Oscar Spieler - CEO Brian Tienzo - CFO

Michael Webber - Wells Fargo Fotis Giannakoulis - Morgan Stanley Ken Hoexter - Bank of America Merrill Lynch Jonathan Chappell - Evercore ISI Joe Nelson - Credit Suisse Herman Hildan - Clarksons Platou Espen Landmark - Fearnley Securities *

Good day and welcome to the Q3 2016 Golar LNG Limited Earnings Conference Call. Today's conference is being recorded. At this time I'd like to turn the conference over to Oscar Spieler. Please go ahead, sir.

Thank you very much. Good morning everyone there. Welcome to the presentation of the Q3 numbers for 2016 for Golar LNG Limited. My side I have Brian Tienzo, our CFO, who will present the Q3 numbers a bit later. Going over to Slide number 3, Golar had an EBITDA loss of $11.3 million versus a loss of $17.5 million in Q2. The improvement is mainly due to improved shipping rates. Q3 and Q4 have been extremely active and we started off with creating Golar Power, a JV between Stonepeak and Golar to provide midstream and downstream services. We also created a OneLNG JV with Schlumberger to offer upstream and midstream solutions. With both JV's now in place, Golar and their partners are now covering the whole LNG team. We’ve agreed with the GMLP to exchange the existing IDRs for additional common and GP units. OneLNG and Ophir have formed a joint operating company to develop 2.6Tcf at the Fortuna field in Equatorial Guinea. We’ve improved our cash position and our ability to deal with upcoming convertible bond by securing a [indiscernible] loan of $150 million, raised $170 million in equity and managed to release $2 million to $4 million from Hilli LC. Moving over to Slide number 4, I will try to explain how Golar will operate under and the reason behind it. With the new structure shown here, we’re covering the complete LNG train. OneLNG where we own 51% and Schlumberger, they are owning 49%. We would be able to offer a complete solution to develop stranded gas fields both for [indiscernible] upstream and midstream services. OneLNG, led by the CEO Jeff Goodrich, previously the CEO of Parenco, will have laser focus on developing and delivering new products. On the other side of the slide, you will see Golar Power, the 50%, 50% owned Golar Stonepeak company. They will have laser focus on integrated downstream project including FSRU infrastructure and power plants. Golar will be kind of a service company to the rest of the group with focus on building and operating assets. Golar will also have a strong focus on shipping and recontracting of the GMLP vessels, whether it is FSRU's or LNG carriers. We believe that this structure will improve in terms of focus and enhance our ability to win more projects on upstream, midstream and downstream. By that, I will leave the slides to Brian, who will go through the financial.

Thanks, Oscar, and welcome to everyone. And as Oscar said, just now the 3Q operating results whilst remaining in the loss-making territory is an improvement of 2Q financial performance. This is a result of a much anticipated improvement in shipping. We saw our fleet utilization increased from 31% in 2Q to 37% in 3Q. Of course that is complemented by a TCE increase to 13,852 per day from 2Q level of 8,792 per day. As both operating and admin expenses were either at level or lower than Q2. EBITDA loss for the quarter improved from a deficit of $17.5 million in 2Q to a deficit of $11.3 million in 3Q. A provisional noncash loss of $12.2 million was recognized this quarter from the disposal of assets that make up the Golar power JV with Stonepeak. The vast majority of this loss is recoverable over time and is likely to adjust downwards as we finalize the purchase price adjustments in finalization of accounting for this JV. The improvement in our share price and interest rate swap levels from June to September means that our net financial expense this quarter at $7.6 million is much lower than 2Q of $40.6 million. So all of the above has contributed to significantly reducing our loss this quarter to $17.4 million compared to a loss in 2Q of $75.2 million. Turning over to Page 6, to look at the main movements in our balance sheet. The main movements in the balance sheet from the previous quarter can be summarized as follows: you can see an improvement in liquidity position following the conclusion of the Golar power JV in July. There has been a material reduction in other current assets including assets held for sale as both Penguin and Crystal, new build assets have been removed from the books. The main item remaining in here is the Golar Tundra, which we continue to consolidate. There was also an increase in assets under development as we progress with the Hilli conversion. To date we have drawn $250 million from the FLNG Hilli financing. Turning over to Page 7, to look at our liquidity and financing review. So financing activities during 3Q and subsequent activities since then have helped to strengthen the Company's credits and liquidity position. To quickly summarize those activities, in July the creation of Golar Power with Stonepeak contributed $103 million to the balance sheet. Over the past months, we have released $48.7 million from the restricted cash that secures the Hilli LC. In October, the IDRs relating to MLP were reset and will exchange for 3.8 million units and these today are valued at approximately $8 million. Finally to deal with the impending maturity of March 2017 convertible bonds, we secured a commitment for $150 million credit facility and concluded an upside equity offering which produced net proceeds of $170 million. The result of all of these is that we currently have liquidity in credit facilities close to $500 million with which to put to work to safeguard and to grow the business. As the Company look to develop opportunities, we also continue to build on levers that we can use for financing these opportunities. And amongst these are the cash release from the Hilli, both from the LC and also from the final debt drawdown. A potential drop down to Golar Partners of one or two trains of FLNG Hilli. Of course with the leverage against common unit investments in GMLP, which is currently valued at approximately $430 million. And finally, we’re still continuing to work in releasing equity from our ships. I will now turn the presentation back to Oscar to go through the business review.

