Brian Tienzo - Chief Financial Officer Oscar Spieler - Chief Executive Officer

Ben Nolan - Stifel Jon Chappell - Evercore Michael Webber - Wells Fargo Fotis Giannakoulis - Morgan Stanley Gregory Lewis - Credit Suisse Herman Hildan - Clarksons Platou Prashant Rao - Citigroup Magnus Fyhr - Seaport Global Matt Niblack - HITE Capital John Humphreys - Bank of America

Good day and welcome to the Golar LNG Limited Q1 2017 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 and good day to everyone and welcome to Golar LNG’s Q1 2017 earnings call. As moderator said, my name is Brian Tienzo and I’m joined today by our CEO, Oscar Spieler who is actually sitting in Oslo today, and our Head of Investor Relations, Stuart Buchanan. So let’s start today’s call by turning to Page 3 of the presentation. Operating loss and EBTIDA in the quarter reported a loss of $41.4 million and $16.2 million, respectively, compared to Q4 loss of $32.7 million and $15.9 million. While there was an improvement in revenue in the quarter, this was negatively impacted by non-cash adjustments. We also issued $402.5 million, 2.75% five-year unsecured convertible bond during the quarter and that came with a capped call that gives an effective conversion premium price of 75% and $48.8, respectively. Following that, we repaid a balance of the 2012 five-year convertible bond and refinanced the debt facility in respect of the LNG carrier Golar Crystal. The combination of the extinguishments of the old bond, the new bond raising and also the small equity offering we did in November 2016, and the availability of a new credit facility has enabled the company to be in a much better footing. We also secured a firm two-year contract for Golar Grand commencing Q2 2017 and a 12-month contract for a carrier commencing in Q1 2018. After the quarter, the following material events occurred. Golar LNG’s Fortuna joint venture executed an Umbrella Agreement with the Republic of EG to establish the fiscal and legal framework for the Fortuna FLNG project. Following that Fortuna midstream EPC contract was awarded and project is on track for mid-2017 FID. And the put Option in respect of FSRU Golar Tundra was exercised by Golar Partners and simultaneously entered into purchase option agreement with Golar to acquire up to 25% interest, representing 50% of the extracted capacity in FLNG Hilli Episeyo. The transaction is expected to close in June, subject to customary closing conditions. And finally, recently OneLNG’s relationship with Republic of EG continues to strengthen as both enter into a memorandum of understanding to find a monetization solution for stranded gas focusing on Blocks O and I offshore Malabo. Let’s now turn to Page 4 to go through the financial highlights. Total operating revenues for the quarter of $25.1 million is higher than 4Q at $23.1 million. This is mainly due to improvement in rates observed during the latter part of 4Q 2016 and into the early part of January 2017 and also translated to increase in TCE of 14,189 per day for 1Q against 10,893 per day in the previous quarter. While debt revenue this quarter at $8.2 million is lower than 4Q at $10.5 million, this is mainly due to the recalculation beyond our fleet [ph] in respect of the Grand following its firm employment with a major oil and gas company, which was also concluded during Q1, which lead to a non-cash provision. Going forward, such provision will be reversed and a credit released for the income statement. Operating cost is consistent with 4Q level, whilst G&A expenses decreased from 4Q level. 4Q costs were particularly high due to various projects and financial reporting activities. All of the above have led to a loss before depreciation of approximately $16.2 million, which is consistent to 4Q at $15.9 million. In addition to the quarter’s operating losses, our non-cash loss at $17 million arising out of the deemed disposal of GMLP shares as a result of its follow-on offering and mark-to-market losses, increase in interest costs from the new bond offset by non-cash gain on our total return swap, contributed to the net loss for the quarter of $65.8 million. Turning now over to Page 5 to look at the balance sheet, as you can see, the balance sheet as of 31st of March 2017 shows marked improvement compared to the end of 2016 balance sheet. Following the company's execution of the equity offering of $170 million in November, the conclusion of the convertible bonds of 402 in February and the drawing down from a new credit facility in March, the company has materially bolstered its liquidity and at the same time extinguishing its near-term debt maturity. The company does not now have any debt maturing until October 2019 and only then it will be approximately $85 million across three ships. This is manageable. You will note that our balance sheet currently shows approximately 849 million classified as current portion of long and short term debt. Of this 300 million is related to the Hilli loan, which we are required to classify as short-term. As we expect, this will be refinanced by an already existing facility in March 2018. Furthermore this category also includes balances belonging to the lessor's of the asset, which we finance in the sale and leaseback. Accounting convention requires us to consolidate those lessor companies, albeit where now they have control or exposure of those balances. This amounts approximately $490 million. The overriding message that comes out of this balance sheet is that the company is now in a much better position to meet both challenges and opportunities ahead. On that note, I now pass the presentation over to our CEO, Oscar Spieler to take you through various business franchises.

