Brian Tienzo - Chief Financial Officer Iain Ross - Chief Executive Officer

Michael Webber - Wells Fargo Securities LLC Fotis Giannakoulis - Morgan Stanley & Co LLC Gregory Lewis - Credit Suisse LLC Jonathan Chappell - Evercore ISI Herman Hildan - Clarksons Platou Securities Ben Nolan - Stifel Ken Hoexter - Bank of America Merrill Lynch

Good day, and welcome to the Golar LNG Limited Q3 2017 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Brian Tienzo. Please go ahead, sir.

Thank you, moderator, and good afternoon and good morning to you all. Welcome to Golar LNG’s third quarter earnings call. My name is Brian Tienzo. I’m joined today by our new CEO, Iain Ross; and our Head of Investor Relations, Stuart Buchanan. So let’s get on with the presentation by skipping over Page 2 and going over to Page 3 for the financial highlights. So the improvement in shipping market is also now starting to show in our results, while our ships remain below cash break-even for the quarter. We have nevertheless seen quarter-on-quarter improvement in operating revenues. Over to operating revenue this quarter of $32.4 million is better than the previous quarter. However, our operating performance was negatively impacted by higher voyage and operating costs as a result of Tundra coming back to the Golar fleet and on various repairs and maintenance performed during the quarter. With improvement in our share price and increase in swap rates quarter-on-quarter, non-cash mark-to-market in these gains helped to stem our net loss at $43.9 million, compared to the second quarter loss of $73.8 million. Saying that, with the Grand charter lease from the partnership seizing in 4Q, the continued recovery and shipping rates, as well as the anticipated earnings from FLNG Hilli Episeyo over the coming months, we expect to see ongoing improvements and our operating results over the coming quarters. Let’s now turn to Page 4 to look at our balance sheet. With free cash of approximately $287 million, our balance sheet remains efficient and robust for operations and upcoming projects. There are big liquidity milestones over the next few months and most of those relating to Hilli, and these includes the $435 million still available from the Hilli financing, including a final drawdown of up to $260 million upon the vessel acceptance. Of this $140 million is free cash. A positive conclusion discussions with GMLP regarding the dropdown of the remaining contract and capacity of Hilli Episeyo will produce approximate $180 million in free cash also. And of course, the reduction of the required LC on the Hilli $200 to $300 million from $400 will result a reduction in restricted cash requirement and therefore augmenting our free liquidity still. Finally, the improvement in shipping rates will further help liquidity. Just for transparency, the current portion of long-term debt in our balance sheet of $1.1 billion includes $700 million relating to our lease finance arrangements, which are reflected in the bits of the lessor on the entities and which we are required to consolidate under U.S. GAAP. Of this, only $47 million is our real exposure to short-term. Furthermore, of that $1.1 billion, $375 million relates to Hilli, which as you know, will become long-term once acceptance is achieved. So our real underlying current portion of debt as of 3Q is actually close to $70 million. Anyway, on that note and without further ado, I now hand over the presentation to our new CEO, Iain Ross.

