UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August 2005
Golar LNG Limited
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(Translation of registrant's name into English)
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F |X| Form 40-F |_|
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes |_| No |X|
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-________
Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 99.1 is a copy of the press release of Golar LNG Limited
(the "Company"), dated August 30, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Golar LNG Limited
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(Registrant)
Date August 30, 2005 By /s/ Graham Robjohns
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Graham Robjohns
Chief Accounting Officer
Exhibit 99.1
[GRAPHIC OBJECT OMITTED]
Golar LNG
June 2005
SECOND QUARTER RESULTS
Golar LNG reports operating income of $11.6 million for the three months ended
June 30, 2005 and a net loss of $4.4 million as compared to operating income of
$18.3 million and net income of $17.3 million for the first quarter of 2005
($18.0 million and $19.2 million1, respectively, for the second quarter of
2004). Net cash provided by operating activities remains positive for the
quarter at $11.5 million, compared to $20.6 million for the first quarter of
2005.
The results for the second quarter have been impacted by the mark-to-market
revaluation of interest rate swaps, which has resulted in a net loss (after
minority interests) of $8.0 million and foreign exchange and currency swap
losses in respect of the Company's leases of $2.2 million. Both these items,
which total a charge for the quarter of $10.2 million (net gain of $4.0 million
for the last quarter), are unrealised and therefore have no cash impact.
Interest rate swap losses were impacted during the second quarter of 2005 due to
long-term interest rates hitting a relative low point at the end of June 2005.
The Company's share of Korea Line Corporation's ("Korea Line") net income for
the three months to June 30, 2005, is $7.4 million as compared to last quarter's
$9.6 million ($4.2 million(1) for the second quarter of 2004) in respect of
Golar's 21.9% shareholding.
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(1) The comparative financial information for the three months and six months
ended June 30, 2004 reflect adjustments from the Company's previously
reported results for those periods, which relate to the Company's equity in
net earnings of Korea Line Corporation and which were reported at the time
Golar's audited financial statements were filed in June 2005. The
adjustments reduce the reported net income for the three months and six
months ended June 30, 2004 by $3.1 million and $4.2 million respectively,
or on an earnings per share basis by $0.05 and $0.06 respectively.
Continued weakness in the spot market has led to a fall in operating revenues
for the second quarter of 2005 to $38.9 million as compared to $44.2 million for
the first quarter of 2005 ($38.5 million for the second quarter of 2004).
Average daily time charter equivalents (TCEs) were $41,200 for the second
quarter of 2005 against last quarter's $50,600 ($55,150 for second quarter of
2004). The average daily TCE has again been affected by commercial waiting time
in respect of the Golar Winter, which traded for two months out of the quarter,
and the Golar Frost and Golar Viking both of which were idle during the second
quarter for all but a few days. The above three `spot' vessels participate in
the Golar-Exmar joint arrangement together with one Exmar vessel, with net
revenues pooled and shared between the two companies. Exmar's vessel, the
Excalibur, embarked on a short-term charter towards the end of June but was idle
for the balance of the second quarter.
Vessel operating expenses for the second quarter of 2005 were the same as the
first quarter of 2005 at $9.6 million ($8.3 million for the second quarter of
2004). The increase over 2004 is attributable to the operating costs of the
three new vessels delivered in 2004 and early 2005.
Administration costs were $3.5 million for the quarter as compared to $3.2
million last quarter and $1.9 million for the second quarter of 2004.
Net interest expense for the second quarter of 2005 was $11.4 million, which
compares to $10.7 million last quarter and $6.6 million for the same period in
2004. The increase over last quarter is primarily due to higher levels of debt
as a result of the refinancing in March offset by reduced margins, and generally
higher interest rates. Interest expense and interest income includes $10.4
million and $8.7 million respectively relating to the Company's lease finance
transactions.
Other financial expenses for the second quarter of 2005 of $10.1 million include
a loss of $7.8 million associated with the fair value of interest rate swaps,
including the effect of an additional $155 million of interest rate swaps
entered into during the quarter. This compares to a gain of $6.4 million last
quarter ($9.9 million gain for the second quarter of 2004). Other financial
items also include net foreign exchange translation and currency swap losses of
$2.2 million in respect of its leases during the second quarter of 2005, as
compared to a $1.5 million loss last quarter.
Loss per share for the quarter was $0.07 as compared to an earnings per share of
$0.26 last quarter and $0.29 1 for the second quarter of 2004.
The number of shares outstanding as of June 30, 2005 was 65,562,000 (March 31,
2005: 65,562,000). The weighted average number of shares outstanding for the
second quarter of 2005 was 65,562,000 and 65,612,000 for the twelve months ended
December 31, 2004.