Thank you, Brian. Let’s go over to Page 6. The LNG carrier’s earnings have improved from previous quarters, however, slightly lower than we expected. The number of spot fixtures so far this year is 114 versus 134 in the same period last year. We have seen increased request for interest for time charter for long and medium term fixtures. And the Golar Group has fixed two vessels on medium term, one having started up in May 2017 and the other one scheduled to start in Q1 2018. We believe that this increased interest with time charter reflects an increasing understanding amongst industry participants that the growth in LNG production is higher than the growth in the shipping capacity and that the market will tighten. The orange graph in the upper right corner on the slide illustrates this and shows that based on forecasted LNG production and fleet growth, utilization will increase going forward. We believe that we will start to see an effect of this increased production in autumn this year. At present, the market is slightly above $30,000 per day with approximately 50% [indiscernible]. And an estimated utilization of the fleet of around 50%, so the effective time charter earning will be around $15,000. Going over to Page number 7, the FSRU market and the Sergipe project. The piling and the foundation work on the gas turbines have been completed, and the GE EPC contract is progressing according to schedule on the Sergipe project. The permitting works for FSRU and related infrastructures are going according to schedule. However, it will be a challenge going forward. The project has a lot of governmental and local support, which will help in this respect. They are making good progress on financing and expect that all loan agreement will be done to permit the financial close by the end of 2017. We are looking at laying the delivery of Nanook and potentially carrying out the required modification needs for the Sergipe project at Samsung so that Nanook will go directly from Samsung to Sergipe and start on the 25 year time charter around mid-2019. We'll hand it over to FSRU. With all the new production coming online and with a lot of committed volumes we believe that the demand for FSRU’s will improve. Our estimate is that 20% to 30% of the increased production is uncommitted and we will put pressure on LNG prices making LNG even more competitive relatively to alternative and the resources. The markets, the FSRU market is changing slightly with an increased focus on smaller and cheaper FSRUs, which could be positive for our steam vessels. We also see that customers are occasionally ordering FSRUs themselves, and that new competitors are entering the market are affecting the margins in the FSRU segments. When it comes to Tundra it is still anchored off the coast of Ghana and unfortunately does not seem that our custom has made any progress on their end. In the meantime, we have and are pursuing our contractual and legal rights and having granted an interim arbitration award for $23 million, which we will enforce as soon as possible. When it comes - going over to Page number 8 on Hilli, which is our major project and Hilli is a project where I spend most of my time and focus and they are making fairly good progress. All equipment has been installed and we are now in the middle of the pre-commissioning and reinstatement of systems and equipment. This includes pressure testing, nitrogen, helium testing, lead testing, drying out of system, flushing, restaging, et cetera. As we start with, we are doing [indiscernible] issues, preparation is on schedule [indiscernible] loaded onto the heavily ready to sail. Escort tugs has been secured and over the last month the progress at the yard has been slower than we anticipated. Even though we still have around 4,000 people on board as capital. On the 24/7 basis with around 3,500 during daytime and 500 at night. So while that we are to recover some of the mass production over the last month and that we follow the plans going forward we still believe that it is possible to send a notice of readiness at the end of September in Cameroon. Our focus now is to make sure that the vessel is complete when we leave Singapore and that the pre-commission is done properly and make sure that when Hilli leaves the yard, it is ready to start commissioning after arriving Cameroon. The next major milestone when it comes to Hilli will be mooring is installed in Cameroon in end of July and Hilli leaves Singapore and then we tender our notice of readiness in Cameroon. The CapEx forecast is well within the budget and Perenco is on schedule when it comes to their work in Cameroon. As we have said before, the Hilli will be in the renamed Hilli Episeyo at the naming ceremony on the July 2 in Singapore with all key stakeholders present. The relation between the key stakeholders is extremely good and we will take up discussion on utilizing their remaining two trains as Tundra Hilli has been accepted and started producing. Going over to Slide number 9, OneLNG the joint venture between Golar and Schlumberger is spending 95% of their resources on [indiscernible] Fortuna project to FID and the project is on track from mid-FID, mid-2017 FID. We have signed the Umbrella agreement that covers the legal activities framework in Equatorial Guinea, and we have award of midstream contract to [indiscernible]. The major outstanding issue to take FID is to highlight the financing with the consortium of Chinese lenders, in addition to the upstream EPCIC contracts, and to agree with our partners when it comes to the offtake structure and obtain Ophir shareholder approval. Going over to Page number 10, OneLNG signed a binding MoU to explore liquefaction and monetization of stranded gas on Block O and I offshore Malabo in Equatorial Guinea. The Blocks includes totally proven 2.5 TCF of gas. We see this as a potentially interesting opportunity however still a lot of work has to be done both commercially and technically to ensure that this state lead product is viable. In addition there are several other interesting projects in the project thermal for OneLNG with the main focus on West Africa. However, as I said before the focus is on getting the Fortuna project over the line. Golar LNG are making new progress on Mark II, which will enhance the gas specification and operational envelope of our FLNG operation. The targets for Mark II is to reduce the unit cost compared to Helli and improve our competitiveness further. Golar is working on several FLNG products in America's and we believe based on the LNG prices, we believe it will remain under pressure over the coming years. This will further stimulate the demand for Golar’s lower-cost FLNG execution although. Going over to the final slide, Slide number 11, the recent financing transaction including the resetting of the IDR to raising equity is strings of the convertible bond and margin loan has strengthened Golar's balance sheet and its ability to find its future FLNG and power project. This will be further improved when we do the Golar Partner or transaction. Golar Partner has exercised its right to put Tundra back to Golar, at the same time Golar Grand’s, the GMLP is an option to a 25% equity interest in the FLNG Episeyo which will most probably happen midyear. The shipping market is challenging, but we remain positive based on the increased production, which is delivering and ramping up as we speak. The Sergipe project is on track, we don't except financial close end of the year. The Hilli project remains within budget on a tight schedule to be able to tender notice of readiness in end of September. And we expect the Fortuna project to take it earlier on middle of the year and when it comes to FLNG project we are, as we have said, developing several different opportunities, but we are focused on getting Fortuna over the line. Our Golar’s immediate priority is to however complete and commission the Hilli and we look forward to providing important update on that at the forthcoming Q2 and Q3 results presentation. With that we go over to Q&A.