Good afternoon, good morning. It’s a pleasure to be on the call and I look forward to meeting many of you over the forthcoming weeks and months. If we can move to Slide 5, this diagram provide some context and is a reminder of our high-level strategic direction. Starting at the left-hand side of the graphic, we plan to use our OneLNG joint venture with Schlumberger to access and develop gas assets, which is suitable for monetization through Golar’s unique FLNG capabilities. And then moving across the page, we can move the gas via our LNG transportation business and into floating regas and ultimately, power generation via our Stonepeak joint venture known as Golar Power. Golar’s core skills in this midstream gas market together with our key business and technical partners gives us, we believe a differentiated position in this gas value chain. And by developing skills, competencies and harnessing experience in all of these elements, we can potentially join up the left-hand side of the picture to the right-hand side, so ultimately turning gas molecules into electrons and create superior value for shareholders. So taking each of these business blocks in turn, I’m moving to Slide 6. The Hilli Episeyo project completed conversion work and pre-commissioning in the yard, moved to anchorage for sea trials and further tests before leaving Singapore on the 12th of October 2017. She completed a journey of some 8,300 nautical miles at an average speed of around 9 knots, taking a quick pit stop in Mauritius before rounding the Cape of Good Hope and then arriving safely in Cameroon on the 20th of November 2017. The last week, we see the vessel complete various procedures, inspections and obtained customs clearance. And we’re now in the process of hooking her up to the soft yoke mooring. And over the next few days, we will complete the mooring riser and umbilicals connections and serve our notice of readiness, which is an important point as it serves and serving the NOR starts the time process towards earning revenue from the vessel. Following NOI, we will carry out some further tests and then load a parcel of LNG from a Golar there to cool the vessels and commence the full LNG commissioning process, which should result in our first production of LNG sometime around the end of the year. We will take the time that we need to progress through this program safely and thoroughly, so remain as a view that completion of commissioning and customer acceptance is still on track for the end of the first quarter 2018. Moving on to progress in OneLNG, Fortuna has made good progress in developing alternative financing plans and we have our off-taker agreed in Gunvor. The overall economics of the development are strong and we remain extremely positive about the potential to get this project going and see some activity in the yard early next year. Additionally, within OneLNG, we’re progressing well with both other active projects and the funnel of future opportunities that will hopefully dropdown to become active project status over the course of the next year. And finally, Golar’s MARK II design that we’re proposing for Delfin U.S. Gulf Coast development is progressing well with the planned completion of that fleet in March 2018. So moving to Slide 7 for shipping. We’re seeing a real and positive progress in the LNG shipping market. The recovery is yielding materially higher spot rates towards the end of Q3 and certainly into Q4. Now this recovery appears to be driven by several factors. Firstly, we’re seeing increased demand from Chinese markets for the year to October, imports are reportedly up 48% to 29 million tons. Secondly, much of this increased Chinese demand is being supplied from the U.S., resulting in increased ton miles. So ton for ton double the number of vessels are required to deliver to China from U.S. compared to say, Australia. Thirdly, we’re seeing a tightening of the availability of short-term vessels created by the ramp up of new volumes coming on both this year and next, which is taking spot vessels off the market. Fourthly, the reemergence of arbitrage opportunities between Henry Hub and JKM price – JKM pricing. So the spot rates for the TFDEs are currently north of 70,000 per day, and we’re looking to see steam ship rates increase accordingly as charters look to alternatives. We’re also seeing increased interest in long-term time charter rates – I’m sorry, time charter opportunities. The outcome of these factors will result in increase to both the average TCE and utilization numbers for the fleet. So moving to FSRU and Power on Slide 8. The Sergipe project in Brazil remains on schedule and within budget. Earthworks, sables and foundations are nearing completion and we currently have in excess of 1,200 people on site. Q1 2018, we’ll see the arrival of the gas turbines, heat recovery steam generators, steam turbine and transformers, which is coming onsite as modules for installation and hook-up. I visited the site a few weeks ago was – and was impressed by the quality of the work and the organization and safe management of the sites. The EPCI contract for the soft yoke mooring andpipelines have been appointed. They will also commission the gas system. The Golar Nanook FSRU 25-year time charter has been agreed and the vessel remains on target to be delivered to site in Q3 2018. We expect flows on the full project finance package in Q1 2018. Outside of Sergipe, the market for generic FSRU newbuilds remains very competitive with margins under increasing pressure. However, the market for small to midsize FSRU is robust, and we currently are working on a number of opportunities suitable for most – more cost-effective converted TFDE or SD carriers. We believe the provision of integrated FSRU and power solutions offers Golar greater upside and standalone FSRU deals. And as a result, we’re progressing the development of several opportunities across Latin America, West Africa and the Indian subcontinent. So moving on to our outlook on Slide 9. We’re pleased with the transformation the company has undertaken since ordering FLNG Hilli in June 2014. Golar is currently going through a process that will see it transition from a mid-stream shipping company into a fully integrated gas to wire energy company. The key building blocks to this transformation are as follows: The delivery and start-up of FLNG Hilli Episeyo, a vessel that will generate base operating cash flows under its tolling agreement of approximately $164 million per year over the coming eight years. Trains 3 and 4, yet to be contracted, represent further potential upside. Trains 1 and 2 also have Brent-linked upside, which can generate additional annual operating cash flows of approximately $3 million for every dollar increase in Brent prices between in the range of $60 and $102 per barrel. Secondly, the project development of the Fortuna field, organized through the OneLNG joint venture with Schlumberger and Ophir, is expected to reach FID in the first part of 2018. With its particularly robust field economics, this project will give Golar direct access to reserves in the ground. The development of the power project in Sergipe is progressing according to plan with respect to both construction and financing arrangements. Commencing in January 2020, this project is expected to generate annual operating cash flows of approximately $330 million based on current exchange rates. Of this, 50% is controlled by Golar Power, in which Golar has a 50% interest. The project infrastructure attractively positions Golar Power for further expansion opportunities at a low incremental cost. The FSRU Nanook is committed to the Sergipe project for 25 years with annual operating cash flows of approximately $39 million accruing to Golar Power. Further FSRU opportunities in the final stages of negotiation are expected to yield additional business for both Golar Power and Golar Partners. The shipping market is showing strong signs of improving. As of today, the effective time charter rates being achieved in – at the fourth quarter are more than twice that recorded in third quarter. An improving trend is expected to continue into 2018 and 2019 when shipping supply should lag demand created by the increased production. At full utilization, every $10,000 increase in shipping rates equates to approximately $40 million additional annual operating cash flows across the fleet. The outlook for Golar Partners has improved having taken steps to secure its current distribution by way of its initial acquired interest in FLNG Hilli. Improving spot rates for its ships also provide a more supportive backdrop for their re-contracting. And finally, supported by the successful execution of existing projects and contributions from key joint venture partners, OneLNG and Golar Power, the project portfolio for the Golar group of companies continues to grow. This unique combination provides a differentiated and competitive value proposition in the gas to wire energy sector. So as a result of the above, Golar is a company likely to increase its earnings significantly over the coming three years. These results will be underpinned by secured contracts currently in execution, further augmented by a strengthening shipping market and a solid portfolio of projects that are expected to translate into new contracts. The company looks forward to providing confirmation of its outlook over the coming quarters. Thank you very much for your attention. We’ll now move over to questions.