FINANCING
As reported last quarter, in April 2005, the Company completed a lease finance
transaction in respect of its newbuilding DSME Hull 2226, which is due for
delivery in January 2006. The net amount funded in the transaction will be
approximately $105 million, $47 million drawn down in April with the balance to
be drawn on delivery of the vessel.
The Company has entered into interest rate swaps on an additional $155 million
of debt and lease obligations during the quarter, $105 million of which relates
to the lease transaction in respect of the next newbuilding to be delivered in
January 2006. As at June 30, 2005 approximately 56% of bank debt and net (after
deduction of restricted cash deposits) capital lease obligations accrues
interest at a fixed rate. Taking into account the $105 million swap in respect
of the newbuilding to be delivered in January 2006 noted above, this percentage
effectively increases to approximately 60%.
CORPORATE AND OTHER MATTERS
During the quarter the Company has continued to develop its portfolio of
terminal related projects.
Following the successful conclusion of the final Service Conference in respect
of the Livorno project, all reservations noted at the time of the conference
have been lifted and this is expected to be formally confirmed during September.
Following this final step it is expected that the Ministerial decree will be
issued within the next few months.
As reported last quarter, together with Saipem SPA the Company has been
developing a Floating Power Generating Plant (FPGP) using a converted LNG
vessel. Golar has applied to the Cyprus Energy Regulatory Authority (CERA) for
licences to construct and operate such a terminal about 5km offshore Cyprus. The
licence application is progressing positively and the process is expected to be
completed during the 4th quarter.
The Company continues to focus on floating energy solutions as a major area for
business development and is in various stages of investigation and discussion
with respect to several other prospective projects.
Significant progress has been made on developing an engineering specification
for the conversion of one of Golar's existing vessels to a Floating Storage and
Regasification Unit (FSRU). The Company has been working closely with Moss
Maritime (a wholly owned Saipem company) and an Asian shipyard and based on work
carried out to date, a fully converted FSRU could be available by the 4th
quarter of 2006.
The Company has received expressions of interest for the use of such a unit and
is also continuing to develop other potential projects.
The changes in the Company's technical management organisation which were
announced earlier this year have now been completed. The new structure, which
includes co-operation with Barber Ship Management and Thome Ship Mangement, has
been well received by Golar's customers and should over time also reduce the
fleets daily operating costs. However, pressure on wages for experienced sea
staff continues as a function of the world-wide increase in the LNG fleet.
The Board is pleased with the appointment of Mr. Savvides as an independent,
non- executive Director of the Company on July 31, 2005. Mr Savvides, whose
background includes four years as Minister for Health in Cyprus and founder and
managing partner of the audit firm PKF in Cyprus, will undoubtedly make a
valuable contribution to the Board.
MARKET
The lack of LNG supply has continued to restrict spot market sales. Every spare
cargo of LNG is now eagerly sought as prices have risen steadily throughout the
year. With the exception of equity gas sales from within projects, the only
genuine spot sales have originated from Nigeria.
LNG production was sustained at the first quarter record level of approximately
152 million tonnes per year (mmta). The expected extra production this year of
approximately 21.6 mmta is slowly reaching the market after a number of delays
affected almost all of the projects. A further 11.5 mmta is scheduled for 2006.
Continued strength of demand for LNG is still encouraging development of new LNG
production projects: Yemen has now secured tonnage through tenders from Total,
on behalf of Yemen LNG, and through Suez LNG, as equity buyers while Kogas has
secured tonnage from within the Korean domestic market. Shell's Qatar project,
as well as new projects in Nigeria (OK, and Brass River) will further enhance
demand for shipping.
The destination of the volumes that have been produced has proved to be
something of a surprise, as very little has gone to the US in spite of their
high gas prices. This reflects high demand and prices in Europe following
consistently high demand in Korea and Japan and has been aggravated by a decline
in output for export from Arun.
Currently there are 182 existing LNG carriers with around 127 more on order. In
the long-term shipping market, continuing demand from Qatar, Yemen, and Nigeria
is leading to pressure on the availability of newbuilding slots and newbuilding
prices continue to firm right through to 2009 and 2010.
As previously stated, demand for shipping in the spot market has been restrained
by lack of product, and charter rates restrained by excess supply of shipping.
Most of the current excess reflects the delivery of ships for long-term projects
that have been delayed. We are now seeing evidence that the combined negative
effect of all these factors has peaked; the delayed projects now coming on
stream mean that the vessels dedicated for these trades are entering their
long-term commitments, thus reducing the spot pool. Apart from vessels destined
for the postponed Snohvit project, there are few uncommitted vessels entering
the market in the next six to nine months. It is therefore anticipated that
utilisation of spot vessels will improve.
However, the Board remains of the view that while there will be more
opportunities for spot vessels to obtain business moving forward, the margins
available for transportation will remain small with producers able to take the
major benefit of high spot sales prices. Shipping rates will thus remain soft,
potentially for the next one to two years.