Thank you, Brian. Let's start on shipping. The shipping market are slowly improving with significant more spot cargos in 2016 than in 2015. The result is a slowly increasing -- slow increase in utilization under [indiscernible] earnings. The demand of vessels has been varying through Q3 and Q4. However, the rates are been fairly stable. We have lately seen spot rates up $45,000 on a round basis. We had around six ships reasonably fixed for the next 12 to 18 months, 50% increase in LNG production by 2021. Limited number of new building, we’re positive to the LNGC market moving forward both near-term and long-term. As we see it today, the Q4 numbers will be slightly lower than the Q3 numbers. However, we are optimistic that the Q1 numbers will improve compared to Q3 numbers. The pool have several agreements on short-term -- time charter and contracts [indiscernible] with different parties. And the two have already filled after the 6% of the available days in Q1. Moving over to Slide number 9, where we will talk a bit about Golar Power and Sergipe Project. Major progress has been made on the Sergipe Project and the EPC project and it is under operation and margin. The project has purchased the land in Sergipe, the LNG supplier remit [ph] has been signed. The FSRU agreement between Sergipe Project and Golar Power has been signed with a bareboat rate of $106,000 per day for 25 years. Permits are going according to schedule and we got the permit yesterday to start off the construction. Golar Power have also acquired Genpower shares and now holds 50% of the equity in the Sergipe Project. Total equity for Golar Power is for the moment $165 million. We believe that the financing we’ve secured in first half of December this year and we’ve seen strong interest from the back. Golar Power are working on several integrated projects around the world, include and FSRU, infrastructure and power plants. So the Sergipe project has -- are really in a good state. They have managed to go and get off the management and things are going according to schedule. Going over to Slide number 10, on the FSRU market. A combination of a falling energy LNG prices, increased availability to LNG -- of LNG, power shortages, the fact that FSRU terminals are substantially cheaper and with a shorter lead time than the land based terminals leads to strong pipeline of potential FSRU projects. With our leading role in the FSRU market, we’re well positioned to take our share of this market, whether it is newbuilds, converted TFDEs or converted steam vessels. We are working on a number of projects around the world like Ghana, Ivory Coast, Sergipe, Egypt and acquired [indiscernible] which we really don’t want to discuss here on the call today. We’ve received the first payment on Ghana and there is a meeting in Ghana in the middle of December to start off the project. We’ve recently seen some of the projects around the world do not demand necessarily modern FSRUs with high turnout and high storage that are more focused on cost and therefore we’re in quite detailed discussion on project for conversion of some of our modern steam vessels. Going over to Slide number 11, coming into the FLNG market. There are plenty of stranded gas opportunities around the world and only a fraction of these fields are in production. And they do not see that the opportunities is a limitation when it comes to FLNG. With the Hilli concept we have limitations, with regard to issues like gas specification, weather, offloading etcetera. However, we still believe that there are enough project for a handful more Hilli conversions, especially in West Africa. We have started to develop our next concept Mark II, as we’ve discussed before, which should enable us to operate in a harsh environment and large gas envelope, potential storage of liquids and alternatively air cooling etcetera. Most important is actually that we’re preparing to create or we’re creating more efficient production line for FLNG in order to meet the demand going forward. The next two slides will cover the Perenco project and the Fortuna project. So let's go over to Page number or Slide number 12. The first project is as you know Hilli, which is we will operate on a eight year contract in Cameroon for privately held [indiscernible] and Company. The contract will -- contract only utilize two out of the four cranes with option for Perenco to utilize train, train number three and four. The Black & Veatch technology, which is used on Hilli is proven technology. However, the fact that the liquefaction plant of the Exmar barge, which has been constructed in China has been accepted is a very, very important risk reducing factor for Hilli, since the Exmar have the same technology, the same supplier, and approximately the same capacity. When it comes to the progress on Hilli, we’ve over 4,000 people on the project over the last week. And so far we’re within the budget and we believe that we will be within in the budget also at the end. The schedule, we’re according to Perenco contract, we will start off commissioning first of October or end of September next year and we’re in line with that. When it comes to the progress on board vessel, we’ve started off loop checking, pre-commissioning of systems and we continue with this [indiscernible] to the vessel leasing of board. Perenco is according to their monthly report on schedule, to be ready for start off at September as well. We have people down in Cameroon on a regular basis and they confirm good progress. So let's move over to Slide 13. We’ve been working on with a fear over several years to find a solution on developing the Fortuna field in EG, and we all believe that by creating a JV between OneLNG and Ophir, we’ve managed to align the upstream and the midstream simplifying the execution although. The total project cost will be around $2 billion and with a production of around 2.4 million ton per year, assuming a $6 million per Mmbtu. Therefore the price, the project will create EBITDA of around $560 million per year. The life of the project will be between 15 and -- to 20 years. FID is dependent on financing, which we believe we will be able to secure in Q1, 2017, approved by Ophir shareholders and governmental ratification. Going over to Slide number 14. So capturing the spreads. Our business idea is to monetize stranded gas assets that can currently be acquired at $10 to $20 per Mmbtu and develop them into power using FLNGs, LNGCs, FSRUs and power plants, thereby giving consumer cheaper, cleaner, and more flexible energy. With the type of 15% to return on upstream, FLNG, and FSRU, and a bit less on shipping, we’re able to deliver LNG for around $4.4 per Mmbtu around the globe which we believe is extremely competitive, that being power generation, we’re able to produce power all-in for $40 per megawatt hour and on average electricity price of $120 million per megawatt hour as shown in the left hand graph therefore [technical difficulty] that Golar and its partner are able to capture some of the spread. So before we go into question-and-answer, I’d just like to summarize on Slide 15. So both Golar Power and OneLNG have taken significant steps forward in their first fully integrated project. And funding is now in place to settle March 2017 maturing convertible bond. We’ve repaired the balance sheet. The repaired balance sheet will assist with other financing discussions. Positive signs in the shipping market. Significant new production now ramping up with more new production on its way, new building order is under control. FLNG, Hilli, moving into critical final phases of construction on track to deliver on budget and within the contract window. Small scale Black & Veatch Prico liquefaction technology now proven to work in a marine environment. According to specification, the IDR has been reset, has improved the MLP currency. Better positioned to contemplate part purchase of FLNG Hilli. Financing of FLNG at an advanced stage. Good progress with permitting and LNG off-takers for the Fortuna project is lined up. Golar has over -- has developed a number of projects delivered -- delivering over the next 4 years, which will add substantial EBITDA1 going forward. With that, we start off with question-and-answers. Please, operator.