Thank you. [Operator Instructions] We can now take our first question from Michael Webber from Wells Fargo. Please go ahead. Your line is open.

Hey, good morning, guys. How are you?

Hi, Mike, good. Thanks.

Hi, Mike.

Hey, so I wanted to start off on Fortuna. If you can maybe get a bit of color around what the different alternative financing solutions are whether a soft FID is still a viable alternatives and maybe kind of speak to how that would impact your liquidity in 2018?

Sure. I guess, I think start off with, I think, it’s clear that the sponsors for Fortuna are very frustrated with how long the financing is taking to conclude, saying that, we’ve made some good progress over the past few weeks. But of course, we need to get to a position where if the delay continues, we need to be able to conduct work in the vessel, such that we can progress the projects and stop further delays. So on that point, we are looking at alternative measures to progress the project, including potentially as a consideration for, as you say, a soft FID. Now to the extent that happens that actually does not have too much impact on cash flow simply, because under the fully debt finance FID. There’s a certain amount of equity that needs to be injected into the project before we can drawdown in the facility similar to the way that Hilli was structured to some extent. So to the extent…

$25 million capital call, I guess, in that original agreement?

Sorry, what’s that?

That’s the original $225 million capital call to OneLNG kind of for that original agreement?

Yes. But that – I mean, the – that amount isn’t expected to be injected immediately, it’s over a period of time such that the drawdown in a facility, for example, we don’t – we wouldn’t have expected that to happen until the end of 2018 anyway.

Okay.

So to that extent, it doesn’t really impact the cash flow differently from moving from a fully debt FID to equity FID.