Thank you. [Operator Instructions] We will take our first question today from Ben Nolan from Stifel. Please go ahead.

Yes thanks. So, I have, I guess two Hilli related questions if I might, the first is and really I guess they are both around the expansion of the third and fourth trains, how soon after the start-up of train one and the whole approval process and everything else being finished, how soon would you expect those actually be it contract and revenue generative?

Generally, the informal discussions we will have with our stakeholders here is that they would like to see a stable operation at Hilli, but all stakeholders are extremely positive when it comes to starting off train 3 and 4 due to the fact that there is minimal CapEx involved both for the State and for Perenco [ph] in order to increase the production, but if you say that the schedule established and have commissioned is by March 2018 or a few month after, I think it will be middle next year.

Okay perfect, thanks. And then there was a comment in the press release about how to think through the dropdown of the trains to GMLP, and it is said in there that any potential expansion or capacity would not be included in as a dropdown candidate, I am just making sure that I am understanding that correctly. That means any improvements in utilization over and above sort of the nameplate capacity rather than say trains three and four being dropped in Kansas, so trains three and four you would think of those as dropdown candidates at the MLP, correct, and just any improvements in utilization and pricing as a function of oil pricing would be capped at GLNG, is that correct?

Yes Ben that is generally correct. So the priority is obviously establishing the dropdown structure for the capacity that has already been firmly employed for the first two trains. And the announcement is really concentrating on announcing specifically one half of those first two trains and hence approximately 50% of the employed capacity. What we expect will happen of course is that as and when the train three and four become live and we have visibility on the cash flows and those and the structure is sufficiently flexible such that GMLP could also opt to buy cash flows from those two trains, as long as they are incremental to the existing production. So, what GMLP does not intend to do is to buy in to any variability arising out of the changes in commodity prices.