The overall return provided by recently concluded long-term charter contracts we
estimate to been in the region of 7%. This can provide an acceptable return on
equity if combined with a high degree of leverage. However, with the level of
risk attached to charter party arrangements, operating costs and financing, such
charter deals are not seen attractive by the Board.
OUTLOOK
The Board is disappointed with the results for the second quarter.
Financially the Company is well positioned. The remaining installments on the
three newbuildings to be delivered in 2006 and 2007 are $344 million of which
$102 million has finance already arranged. Based upon achieving a similar level
of financing as the recently delivered newbuildings, the Company will need
approximately $30 million in cash to make the final installment payments and
take delivery of these vessels. This level of financing equates to leverage of
approximately 53% of the underlying market value of the ships. As at June 30,
2005, the Company had $88 million in cash and cash equivalents and has in
addition marketable securities worth approximately $60 million as of the same
date.
In line with the comments made in the report for the first quarter of 2005,
shareholders should anticipate that the Company's earnings will be negatively
influenced during the next 1 - 2 years by the open spot vessels the Company has.
In order to improve the utilization of this open capacity the Company is
currently evaluating several different kinds of employment options. There are
signs that the spot market has bottomed out and is showing some signs of
improvement, in particular several of the major operators are in the market for
short to medium term tonnage starting at the end of 2005 and the beginning of
2006.
The Board anticipates some improvement in earnings from the spot ships during
the third quarter of 2005. Moving forward, even in the worse case scenario of
all three vessels being idle, net operating cash flow (or EBITDA after deduction
of interest costs) would still generate in the region of $50 million per annum.
The major challenge for the Company at present is to develop the business from
being a pure LNG shipping company to being an LNG logistical player. The
strategy is to use the open capacity, which today is having a negative influence
on the financials, to break into this market by providing early start up
solutions for terminal projects. This strategy has risk attached, but is well
supported by strong underlying market fundamentals and potential economic
benefits. Given current prices LNG has a strong cost advantage over oil based on
a burn parity comparison in addition to the overwhelming environmental benefits
of gas and the fact that LNG provides diversity of energy supply and
flexibility. The Board feels that substantial progress has been made in
implementing this strategy.
FORWARD LOOKING STATEMENTS
This press release contains forward looking statements. These statements are
based upon various assumptions, many of which are based, in turn, upon further
assumptions, including examination of historical operating trends made by the
management of Golar LNG. Although Golar LNG believes that these assumptions were
reasonable when made, because assumptions are inherently subject to significant
uncertainties and contingencies, which are difficult or impossible to predict
and are beyond its control, Golar LNG cannot give assurance that it will achieve
or accomplish these expectations, beliefs or intentions.
Included among the factors that, in the Company's view, could cause actual
results to differ materially from the forward looking statements contained in
this press release are the following: inability of the Company to obtain
financing for the new building vessels at all or on favourable terms; changes in
demand; a material decline or prolonged weakness in rates for LNG carriers;
political events affecting production in areas in which natural gas is produced
and demand for natural gas in areas to which our vessels deliver; changes in
demand for natural gas generally or in particular regions; changes in the
financial stability of our major customers; adoption of new rules and
regulations applicable to LNG carriers; actions taken by regulatory authorities
that may prohibit the access of LNG carriers to various ports; our inability to
achieve successful utilisation of our expanded fleet and inability to expand
beyond the carriage of LNG; increases in costs including: crew wages, insurance,
provisions, repairs and maintenance; changes in general domestic and
international political conditions; changes in applicable maintenance or
regulatory standards that could affect our anticipated dry-docking or
maintenance and repair costs; failure of shipyards to comply with delivery
schedules on a timely bases and other factors listed from time to time in
registration statements and reports that we have filed with or furnished to the
Securities and Exchange Commission, including our Registration Statement on Form
20-F and subsequent announcements and reports.