Okay, that’s helpful. And then if I maybe around, I don’t get ahead of ourselves, but around the Hilli in Train 3. I think, you mentioned previously that while it’s not something that’s on the books now, the terms around the Train 3 have already been negotiated if and when it happens. Can you speak to what the potential EBITDA impact would be there considering everything is built out and that should theoretically fall straight to the bottom line?

Sure. So I think, when we made public the contract, the binding terms that we signed with Perenco, we said Train 3 could be an additional around $70 million of EBITDA over and above the EBITDA of Train 2. Now obviously, that’s Perenco’s option, so we can’t really speak on their behalf. But I think, given the progress – the good progress we’re making on the Hilli, I think discussions in Train 3, we expect would progress more quickly once the vessel is accepted. And of course, seeing how the commodity space is where it is at the moment, I think, there’s certainly motivational part is to make that happen.

Okay. And those conversations are – I’m assuming, it’s kind of at a pause if you get the asset over the field and hook it up and it’s something you’d expect it to have a conversation about in H1 of 2018?

We would expect. So I think, the most important thing that we have with that vessel at the moment is making sure that it’s following the target schedules that we set.

Fair enough. All right, thanks for the time, guys. I’ll turn it over.

Thanks, Mike.

Thank you. We can now take our next question from Fotis Giannakoulis from Morgan Stanley. Please go ahead. Your line is open.

Yes. Hi, guys, and thank you. I want to ask you about the Hilli, the delivery of the Hilli and the start-up. How critical the commissioning of the Hilli for the financing of the Fortuna? And if there are other projects that you are in discussion right now that they’re dependent on the successful production of the Hilli?

Well, I think, first and foremost, I think, you ask anyone in the organization if the Hilli would work? I think the answer is a resounding, yes, it will work. Clearly, getting the Hilli working is very important to ourselves and to our counterparties. As far as the financing is concerned, in the discussions we’ve had so far, the Hilli has a subject to making financing effective hasn’t been mentioned. But clearly, there is an important in there. And of course, it’s easier to discuss financing when you can point to something that already works and that’s something that we saw with FSRU. So to the extent that the Hilli is working, it’s a bonus for the projects that we had, believe that Hilli will work. And I’m sure that the discussions and other projects would probably be an easier discussion also once the Hilli is up and running.

And this confidence that you can convey to the other parties, both the lenders and the potential customers of other FLNGs. Is it a commissioning period that we’re going to see starting in December, or it’s the commercial acceptance? What shall we expect as the main event for the success of a Hilli?

It’s Iain here. I mean, we’re going to go through a very structured commissioning program, which I outlined in my prepared remarks. We’ll start early next month once we’re hooked up another the risers and umbilical onboard. Once we’ve got the production of LNG commenced, we’ll just continue to refine that process, and towards the end of the quarter when we expect to be ready for the acceptance testing and handover to the customer already.

Thank you. Brian, one last clarification, did you still have not drawn down another $585 million of debt of the $960 million, which is fully available. What is the remaining CapEx right now for the Hilli?

So I think what we can say there is that, we remain confident it will be under budget once the Hilli is completed. You have noted that, we’re over billion dollars in expenditure, but it’s something we’ve got in Q3, by the end of Q3, I should say. Having said that by the – by early October, we have drawn down approximately $525 million on the facility. So to the extent, we have an available facility that takes it to $960 million at acceptance. We still have quite a bit to do. And of course, that’s very important, because obviously, we’ve been saying all along that, we will be under budget. And of course, that’s a less strain to equity. But at the same time there is free cash coming from the two – the final 260 drawdown that we will be able to do to make once the acceptance is occurred.

So do you expect that you’re going to have more free cash in addition to the 260?

No, no, what I’m saying is that there is ample availability from the facility in order to make sure that they’re on – there is a very little exposure to addition inject – injecting additional equity into the Hilli.

Okay. Thank you very much, Brian.

Thank you. We can now take our next question from Gregory Lewis from Credit Suisse. Please go ahead.