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. We are good. Thanks.

Good. Just a couple quick ones on FLNG. And then a quick question on the regas side. But maybe starting off, Brian, obviously there has been a lot of progress made in the past two quarters specifically, I guess, really the last quarter around FLNG. The -- obviously the EG project going into the JV, the renewed equity raise and kind of getting ahead some of your liquidity bogeys [ph]. Can you kind of layout for us over the next three to four months the different capital calls you guys have with that JV specifically, and in terms of the equity up front that needs to go in upon FID and how those different payments will work, so we can accurately map that out going forward?

Sure. I think we can't really go into detail just yet, Mike, as you can imagine. But I think the fact that there has been a slight delay in FID over the project itself helps the financing position. As you already heard from us there are certain levers that we can pull ahead of those that helps to bridge the financing position. Now of course, one of the other things that we forgot to mention in the presentation is that we’ve been speaking with capital in this regard to try and help maintain a slower burn on the conversion process, which helps to augment the ability to fund those projects. Don’t forget that the funding of those projects is going to be over a period of three years. And of course we try to spread that as much as possible in order that we get the Hilli up and running, monetize the value of money that are sitting on the Hilli. Certainly there is -- there is a certain amount of funding to be required, but that’s something that we continue to work on and it's really something that we can't go out to the market just yet, but I think the one thing to remember there is I think the economics of the Fortuna project is sufficiently compelling that when we eventually go out to the market I don't think it's going to be too much of an issue with investors hopefully.