Right, okay. That’s what I thought. I just wanted to make sure that I wasn’t misunderstanding. I will turn it over there thanks a lot.

Thank you. We will take our next question today from Jon Chappell from Evercore. Please go ahead, your line is open.

Thank you. Good afternoon guys. Oscar last time we talked about kind of the first mover advantage that the FLNG conversion solution had and as you talk with this new potential project in Equatorial Guinea and you have three to four other projects that you are looking at, can you just give us a reminder of how your solution compares from a timing perspective to some of the other potential opportunities out there?

I think what we have said that generally that we are able to have people just at the same time; one project at the early stage, one in the middle, and one in the final stage. When it comes to the project, we are working on several projects in West Africa as we have said. Some of them are, I think FID through 2019, some of them could happen before, it depends a bit, and then we are working on a few projects in Americas, which can be earlier, but all the things are under development, so it is a bit early to stay on an firm date [indiscernible].

Okay. My second question has to do with the Sergipe project, it is a bit confusing, you say you are still on schedule, but there is a main challenge as far as the regas terminal being permitted. What kind of timing should we think about for getting some clarity on that part of the entire project?

As I have said, I don’t think, I mean that’s a challenge, it is not a main challenge, it is a challenge and I would say that with all the prudential and governmental support we have on this project, I don’t see this as a big problem. I never seen Sergipe as a major problem on this project because of the support we have from the governmental and the provincial state .

Okay, thanks for your time Oscar.

Sorry moderator, it is Brian here. Just to clarify on the answer that I gave to the previous question regarding the Hilli trains, I think just to highlight that MLP isn’t actually - right now isn’t actually buying trains three and four. The announcement is in respect of the capacity of train one really, and at such time as trains three and four are able to firm up employment that was capacity, incremental capacity could be part of option for the MLP. If they wish to - option to exercise and buy the cash flows out of those debt capacity also.

Thank you. We will take our next question today from Michael Webber from Wells Fargo. Please go ahead. Your line is open.

Hi good morning guys how are you?

Hi Mike.

Brian, first of all thanks for clarifying that, but first question is for you, on Slide 8 you kind of ran through the Hilli timeline, and I was hoping, I know the first question kind of spoke to this, but maybe dig it a bit more specific, can you kind of walk us through that timeline and how that should impact the P and the balance sheet. So when we should actually start to see either revenue from commissioning cargo’s that are getting carried on Golar vessels, you know the actual start-up of the contract just maybe kind of walk through the timeline and how it respects that would impact the P&L?

The way we're seeing it at the moment Mike is that the vessel is still targeted to get to Cameroon by the end of September at which point we will turn to her already for commissioning. During the commissioning process there will be revenues accrual during that time and obviously that depends on what we can do during that period also. So, really during Q4 there will already be certain amount of revenues accruing that is going to the P&L.

At the full contract rate?

No, it is sort of, my expectation is that it will ramp up to full contract rate. So you can imagine we have three - we have four trains, we can, the expectation of course is that we will try and commission sufficient trains enabled for us to be able to satisfy the performance metrics under the contract, so we are not limited to just using two trains so that gives the flexibility, but the expectation is that we don't expect to be at full capacity and it is more of a ramp up process, but regardless there will be, we expect fully that in Q4 we already start seeing the revenue coming into Golar LNG Limited. At that point in time if the first train, if the 50% capacity of the contracted trains as already been dropped to MLP than a portion of that will obviously be due to the MLP, depending on what would actually happens.

Okay that’s helpful and I can follow up with more details offline. My follow-up is actually around Fortuna, and kind of getting that over the line, just curious, seems like there has been a kind of maybe a shift around just kind of thought process around offtake and FDA's, can you give a sense on how much of the gas associated for Tundra you guys think you have sold for at the time of FIB being and maybe kind of how you think about different ways to maximize the economics kind of it is currently associated with that project?

We are in the middle of discussion with our partners now and we are discussing different options. One is sell all the LNG, others are trying to utilize the, I think in Europe and all the [indiscernible] LNG, but there is no definite conclusion on this and we are on the middle of a discussion there now. But there is obvious big potential that you can optimize uptick quite dramatically here, if you take care of yourself instead of selling it to the third party.

Right. So as you look at it today and you're kind of playing with house money a bit because I know there is - you have got redundancies built-in to the signed kind of binding terms agreement from I think three or four different buyers, but as you look potentially stretch that is there, you think half of that gas at a minimal and then may be sold for in the long-term basis and you kind of play with the rest or is it more wide-open than that?