Yes. Thank you and good afternoon and welcome aboard Iain.

Thank you.

Could you guys delve a little bit into Golar Power. I mean, as we look at OneLNG, it seems like there’s a lot of always headline projects that are out there on the market. But it seems like there should be an equally large opportunity set at Golar Power. Just if you could provide us a little bit more of an update, I know you mentioned opportunities in Latin America and potentially West Africa. But if you could just talk a little bit about more what you’re working on and sort of when we could maybe see some of these projects and any sort of color around that would be helpful?

So we are working on the development of power project in those geographic areas that I mentioned. Some of them, obviously, as they relates to Brazil, they go through an auction process. So we may be participating in some of those, there’s quite a lot of work that has to be done to qualify for participation in the auction process. But I would say that if you look at the power to – so the gas to power projects and the smaller to midsize FSRU projects, we do have a lot of activity. And I’m very hopeful that we will be able to share more of that as the quarters go on and obviously to enhance something that’s a little bit more full and complete. The trouble with these projects is particularly as we may be progressing with customers and negotiating, we can’t say anything about them until they’re done. And so it’s – hence it’s balanced. So it’s a little bit unbalanced from the optics at that point.

Okay, great. And then just, obviously, we’ve got to get the Hilli up and running before we start thinking about Train 3. But what’s interesting is, typically, you guys have been pretty creative in bringing things forward. And I guess, what I’m wondering is, is Train 3 contingent on Perenco lining up customers, or could it be something where the Train 3 could potentially be spot cargoes?

We can’t really comment on whether or not Perenco is arrangement in respect of Train 3. As we said earlier, Gregory, I think the – because Train 3 is purely at Perenco’soption, all we can hope, of course, is the smooth operation of the Hilli, the commodity market going according to – well, having a positive trend. There are factors – sufficient factors out there that motivates everyone to making it happen.

Okay, guys. Thank you for the time.

Thank you.

Thank you. We can now take our next question from Jon Chappell from Evercore. Please go ahead. Your line is open.

Thank you. Good afternoon.

Hi, Jon.

Brian, in Golar’s former life, you’re obviously a pretty heavy spot market player in the LNG shipping markets, and that’s led to some good times and some bad. I know that the market, as you said, is kind of beginning the recovery, you have a lot of exposure there the 10,000 that’s equating to the $40 million in revenue. But you’re also a much different company now. So as you kind of think about the chartering strategy in 2018, this market continue to move forward. Do you think you’d lock in kind of more long-term time charters to remove the shipping risk from the entire kind of entity you’ve created? And also as you think about further dropdowns to GMLP?

Well, I mean, first and foremost, I think, it was never really intended. We have such of the exposure in the spot markets. And saying that a chartering guy has been very positive recently, which is nice to see, because he is normally quite glum most of these trains. So it is a very positive outlook out there. Now, of course, the first thing that we always trying to look for is to try and make sure that we decrease volatility on cash flows. I’ve said all along the vast majority of the assets should be on long-term charters simply because one, we have the vehicle to be able to monetize those quickly through the MLP plus, as we’ve seen previously on such a big exposure, it does strain the balance sheet quite extensively. So as far as the improving energy market is concerned, that is the first ways that we look at. Of course, as rates get better and utilization follow suite, there maybe other structural opportunities that arise that we would seriously consider. I think as you rightly say, we are moving slightly away from that. I mean, today, our biggest exposure remains the shipping. And so we need to take care of that, but not too long into the future with the Hilli up and running and the various projects we have, including those in Brazil. Then we need to make decisions on capital allocation. So it’s a very longwinded way to answer your question. But I think the answer there is that, we’re open to looking at positive structures as the shipping market develops.

Okay, that makes sense. And then also if I can ask Iain kind of a bit of an economic question. I mean. obviously. you have a lot of experience in the different parts of the supply chain with hydrocarbons and infrastructure in your first two months at Golar. What are some of the opportunities that you foresee that you’re pretty excited about? But then also any particular challenges that have been noteworthy to as you kind of transition to the new role?