Got you. And maybe -- and if I just narrow the focus here for a second, I believe one of the filings over the summer that kind of a paw on FID of the first project within that JV, I believe there is a $250 million capital call, but it then also can include intellectual property and it's a bit hazy exactly how much that specific call would be and it would obviously be relatively up front. So are you able to provide any color on that or is that still kind of up for debate internally?

I mean, certainly I don’t think it's partly talking about specific amounts now, but you are absolutely right. There are certain sort of assets and IPs and so on that Golar can contribute to the project that would be taken into account when deciding what the numbers eventually will be from a cash perspective -- sort of cash contribution perspective. So those will go towards reducing whatever the share of Golar's sort of equity and cash injection to the project will be.

Right. Okay. Now it's a good problem to have and I will follow-up with you on it later.

Okay.

Just one more on FLNG, Oscar I believe in your comments earlier, you referenced kind of a effectively next-gen conversion FLNG that you guys were looking at that involves liquid storage, air cooling and things like that and the sectors brief history those higher spec assets have been relatively expensive. Do you have a big sense on what the relative economics would be on something like that or is it too early?

No, I think it's hard, [indiscernible] a bit ambitious, but what I told the guys who developed Mark II is that on equal basis it should reduce their cost per produced by 20%, because I think it's actually achievable. I think if you add on the ability to store liquids, the additional investment in the vessel will be paid by itself, because the liquids need more work on the LNG, so I think that is a very positive thing if you manage to do that. So I’m not too concerned about the CapEx as such, and I think we as a Company, we’re wanting to do and its -- and that is actually the most competitive provider of liquefaction services -- both in liquefaction services and I think we are -- have a big [technical difficulty].

Okay. That’s helpful. And again I could follow-up on that later.

Yes.

I just have one more and I will turn it over on the regas side and forgive me if I missed this in the deck, but the Ivory Coast regas projects you’ve got an asset in the Tundra that has not I don't believe it’s been accepted yet, despite the fact that the government has approved the infrastructure needed there, but there is still going to be a lag associated with that. Is there an opportunity to realistically market the Tundra into Ivory Coast or into another project and how should we think about the different assets kind of heading into those two locations [ph] here?

I think we -- the Tundra is first of all to -- go into Ghana, we’re in positive discussions with the customer. We have received the first payment which is a good sign. It's a good contract, etcetera. So when it comes to Ivory Coast, I think there will be [indiscernible] vessel, but it depends on how the discussions are going. We have a contractual obligation, and we can't really start off for -- out Tundra before that is solved one way or the other. But on Ivory Coast, it's we have a JV with Total and the government and so forth where we own 6% of the terminal, where we’re able to develop floating FSRU plant together with them. It's early stage.

Okay. Just to be clear, you said you had received the first payment on the Tundra from the guys from …?

Yes.

Okay.

From Sahara.

Okay. That’s helpful. Okay. I appreciate the time guys. Thank you very much.

Cheers, Mike.

And we can now take our next question from Fotis Giannakoulis from Morgan Stanley. Please go ahead.

Yes. Hi, gentlemen and thank you. I’ve seen that you’ve done a significant progress over the last quarter, but I want to focus a little bit more on new opportunities and particularly on slide 14, where you presented the electricity cost of several countries. It seems from this slide that significant margin lies upon the conversion of gas to electricity and I’m wondering whether a part of Sergipe project and the 1.5 gigawatt power plant, is there -- are other opportunities that you’re pursuing right now and if we can -- if these opportunities they kind of in the future be related to new FLNG projects or OneLNG to get involved into the whole value chain from liquefaction to producing electricity?

So, I think the pulse of Golar Power for the moment is first of all to deliver Sergipe project. I think that’s the most important thing, that goes very well. We have no doubt that they will deliver. So we're not spending that much of capacity on trying to find new projects as we are working on projects, the integrated projects, same size of power plants, etcetera in other parts of the world. So that’s business which we will pursue and of course when we’re talking about off take from our FLNGs, we also have in mind the Golar Power that we should be able to deliver LNG to these power projects. I don’t know if that answered your question?

Yes, that’s very helpful, Oscar. And I also want to ask you about the Fortuna project. That was a project that went through a lot of different stages until it find its final structure and come so close to the FID. Can you describe us -- to us if you had to do this again what would be the timing that you would save in a project like that? How shall we see the lessons learned from the Fortuna project coming into the future projects and your ability to deliver faster new FLNG projects?