August 30, 2005
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda
Questions should be directed to:
Tor Olav Tr0im: Director and Chief Executive Officer +44 7734 976 575
Graham Robjohns: Chief Accounting Officer & Group Financial Controller +44 207
517 8600
Charlie Peile: Executive Vice President, Head of Commercial +44 207 517 8600
GOLAR LNG LIMITED SECOND QUARTER 2005 REPORT (UNAUDITED)
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INCOME STATEMENT 2005 2004 2005 2004 2004
(in thousands of $) Apr-Jun Apr-Jun Jan - Jun Jan - Jun Jan - Dec
unaudited unaudited unaudited unaudited audited
(restated) (restated)
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Operating revenues 38,907 38,520 83,103 74,508 163,410
Vessel operating expenses 9,645 8,255 19,217 16,499 35,759
Voyage expenses 1,402 621 2,446 905 2,561
Administrative expenses 3,452 1,910 6,637 3,608 8,471
Depreciation and amortisation 12,821 9,760 24,956 18,236 40,502
Total operating expenses 27,320 20,546 53,256 39,248 87,293
Operating income 11,587 17,974 29,847 35,260 76,117
Interest income 9,479 7,644 18,189 14,517 31,879
Interest expense (20,913) (14,239) (40,346) (27,169) (61,987)
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Other financial items (10,107) 8,905 (7,510) 6,011 4,804
(Loss)/income before taxes
and minority interest (9,954) 20,284 180 28,619 50,813
Minority interest (1,504) (5,195) (3,783) (5,179) (7,575)
Taxes (295) (119) (420) (216) (420)
Equity in net earnings of 7,403 4,206 16,994 9,739 13,015
investee
Net (loss)/income (4,350) 19,176 12,971 32,963 55,833
Basic (loss)/earnings per share ($) ($0.07) $0.29 $0.20 $0.50 $0.85
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BALANCE SHEET 2005 2004 2004
(in thousands of $) Jun 30 Jun 30 Dec 31
unaudited unaudited audited
(restated)
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ASSETS
Short term
Cash and cash equivalents 87,794 102,687 51,598
Restricted cash and short-term 41,131 38,486 41,953
investments
Other current assets 14,467 19,222 22,358
Amounts due from related parties 432 298 294
Long term
Restricted cash 718,127 670,069 714,802
Equity in net assets of non-consolidated 65,601 43,684 48,869
associate
Newbuildings 108,002 94,045 145,233
Vessels and equipment, net 1,238,044 1,097,839 1,078,383
Other long term assets 11,116 7,313 6,839
Total assets 2,284,714 2,073,643 2,110,329
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term
Current portion of long-term debt 65,759 64,900 66,457
Current portion of capital lease 2,466 2,200 2,662
obligations
Other current liabilities 56,391 58,188 46,401
Amounts due to related parties 435 614 374
Long term
Long term debt 792,654 670,163 636,497
Long term capital lease obligations 836,264 788,832 842,853
Other long term liabilities 84,326 93,110 86,033
Minority interest 30,065 23,885 26,282
Stockholders' equity 416,354 371,751 402,770
Total liabilities and stockholders' equity 2,284,714 2,073,643 2,110,329
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STATEMENT OF CASH FLOWS 2005 2004 2005 2004 2004
(in thousands of $) Apr - June Apr-June Jan - June Jan - June Jan - Dec
unaudited unaudited unaudited unaudited audited
(restated) (restated)
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OPERATING ACTIVITIES
Net (loss)/income (4,350) 19,176 12,971 32,963 55,833
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortisation 12,821 9,760 24,956 18,236 40,502
Amortisation of deferred charges 323 278 2,349 532 1,270
Income attributable to minority interests 1,504 5,195 3,783 5,179 7,575
Undistributed net earnings of non-consolidated (5,856) (4,035) (15,447) (9,568) (12,844)
investee
Drydocking expenditure (508) (8,016) (9,383) (9,241) (13,299)
Change in market value of interest rate and currency 15,950 (6,612) 14,746 (3,432) (12,237)
derivatives
Interest element included in capital lease 1,527 1,877 3,731 3,874 6,321
obligations
Unrealised foreign exchange (gain)/loss (5,605) (2,549) (9,303) (3,160) 5,161
Change in operating assets and liabilities (4,261) 3,817 3,773 5,679 3,746
Net cash provided by operating activities 11,545 18,891 32,176 41,062 82,028
INVESTING ACTIVITIES
Additions to newbuildings (31,013) (225,198) (136,465) (228,572) (278,560)
Additions to vessels and equipment (1,916) (2,511) (3,504) (4,115) (8,232)
Long-term restricted cash (46,586) (37,938) (47,839) (36,497) (37,515)
Purchase of unlisted investments -- -- (3,000) -- --
Short-term restricted cash and investments 5,815 (7,255) 822 (28,337) (31,806)
Net cash used in investing activities (73,700) (272,902) (189,986) (297,521) (356,113)
FINANCING ACTIVITIES
Proceeds from long-term debt -- 110,000 420,000 110,000 110,000
Proceeds from long-term capital lease obligation 44,800 163,715 44,800 163,715 163,715
Repayments of long-term capital lease obligation (544) -- (1,961) -- (894)
Repayments of long-term debt (9,763) (18,259) (264,540) (30,172) (62,281)
Financing costs paid (916) (1,309) (3,626) (2,280) (2,740)
Payments to repurchase equity -- -- (667) -- --
Net cash provided by financing activities 33,577 254,147 194,006 241,263 207,800
Net (decrease)/increase in cash and cash (28,578) 136 36,196 (15,196) (66,285)
equivalents
Cash and cash equivalents at beginning of period 116,372 102,551 51,598 117,883 117,883
Cash and cash equivalents at end of period 87,794 102,687 87,794 102,687 51,598