So what attracted me to Golar was the entrepreneurial spirit of the company and a strategy that I suppose is focused on creating a really differentiated position in the gas supply chain. And having spent 30 years of my life involved in oil and gas, it’s just really thrilling to see both the company that that’s early in its growth cycle and with so much ambition. And in Golars there’s – we really have a strong team of talented experienced and driven people who share this vision. So that that’s the really exciting part of it. And in terms of challenges, I think, I could pick up maybe three straight away. One is to focus on the right opportunities. There’s a wealth of opportunities out there, but we need to focus on ones that we think will go ahead and that we have a high probability of making money and generating cash flow. I think, secondly, finding the right type of people to build out the business on a sustainable business. And thirdly, Brian’s favorite subject, we need to stay on top of the financing in a cash need to – for the business.

Okay, it’s very helpful. Welcome Iain and thanks, Brian.

Thanks, Jon.

Thanks, Jon.

Thank you. We can now take our next question from Herman Hildan from Clarksons Platou. Please go ahead.

Good morning and afternoon, everyone. Just a follow-up on John’s questions really kind of very broadly. What’s your visions for Golar three years down the road?

My ambitions for Golar does creates sustainable increase in EBITDA to create growth and wealth for shareholders to create a company that the strategy that I outlined at the start of it, that led you living, breathing and doing it. And as a result of that generating significant returns for people who have invested in the company.

I guess, kind of rephrasing the question a bit, how will the company look three years from now, if kind of you reach your ambitions in terms of different projects and then kind of what execution path are you envisioning for the company in the next couple of years?

So I think, we stated publicly that the potential of five FID debt LNG, FLNG projects on the go, I think, that’s not an unreasonable target to still aim at. And I think our funnel that we’ve got and the active targets that we have in the OneLNG and FLNG business speaks to that. I’d like to see at the other end of the spectrum in FSRU and Power business that has – it’s obviously by the time three years comes along, we’ve completed, so as you think we’ve got another one or two of those types of projects up and running perhaps more. ,:

Okay, thank you. And then kind of switching gear a bit to the Fortuna project on there. Within FID in Q1 2018, when do you expect cash flow, what – mid-2020? And also as a follow-up FID Q1 2018 marks almost a two-year anniversary from when the project kind of reach the surface? What’s the timeline on, call it, heads of terms to FID on future projects, is it going to take the same amount of time, or kind of how – what should we expect?

As far as the cash flow timeline for Fortuna that’s I mean, the time has always been around in 2020, 2021. As you mentioned earlier, I think, one thing that we need to consider seriously is to in order to avoid missing those timelines that we take a soft FID, get some work going, confident always that once the Hilli and all the other factors surrounding FLNG is up and running. Discussions and financing would be easier to have. With regards to timeline on other FIDs, as Iain mentioned earlier, we are working on developing other projects in the background some of those are multiple FLNG requirements. The timing of which we can’t really say, I mean, there are certain factors that impact timing. And as and when we make material progress in those days, they will be announced.

Okay. So kind of, I guess, the question is, again, rephrasing it, should we expect that there’s a shorter time between the announcement on actual project, call it, commencing in the future compared to what has been in the past?

I think that potentially you mean by announcing, I mean, we’ve got projects that we’re working on that are – that haven’t necessarily been announced, because we’re still working on the development of them. But I would expect that two-year horizon to be a lot shorter.

Okay. Thank you.

… from discussing in the public domain taking FID.

Yes, that’s very good. Thank you very much.

Thank you. We can now take our next question from Chris Wetherbee from Citi. Please go ahead. Your line is open.

Well, this is Liam on for Chris. Thank you for taking my question. I would just like to follow-up on a previous question that was asked about possibly moving some vessels away from the spot market and putting them on time charters. Can you just provide some additional clarity on the level of time charter rates that you like to see before you consider moving the vessel to time charters and also possibly some clarity on the percentage of your total current fleet that you consider moving to time charters in the long-term?