We had worked on Fortuna for many years as we said earlier on and also when it comes to Perenco and so forth. It has taken a long time to develop those projects. I think one of the problem the LNG team has [technical difficulty] LNG project have is alignment, lack of alignment in the different parts of the LNG chain. But actually establishing a model where we both have upstream, we’ve FLNG, we're shipping FSRUs and we’ve potentially also -- we also have power project. I think we're much more aligned that will reduce the time for negotiations in the train. We still have -- we still need to do the financing, we still need to find alignments with the governments around the world, that takes time. But I believe that some of the projects will be done on a much fast track than Fortuna and Perenco going forward. I think the model here, getting in Schlumberger, creating this downstream company, it's a very neat thing where people have focus and can focus on what they’re good at.

Thank you very much, Oscar. One last very quick clarification. I read in your press release about the government approval is for a 10-year gas import, your initial contract was [indiscernible] is for five years. Shall we assume that the vessel of the Tundra will be needed for the next 10 years?

We’re in discussions with our customer, so I really can't comment on it as far as I can say.

Thank you very much gentlemen.

And we can now take our next question from Ken Hoexter from Bank of America. Please go ahead.

Great. Good morning. Just on the Hilli, you mentioned that the third to fourth train opportunities. Can you explain maybe the process and timing for kind of seeing that come to fruition? You talked about 10 months until this is operational, but maybe the timeframe and the discussions that have to occur to get those next phases up and running.

We have discussions with Perenco on these and the government on this issue. So far the feedback we’ve got is that they would like to see -- they definitely want to get train three and four up running, but they want to see one and two in operation before they actually start to commit to do that. So that’s the process we’ve there, but we’re in regular discussions with them and hopefully they will start to hopefully commit earlier, but we’re hopeful to do that but it's very uncertain.

So, it's kind of wait and see until operational and then you'll see some more flurry of activity thereafter?

Yes. I think in order to get up train number three there is a very limited amount of CapEx which is needed in order to -- for Perenco to [technical difficulty].

Yes.

They need -- all the infrastructure can actually produce gas for our three trains, if we go for train number four, I think there is a bigger investment. So your guess is as good as mine.

Okay. That’s a great answer, but can you then give me an idea if you’ve to make another capital investment, what kind of timeframe from commitment till operational would be for a train on an operational vessel?

It depends on -- I mean, the only thing that actually need to do here provided that there are sufficient gas in the reserves they can just open the valve and flow more gas for the vessel, for the first -- for the train number three.

Yes.

And in the meantime they can start to do the drilling and add more treatment [ph] onshore and additional piping etcetera, etcetera. So it depends on what they actually want to do themselves.

You are talking about capital commitment onshore not on the vessel? The vessels will be ready and operational?

That’s not zero additional CapEx.

Okay. So, just then, again, to run up the answer there, the timeframe for that kind of capital investment once the decision is made how long would be your guess until they would be able to get operational?

As I said, it depends on the gas field itself, we don’t have detailed knowledge about the capacity. But as I said, we believe that for train number three they should be able after we have commenced to increase the production of the field and then start off, but that depends on Perenco's appetite to do it. But I can see from a practical point of view that they should not be able to do that as soon as the vessel is accepted and that just increase the production from the field, but the details which we haven't come into yet.

Okay. And then on the Nanook the FSRU, you mentioned I think it was about a third utilization 35%. What are the prospects there for maximizing that capacity as well?

There are different opportunities there. There are potentially new clients around the area, there are potentially pipeline in the area, so I think the probability is pretty good. As you know, Sergipe is a very, very poor area in Brazil, getting in power, the industry will increase and potentially also potentially off-takers of the rig -- from the rig [technical difficulty], so I think we are pretty positive, but I mean it's still early days. And as I said, our main focus on that project for the moment is actually to [indiscernible] and get it ready to start.

Okay. Thanks for that. And Brian, just one financing question, just on the converts. What’s the timeline, I guess to actually settling that and moving on, is that discussions related depending on any Fortuna discussion or what’s the process there?

No, I mean you’re talking about existing converts, Ken?

Yes.

Yes, so I mean, we’ve got the funding in place to start taking it out and to some extent we’ve already started doing that. We’ve started to buy bits -- here and there, small amounts at par, so we’re able to drawdown in that facility any time now until March to take it all out. If there an opportunity arises to do it with no loss to Golar, we will do it before it matures.

Wonderful. Appreciate the time. Thanks guys.