I believe that, I mean, as I said we are in the middle of the discussion and I think we will have to sell some of it for them. So we are able to call it a debt coverage, but we are in the middle of the discussion there on the conclusions that could have just be definitely on what we are doing there.

Great. That's it. I will turn it over thanks.

I think just an addition to that, I think the main, but one other thing that we will obviously do is sell sufficient volumes in order to satisfy the debt and then anything over and above that will obviously try and maximize with possible the returns, but the structure for that isn't yet defined.

Right. Okay, makes sense. Okay, thanks for the time guys.

Thank you. We will take our next question today from Fotis Giannakoulis from Morgan Stanley. Please go ahead.

Yes, hi gentlemen and congratulations for the latest announcement with Equatorial Guinea. I want to focus on that and try to understand how comparable this project is with the previous two FLNG project that you are working on. From what I see this is an existing field that is already producing liquid, can you give us a little bit more color on the cost of gas and the economics of this project and how this compares with the other two? And more specifically I want to ask a few months ago [indiscernible] offered an $8 delivery price of a gas to Asia, is this something that you can deliver and what would be the equivalent delivery cost from this Equatorial Guinea project.

This project is very preliminary. What we have agreed is to agree to try to see whether we can find a feasible solution. This is a state led project. So as you said, it is an existing field with different companies involved. We will act as a midstream provider, mainly in the beginning to try to see whether we could find a midstream solution. The gas of these fields there are, you can say two different folks, one is - one of the field they are producing today, they are re-injecting the gas and that should be gas. We don't know exactly the quality of the gas, but what we have seen so far looks quite promising. There is then another field, which is a pure gas field. We don't know if that the gas composition there either. So there is a very, very early stages when it comes to this. But when it comes to technical solution, if you say that the gas is comparable to something between EG Cameroon is a very compatible project and you could be able to utilize through more or less exactly the same technology, but it’s too early, it’s a lot of commercial work, it’s a lot of technical work, which needs to be done before. We know whether this is a real project or not. When it comes to cost we believe that gas from West African projects will be in the region of into the West at around $2 and then we have $2.5 to $3 liquefaction total and then $1 in transportation and then $0.5 in [indiscernible]. I think we are able to meet what the number you just mentioned.

Thank you very much Oscar. I want to ask you about what is your view and your take from your discussions about a commercial reach of LNG and if the buyers are there to sign a long-term of offtakes and if you can give us a little bit of an overview of the commercial environment and the appetite of buyers for long-term gas?

We are in discussion with different offtakers there are traders, there are oil companies, there are different type of companies and it seems that there are real interest for [indiscernible] project definitely. Everybody sees that we are on the low cost end of an energy production. We are competitive down to equivalent oil price and total reported dollars. So, I think we feel that there are the amount for this type of project. If you look at the [indiscernible] LNG coming out of the market over the next two years, I believe that LNG project will be quite challenged, and of course that will also lead to that. Quite a lot of project will be not able to take it by the image, but however we are trying to check the cost hurdle in order to be even more competitive and increase our competitiveness. But when it comes to offtake, a lot of different structures are discussed personally, I believe that our cost breakeven for West African project, if it wasn't for financing and our partners, I think we would have gone much more in the stock market on those cargos and may be great, I think in Europe, so this I will make sure that we are able to get rid of the LNG and then you are open to this stock market, which I think will be higher than what will be in the long-term market for LNG basically.

Thank you very much Oscar.

Thank you. We will take our next question today from Gregory Lewis from Credit Suisse. Please go ahead. Your line is open.

Yes, thank you and good afternoon gentlemen. Actually, I'm going to ask you just as I look at the stock down 8%, is it - the press release look pretty good, the presentation look pretty good, as I look at the language you mention that the Hilli potentially, the delivery schedule is tight. Now that’s fine, I guess what I’m wondering is there any penalty if the Hilli where to sort of just start up, a month or two late, does that matter at all? Other than the delay in realization of cash flows?

I will answer the cost question first. There are no penalties before - after six months plus 21 days. So even if we are two months delayed, and we use four months for commissioning there are no penalties for us as such.

Okay great.