Well, I think, I mean, if you look at our cash train over the past couple of years, it’s been very leaky simply because the vast majority of vessels have been on spot markets. Now as I said earlier, the intention has never been always there. We took on the vessels without intending to trade them on the spot market, unfortunately, it did hit as a wrong time. As far as rates are concerned, we have seen long-term charter rates staying somewhere between $65,000 to $75,000 a day, that doesn’t really change in the long-term. Having said that what has changed over the past few years is the tenor on those charters. So previously, you were seeing charters of 20 years. I think, the trend is probably shorter than that now, somewhere between five to 10 years. The vast – we would like the vast majority of our vessels to go into long-term charters simply because that gives us more transparency on cash flow, being able to grow the MLP a little bit and lessen our exposure to fluctuations, particularly on cash leakage.

That’s very helpful. Thanks for providing that additional clarity. And also just one additional question on the vessel operating expenses, because they seem like they ticked up a lot to $13.8 million this quarter due to higher fleet management and maintenance costs. I’m just wondering if you think this will continue as kind of a runway going forward, or if you think it could be lower than third quarter level?

So the – these vessels that being having run rates of somewhere between 13, $12,500 to $13,000 per day. Q3 was particularly heavy simply because a few of the vessels did have sort of maintenance and repairs incurred during the quarter. Similarly, the crew cost increased during the quarter simply because of general sort of salary increases and so on. So I would – for modeling purposes, I would still pay around $12,500 to $12,750 as OpEx.

All right, great. Thank you very much.

Thank you. We can now take our next question from Frank Galanti from Stifel. Please go ahead. Your line is open.

Yes. Hey, actually this is Ben Nolan. My other line dropped. But I have – well, my first question relates to the FLNG business and OneLNG business, in particular, there was some commentary in the press release that you expect the number of additional projects to be concluded in 2018, and this goes to something that you mentioned earlier. I’m trying to frame through what concluded means? I mean, is that just MOU or are we talking full FID?

So our hope is that we obviously and we’ve talked a lot about the Fortuna project, where our hope is that, we get that FID away early 2018, and we’re working on other projects that could yield an FID result in 2018. It may slip a little bit, but we’re working them hard in the background. In addition to that, we’re working other projects, which we hope to be able to take along that journey. And it’s impossible to put out specific information partly because of the confidentiality of some of these developments that we’re looking at. But also we think do take time and they have to go through a number of hurdles to get to that point. I’m sorry about being vague about it, but it’s just the situation that we find ourselves in.

That’s helpful. I mean – well, and then switching gears, I guess, for my next question relates to the FSRU market. Obviously, that’s being competitive and it’s a dynamic situation. But what I’ve noticed is that a lot of regions there is a high-level of seasonal demand. Do you think that it’s possible including even for some of your own vessels to do more of these sort of seasonal trades now, obviously there’s one GMLP that is contracted for nine or 10 months of the year. Is that something where you think it sort of lever your position to kind of create extra value and then trade them in the spot market during the off periods or something? Is that a path that you’re pursuing at all?

In theory, that works, but it’s not something that we’re relying on now to go forward. I mean, if an opportunity, a real opportunity like that came up, we could have a look at it. But I think the time that it takes to take an FSRU demobilize and get it ready for a timecard, a trading vessel. Is it a little bit longer than it makes an awful lot of sense to be able to organize, I think, a lot of organization to make that work well. I think the – where we are focusing on the FSRU unit is to take some of our older vessels and look at them as conversion opportunities. And from what I understand from our team, the number of opportunities in the inquiries that we’re having has really picked up over the last several months compared to the last several years.

Okay. And just sort of as a follow-up there. Any – I know you said that or Brian said the duration of LNG contracts are shortened. How – can you maybe frame in the kind of durations that you’re talking about on these FSRUs?

They’re still bit longer. So they’re 15, 20 years in duration.

Okay. All right. I appreciate. Thanks

Thanks, Ben.

Thanks.

[Operator Instructions] We can now take our next question from Ken Hoexter from Merrill Lynch. Please go ahead.