And we can now take our next question from Jon Chappell from Evercore. Please go ahead.

Thank you. Good afternoon guys. Couple quick follow-ups, Brian. First, on the Hilli cash release, $38 million thus far in the fourth quarter and then you say in the press release $110 million in 2018, so that leaves about a $118 million left. Is that a 2017 event or is that kind of peace meal after 2018?

That will be a piece meal after 2018, Ken. So essentially we've got after the latest reduction in the LC, we’ve got 231 or so million dollars left in there. If nothing else happens, once the vessel starts producing, then the level of LC drops from currently $400 million to $250 million. So by virtue of that, there is a release of cash from the restricted cash of approximately $110 million, $112 million and after that it would just be a matter of time before more is released.

Okay, understood. And then a couple just follow-ups on the Tundra and the whole Ghana situation. So what -- can you just kind of help us understand what needs to be done by May 23, which I guess is effectively six months from last week to give us some confidence that this will move forward and whether the legal proceedings are accelerating that or maybe tying it up a little bit?

As we’ve said, we received the payment yesterday from -- the first payment on that which is good. We hear that they’re in discussions with the vendors, with LNG suppliers etcetera, to get this project going and we’re going to have discussions with these people in middle of December in Ghana. We believe we will still continue our effort to secure that funding amount with [indiscernible] [technical difficulty], so that process is going forward.

And then, I want to be clear about this comment on Slide 10 too. I think Fotis asked about this too, but I’m sorry, I’m still not clear on it. It says Golar LNG recently awarded a five-year FSRU contract in Ghana. Is that associated with the Tundra or is there a asset and new potential FSRU opportunity there?

You talking about Ghana? It's a tie -- the contract we have with Sahara and WAGL is a five-year contract. And our option is to try to extend that to 10 years and then make a commercial settlement to that. So that discussions which we’re having with them which we really can't say anything about.

Okay. One last super quick one, obviously the Total Ivory Coast has already asked about as well. Just any idea on the timing on that one? Is that a 2020 event or can that move much quicker?

The Ivory Coast?

Yes.

We’re talking about 2018. So that’s the plan there. So we’re going into a development phase together with the Partners, and we developed the LNG terminal, so we believe that’s a 2018 project.

Okay, great. Thanks, Oscar. Thanks, Brian.

Thanks, Jon.

And we can now take our next question from Gregory Lewis from Credit Suisse. Please go ahead.

Thank you. It's Joe Nelson on for Greg today. Thanks for taking my questions and good afternoon.

Hi, Joe.

Maybe just one kind of quick follow-up on the Ivory Coast project. What is Golar's responsibility there as far as development of the asset? Are you the asset provider and what sort of responsibilities would you’ve there?

Well, the contract -- I think the Golar [indiscernible] JV to develop the FSRU terminal together, we will deliver [indiscernible] on development of the FSRU terminals when it comes to the FSRU and so forth. We might also be involved in the terminal as such, and then during that phase there will be a collection of FSRU, which potentially will be Golar. We are in a good position since we’ve done 15 in the terminal.

Okay, great. And just kind of given the size of the project or timelines, is there any preference there, I guess, in the type of asset they’re looking for, is it mostly conversion of a modern tri-fuel or could we see maybe the rechartering of maybe an existing FSRU in the water?

I think we are discussing all options with them, so it could be either a conversion of TFDE or it could be existing vessel as a temporary solution or it could be a conversion of the vessel.

Okay, great. And then just one kind of higher level one for me and maybe you can help me clarify. In your opening comments, you kind of called out as your JV sort of round into shape, Golar is going to be more of the kind of the project developer, but you did kind of mention a bit of a focus on conventional LNG shipping. Just to be clear, are you more referring to sort of managing and marketing the existing fleet or are you referring to maybe if given the right opportunity, developing sort of new Greenfield LNG shipping assets, maybe backed by a long-term contract or is something like that?

I think we’ve enough vessels in the fleet for the moment, so I think it depends on how the market develops. But I don’t think we will increase our fleet as such. I think the focus of Golar and its group will be on FLNG and downstream projects. Shipping is an important part of it, but it's not vital, but …

Okay, great. Thank you guys. That’s it for me.

And we can now take our next question from Herman Hildan from Clarksons Platou. Please go ahead.

Good afternoon, guys. My first question is on the Sergipe project. You previously provided a range from 0 to 100% dispatch. Could you give a range or could you provide what the EBITDA would be with full dispatch?