So that is very important to understand. When it comes to the tight schedule, it is - we don't see any show stoppers to complete this vessel. So there are no technical problems, engineering issues, there are no missing equipment or anything like that missed alignment, it is just to get it completed, and we are pushing the yard every day and on there every second week almost. And we are, we believe that we are able to deliver this in the region as we have said - the date we have said. But I think it is a very good question, there are no penalties as such before or after six months after October 1, plus 21 days. Then there is $100,000 penalty after that for the next 180 days.

Okay great. And then on the Tundra, I don't think it was a surprise that that was put back, but I guess if you could talk a little bit about the arbitration, I mean it looks like is it correct that you have already received the $20 million plus for the 2016 period and if you could just sort of update us a little on that as well as potentially where what could happen to the Tundra over the next six months to 12 months?

Great. The award that we mentioned is an interim award, arbitration is given as an interim award. It hasn't been sent to our bank account yet. I think it is the question you are trying to get an answer to. However, the next step for us is to get a formal judgment on that award and then enforce it, and then actually get the money. In addition to that, we would also then start claiming on the second half of what is due to Golar at the moment. And given that we have been given an interim award in the initial claim, then we would expect the same on that also. And as far as the Tundra position is concerned we are still in dialogue with the charters, but as we mentioned during the call what we want to be able to do also is continue to press them that this is, once we are talking to them, we are or we have to enforce our legal rights into the contract. And that’s been made clear to the counterparty.

Okay perfect gentleman. Thank you very much.

Thank you. We will take our next question today from Herman Hildan from Clarksons Platou. Please go ahead, your line is open.

Hello and thank you for taking the question. The first question is on the start-up of the Hilli, I mean, we have seen over the recent times that the solution on how the large using the same technology as here. Also I guess there has been some learning from the Petronas FLNG, can you kind of try to walk us a bit through where you see the key learning from what you, from the Petronas FLNG and also what you see as the key to get to a successful start-up of the Hilli?

When it comes to the start-up of the barge in China that was delayed not mainly due to technical issues, it was more commercial issues and the actual commissioning of the barge went pretty straightforward than they actually started it. What we learn from that project, we have the same commissioning manager from [indiscernible] on our project. So we have all the learning from that project into our project, directly and what was the main issues was actually, it was humidity in the pipes Hilli et cetera et cetera, but apart from that we have cleaned up, we have got all the learnings from that Chinese barge, which have exactly the same equipment. When it comes to the Petronas vessel we don't have a lot of knowledge, we don't really get a lot of feedback from them and also it is a completely different liquefaction process. So, I don't think we have too much to learn, but I think in general when it comes to processes - starting up processes like this we know from the experience from Black & Veatch, which have started off several or more than 20 plans like this. We know where the problems are and we are taking measures in order to avoid it. In addition we have also invested $4 million, $5 million in a dynamic stimulator, so we have four or five people sitting always testing this process here in Oslo and of course instead of doing this testing during commissioning we are doing this testing here and we believe that that will save us a lot of time during commissioning and these people have been operating this plan and with the replica of the system aboard and we believe that that will save a lot of time during commissioning and problems.

So as you are not really worried about the positive start-up?

Of course we are worried, but it is not something - it will work, it could take time and I think we are taking the measures in order to minimize the problems during commissioning.

Also I’m a bit curious about the Equatorial Guinea, could you kind of - you say that the Blocks I and O are various stages, but still is the size to make it, call it an announcement in the press release, could you talk a bit about, how that developed the wide side to put it in the press release, if it is still very early stages and kind of in dialogue with the government in Equatorial Guinea in there?

I just saw maybe yesterday that it was announced by the government two days ago. So we felt it was applicable to put into our press release as well, but I don't think it is an interesting project, we will work together with the government, which will lead the project and we will have contract with all the parties of the stakeholders in these blocks and then we will first indicate the technical and potential also at least on the commercial solutions, but it is very, very real estate.

Okay. Thank you very much.

Thank you. We will take our next question today from Chris Wetherbee from Citigroup. Please go ahead. Your line is open.

Good morning gentlemen. This is Prashant on for Chris. I wanted to follow-up on Greg’s question regarding the type of achievable language in the materials today regarding the Hilli and thank you for the color you’ve provided in terms of like the first six months no penalties and that is still effective, there is no technical issues for the vessels, I just kind of wanted to within those parameters get a sense of - if this was to be pushed past the end of September would you still expect, is it fair to say that you still expect a start-up by the end of the year or is it a matter of week sort of, if you could just help us think about maybe what you are envisioning in case there is a delay, how meaningful could that be?