Great. Good morning. Good afternoon over there, I guess. The – I just want to understand the FLNG, was this the same process for the FSRU market? Did you have to kind of wait until commercial operations were up and running before you had the second contract commit?

No, in fact, I mean, so I guess the similarity that we were alluding to is in terms of confidence in being able to finance those things. With the FSRUs, we had previously, in fact, we had two, in a very short period of time, we had two FSRU contracts signed out with Petrobras, those were both the Golar experienced in the Golar winter. But the financing of those became easier as you’re able to point to one that that’s working.

Okay. And can you just walk through, Brian, the timing of revenues from the Hilli? And do you consolidate it, given you’ve sold 50%? And I guess, in the bigger picture, how do we think about the return on the investment? Is it, you’ve now covered your cost and it’s all a call option on Trains 3 and 4, and the potential of fuel being above or crude going above 60, where you can make additional funds, or is there – was there money made in terms of relative price of the dropdown relative to your payments?

So during the commissioning process, yes, we do. There is obviously revenue occurring on the Hilli, but it’s a mixture of tolling fee, as well as being compensated for the production during that period. So it’s very difficult to pin down exactly how much we’re going to be getting. Post-commissioning then it’s obviously easier, because it’s predicated under the contrary and that’s when the cash flow stabilizes and we’re pointing towards the EBITDA that we pointed to. Now, the way that the MLP in Golar have sort of constructed the dropdown is such that the first two trains, or if you want the capacity for producing the base capacity in the Perenco contract absorbs all of the debt that currently sits in the Hilli. What that means is that, in the event Perencowereto exercise their option to start using Train 3 for an additional gas reserves in addition to what’s already predicated for Trains 1 and 2. Then that is pure upside as far as LNG is concerned. Additionally, the EBITDA that we have been discussing really does not include any upside as a result of commodity price or Brent being above $60. So if we continue where we are today during the operation of Trains 1 and 2, as we’ve said, for every dollar increase from $60 Brent, there’s a $3 million EBITDA contribution for Trains 1 and 2 – from Trains 1 and 2.

Great. And just if I can just get another one on the restricted cash. Have you freed up more as we’ve moved through this process? I just want to revisit that how much was tied up originally on both sides of the agreement.? And now that you’re at this phase. Have you released more of that, or what are the stages again, if you can refresh me?

So partly the release we’ve agreed – reached an agreement to reduce the LC that we provide to Perenco from $400 million to $300 million. As a result of that, there will be a release from restricted cash to liquidity. And going forward, as we produce LNG, the next milestone that reduces restricted cash will be then – will be the energy that we produce. So assuming that we start producing 1st of January and we produce 1.2 million tons of LNG, by the time we get to January 2019, then the restricted cash, the LC, I should say, will pull again to $250 million and therefore another back to restricted cash will be released.

Okay. I appreciate that insight. I guess, if you don’t mind another one. My last one would just be when was the last time we saw spot rates at this level? It sounded like you’re talking about doubling from the fourth quarter. We obviously saw a spike couple of years ago. Is this kind of are you seeing it transition into sustainable potential to lock up long-term charters, or it’s still too low and you need both the charter rates to drift up a little bit higher?

Well, clearly, we’ve – I think, we’ve seen previously, we like the charter rate to go high as quickly as possible. But I think, we feel this trending upwards is a bit more sustainable than previously. We’re seeing very little movement on ordering new ships at the moment. I think, capital allocation has helped or capital restriction, I should say, has helped to limit the number of orders there. Of course, there are other factors out three that could still restrict the upside namely delays in the compression facilities and so on. But for the time being, it’s trending the right way anyway.

All right. Wonderful. I appreciate the time. Thanks, Brian.

Thanks, Ken.

Thank you. [Operator Instructions] As we have no further questions in the queue at this time, I’ll turn the call back over to you for any additional or closing remarks.

I’d just like to thank everyone for the questions and their attendance on the call, and we look forward to catching up with you soon. Thank you. Bye-bye.

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