I don’t have that in hand.

We haven't. I think we haven't sort of given as wide arranging of that, but certainly, when it comes to sort of a 38% dispatch for example, the EBITDA jumps from 1.1 billion Brazilian Real to 1.35 Brazilian Real. So you can extrapolate and say that at a 100% dispatch the estimate will be close to 1.5 billion Brazilian real, so there is a certain, there is a big jump in the EBITDA capability of the project were to dispatch.

Yes, sure. And then the question is the [indiscernible], what’s the [indiscernible] efficiency and the capacity factor?

I think we are producing a 1.5 gigawatt plant, is that what you mean?

I think we are using the new frame, I can't recall the frame age I think it is with a very, very high -- the highest efficiency in the industry, I think its .605 or something like that.

Okay.

So we’re using the latest technology from GE and [indiscernible] and I think we are [technical difficulty].

Okay, because then the question is whether we should expect the power count to be based on the peak load production, as shown on slide 14, the electricity price in Brazil is just shy of $10 and based on the numbers you provided you are generating electricity at $7, right? So you should assume call it 107 dispatch then? That’s a fair assumption?

I think we’ve an IPA with core consumers [ph] at the fixed price and as far as I know I’m not into the detail on that. We could take that off line.

Sure. The next question is from the $150 million facility, how many GMLP so to touch for that?

That will depend on when we take that -- when we drawdown in the facility, obviously the better the share price of GMLP, the less we will have to deliver. There is a certain leverage ratio that we have to maintain so they want, we don't, as it [indiscernible] we don’t have to put in all of the GMLP units in there. It’s a -- I would say, close to $15 million, 16 million.

Okay. So off the leverage ratio in the loan agreement?

I'd rather say, Herman.

Okay. And then on the FID for the Fortuna project, are you relying on securing off take in order to close financing on the $1.2 billion or are you able to go ahead without off take?

Now off take isn't obviously be an important part of the project rather than the financing. The financing is sufficiently flexible not to have it, but of course, you need to sell your LNG to be able to service the debt, so there is an implied amount of off take that needs to go, but there isn't a specific amount of off take that’s required for the financing.

Right, because you've been able to get 960 on the Hilli right, so there is not that much volume that needs to be tied down in order to get to $1.2 billion since you are providing the Hilli as well, sorry the Tundra into the security package, right?

That’s correct. I mean, all we have to do as far as the Gandria is concerned, there is a debt service ratio that we’ve to show, but it doesn't say the off take has got to be a specific characteristic.

Yes, and then finally, a short question. In your report, you said that the Sergipe pipeline you utilized 35% of the capacity of the FSRU. So does that mean, is that call it full capacity, is that based on full dispatch throughout the year or is that have you made any assumptions in there?

Well, that’s a full dispatch.

Okay. So the all-in capacity will be about 4 million tons per year on the regas on the FSRU?

Yes.

Okay. That’s all for me, thank you very much.

Operator, are there any more questions? Operator? We have an operator?

Operator, can you hear us? Hello? Investors, this is Golar. I [indiscernible] that you can hear us, but unfortunately we can't hear the operator. So what we will do is we will dial back in, so just stay on the line. Thanks.

It's okay. You can stay connected.

Operator, what happened there?

I lost my line. You’re still connected and they can very much hear you.

Okay. Can we take the next question now please?

Sure. Just bear with me now.

Sorry, we’re not hearing the question, operator.

Okay. I just need everybody to re-queue again, please. And we can now take our [audio break]. Your line is open Chris, please go ahead.

Great. Thanks. Thanks, guys for getting us on the call here. I wanted to ask about the Hilli and talk a little bit about the schedule. Just wanting to get a sense of kind of where we’re from a progress perspective. I know you talked about an aggressive window, but you are still in it. I guess, I wanted to get a sense of kind of what needs to be done sort of what are the potential, I mean are there any potential risks in terms of the timing of that? Just want to get a little bit more color around sort of the progress where we stand and what’s left to be done prior to delivery?

Okay, all main equipment is on board. We have installed the [indiscernible] tower and as a remaining part of the [indiscernible] tower we still need to install substantial amount of piping. We are installing approximately six to 700 pipes per week, so we have fairly good control over the pipe production and pipe installation. We need to terminate all the electrical cables, we need to pool the cables we have pooled around 900 kilometers of cable out of 1,150. So I think that’s in line. The real challenge now is actually to do start up the pre-commissioning of [indiscernible] different systems by systems in order for us to be able to do the loop checking and check the different systems, that’s the main challenge going forward as far as I can see it. Otherwise …

When did that process start, I guess?