So, if you could say that there are X amount of work remaining. So if they have some problems with the progress on the remaining work then we are talking about weeks maybe after a month. If they don't manage to progress the work and how they write progress you could potentially be optimum in that region. When it comes to, if you suddenly have a, that is how I see it today. When it comes to, but if something happens, if there could be an incidental [indiscernible] whatever than it is a completely different case, but we don't make, we are making all efforts to take care of the safety and trying to preserve the equipments as it is. So we are extremely careful when they do the pre-commissioning in order to avoid these type of incidents, but when it comes to - it is not being just worried about that we are not able to complete the vessel, it is just the amount of work. If you look, we are spending approximately I think that in the end they will spend around 18 million hours capital on this project, which is more like double what they anticipate, but the scope of work is a bit, are much higher than they anticipated. So, I am really not worried in that respect that they are not maybe able - it not a six months delay, we are talking about a week of a month or something in that region.

Okay that’s extremely helpful. Thank you for that. And the sort of picking up on something you mentioned there, the scope of the work has been more than expected, but you guys have been able to come in significantly under budget for the conversion, would be how could early it is coming up upon completion, that kind of turns to the next project, I am looking at the Gandria, the 1.5 billion cost is that, I mean it seems like it is higher than what the Hilli was, are there costs that could be taken as their equity release and sort of built into that $1.5 million number or are there, as the nature of the project sort of makes the difference?

It is a completely different project. Hilli receives treated gas control and are moved at shallow waters. The Tundra project is deepwater. It is much more complicated marine system. It produces directly from the well, so we need a [indiscernible] so actually we are manufacturing a complete [indiscernible] valve, which will be able to have the necessary equipment to take one more than the equipment. There are much more equipment on board at Hilli. The [indiscernible] when it comes to have some [indiscernible] so it is a more complicated vessel as such.

Okay that’s very helpful. Thank you. I will turn it over.

Thank you. [Operator Instructions] We will now take our next question from Magnus Fyhr from Seaport Global. Please go ahead.

Yes, hi. Maybe you can give us an update on the spot market, I know you have seen some contracts there but what do see the current surplus is in the market, how many ships are working in the spot market currently?

I don't know exactly how the number of [indiscernible] is working there, but if you look at going forward, most of the less renewables coming out of the new building, they are project vessels. So the majority of the vessels, the new bills, they are going into those spot market as I said. I have the numbers here somewhere, but and of course we also see that there are some redeliveries, quite a lot of those redeliveries are [indiscernible] vessel, which is not really competitive through the vessels. Here we also see that there are some redeliveries on the FID vessels product, more next year than this year, but if you look at the supply demand [indiscernible] data compared to the reduction there will [indiscernible] on vessels going forward. We see more activity in the market these days on request for time charters both long term and medium term. We see more activity in the stock market these days than last year. Actually we have the more or less built for a few weeks ago, that is the first time in the full history. The Golar vessel where built actually for few weeks. So that was really good, but of course we have been a bit disappointed about Q1 and also Q2 compared to what was in the beginning of the year, but we see - also based on the reports that a lot of the production will actually start in Q3 and Q4. And therefore we believe that we will see a tighter market going forward.

Magnus, just an addition to that, I mean typically Q2 is normally the shoulder of the cycle anyway. So, to sum these up, if you look back in previous years, Q2 is typically the time when you would see a bit of weakness in the market and of course to some extent that has been precipitated a little bit by the current status today, but I think if you look at the number of, the number of production coming online, a number of tons of LNG being used, expected to be produced by the end of this year versus the number of ships that are delivering. There is certainly an expected impact of that to the current spot surplus. So, whilst we're not seeing an immediate impact, we're not seeing the immediate impact of that now, being the expectation is and I think the consensus now we use ourselves, but also about the shipping owners is that that will have a positive impact by the time we get to the end of this year.

And then controlling so many ships in the Cool Pool, I mean do you think that could happen earlier?

Sorry, I would I didn't quite get it, you would you mind just reading that?

Yes. With so many vessels that you control through the Cool Pool, I mean let’s call the spot market maybe 30, 40 vessels, I mean can you see that happen earlier or do you think that’s an event in 2018?