It has started a long time ago. So as soon as the system is ready to be loop checked and checked we are checking it. So that’s progressing, but as the count is down it's a huge project, so there is still is a lot of outstanding loop checking, but we have good control over it, and there is a plan for it. We are pushing the yard every day, every week we are down there, so we are fairly confident that this is going according to schedule. So you can say that the original plan when we started the project was 17 of February and now it's 17 of March, but [indiscernible] we have in our pocket from 17 of March, I think the vessel have to leave to Singapore by middle or end of July in order to be able to start off production in Cameroon in end of September 2018, no 17. So we still have quite some contingency in our hand.

Okay. Okay. So there still is cushion in terms of the schedule as it stands right now?

Yes, yes, and you can say that we’re working with the odd in order to make them more efficient, there are 4,300 people on board vessel and they’re as quite impressive they were [indiscernible] Black & Veatch. It's a big conversion, one of the biggest one capital of them. But so far things have gone fairly smooth and we haven't to re-limit on the major obstacles, which we have managed to solve in a good manner.

Okay. That's helpful. I appreciate it. And then, maybe just a big picture one. As I think about sort of the opportunities that are ahead of the Company, and sort of the diversity of some of the projects, both geographically as well as from a technical expertise perspective, how do you see sort of the scale of the Company ramping up? In other words how many projects in different markets in different technical specifications can you guys manage at one-time? I just want to get a sense kind of where the scope of the Company stands from an infrastructure perspective where it might need to go to be able to harness the opportunities that you will see ahead of it?

So we have approximately 100 people in Oslo on the technical side which is the heart of the Company when it comes to conversion. As I said we are working on Mark II, we will streamline the production of FLNG, we are waiting on another floor, we will most probably employ, more people -- we will employ more people when we start on the Fortuna project and we will need to employ more people in order to undertake the Mark II project as well. I believe that as we are today, we are out to doing on a major, we need to employ more people but I think we can have three projects under way at the same time one in the beginning, one in the middle and one in the Commissioning phase, so I think that's where we are today and when it comes to the number of opportunities I don't think that's a big limitation. I believe there are -- of these MMBtu four, five, six, seven, eight projects in West Africa. There are projects in -- from export out of U.S., which we’re working on, there are a number of projects around, so I don't think the number of opportunities are a limitation. It's actually as you said execution from our side so we need to find a more better production line and I think the Mark II is the great answer to that question.

Okay. So that probably gives you a higher degree of scalability as you look forward and more projects begin to present themselves?

No, no.

Okay, perfect. Thanks for the time guys, I appreciate it.

And we can now take our next question from Espen Landmark from Fearnley. Please go ahead.

Yes, guys. Just wanted to touch on the shipping side again. And firstly, seeing that the market is improving, are we kind of nearing levers where it makes sense for you guys to connect net longer term and then dispose some of these LNG assets?

I don't think -- I mean, it depends on the market when it comes to long-term, but what is long-term for me, that’s really long-term 10 years I think we can definitely consider, but it depends on the levels. I think it will take some time before we see a stronger strengthening of the market. I think as I said last quarter, I think the shortage will improve and I don't think we will see we might see over $50,000 in Q1, maybe then we are going into the summer, it might be a bit slower and then things will move upwards, personally I don't believe that the time to market is at the level which we were fixed today.

All right. And then secondly on the rationale for bringing Golar Grand back, I mean is it destined to go back into the GMLP, or is it kind of opportunities within say the [indiscernible] storage space that is more interesting?

Well Golar grand, so I mean as you know Golar Grand is chartered in from the partnership at the moment. So and that charter, you know, will end in 2018, so that -- sorry '17, and at that point, we need to make a decision whether there is a use for Golar Grand and Golar LNG limited and therefore recharter it back or are there a different level of course or if Golar LNG Partners has different use for it. So Golar LNG Limited isn't committed to rechartering Golar Grand when that charter ends.

All right. Thank you.

And we can now -- pardon me, that’s the end of the questions. There are no more questions on the line at this time. I will turn the call back to the host for any additional or closing remarks.

Thank you very much for listening to us and thank you for good questions. I will look forward to update you now in Q1, but before Q1 next year, and I wish you all a happy Christmas and a happy New Year. Good bye.

Thank you. That concludes today’s conference. Thank you for your participation ladies and gentlemen. You may now disconnect.