I think to some extent, one thing that we have been seeing is that the average performance of the Cool Pool has been above average of the sport fleet, the worldwide sport fleet. So to some extent you can see the impact with the Cool Pool already there. Now whether or not we would see that earlier and honestly we don't know, I think simply by the number of vessels being made available by virtue of the fact that they could be positioned all over the world, I think that will have a benefit for us.

Okay. Thanks for the update.

[Operator Instructions] We will take our next question today from Matt Niblack from HITE Capital. Please go ahead.

Hi, thank you. Just a clarification on the backlog on the FLNG side, so is the fact that you have announced the second potential project in Equatorial Guinea is that a sign that you are less optimistic about some of the other projects you're bidding on like Kosmos and others and that therefore you want to move forward here or do you see a path that are being able to execute this, as well as some of these other projects you're working on?

So, I think the announcement really to some extent was just mirroring what the EG government has put out as Oscar said earlier, it is very early stage yet in that project and has no bearing or impact on the other discussions that we are having on other opportunities. It is just another one, another potential opportunity out there that we are exploring.

Okay. And now that you are ways into the partnership with Schlumberger is there an updated view on how many of these boats you could potentially be developing simultaneously, the non-cash flowing?

I think we have said previously that we could have five projects of different progression in one go. I think we are not wavering too far away from that of different progression, I should say. We're not wavering too far away from that particularly some of the projects that we are looking at, at least one FLNG vessel requirement. So that, we are still working under that assumption and of course there has been - we're working on the marketed version as well, which hopefully could help us achieve that objective.

Great and last question, could you provide some more color on the benefits of the Mark II version?

The Mark II version is, one thing is that we are industrializing the production of the FLNG vessels to be a bit more standardized, it is a bigger storage, it is a new vessel, it could either a new or a more modern vessels down the Hilli on those vessels. We are increasing the production, we are potentially we are making a footprint, so we are able to take more complex gas. We are able to - we are off space to store condensate. So that means that we are able to take wider gas specification. The vessel will also be able to operate in a harsher environment potentially. So there are many benefits of that and the focus here is not only to enhance the envelope for the vessels, but also to reduce the cost. We believe that there are potential saving. And I think we will be able to do that actually.

Great, thank you.

Thank you. We will take our next question today from John Humphreys from Bank of America. Please go ahead, your line is open.

Hi thank you very much gentlemen. I just had a question on Fortuna, as far as you have mentioned before selling enough gas to cover the debt, if you could give us sort of an idea of what percentage of volume that would be pricing parameters, the number of counterparties you are speaking with that would make you feel comfortable enough to cover the debt and if that offtake contract is critical to FID in 2017?

So, I think as far as the specific number of amounts to be sold for the debt, for the time being, John I wouldn’t rather not comment on that. I think it is safe to say though that it is a fraction of the amount that the vessel can produce given the current characteristics of the debt today. As mentioned again, we have guys discussing the structure on the offtake, it is something that we would like to have in place for FID, but I think to the extent that the discussions now is with limited number of parties i.e. the fact that the discussions with them is sufficiently mature. We have got a very good idea of what sort of economics we could get out of those, but the structure isn’t yet in place and that’s an ongoing discussion to have.

Okay. Thanks very much Brian. And then the second being on sort of the position of the Gandria, if you could just, there were some articles couple of weeks back about lay-up dispute and things like that of where the - if you have procession of the Gandria and kind of status for that?

The Gandria has been in lay-up for many, many years and the lay-up provider has really not done the services receivables, which they are expected to do and there are disputes on very small amounts, and we and he has - he is willing to take possession of the vessel. We are in contact for the police and the military and political people in Indonesia. And we believe that we will have so in that within the next few weeks. I think we're trying to go on board again tomorrow, but we don't think this is a big problem. So we believe that we will be able to solve this in a good manner over the next few weeks.

Okay. So you see a resolution prior to when financing and offtake agreements should come together for FID, so this should [indiscernible]?

That is [indiscernible]. We will definitely be able to solve that before FID is taken, in one way or the other.

Great. Thank you very much.

There are no further questions at this time over the telephone.

Thank your moderator. I guess that ends the Q1 earnings call for this time around. Thank you everyone for your contribution and participation. And we look forward to speaking to you again in the next quarter's earnings call. Thank you and goodbye.

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