GLNG delivers

Golar LNG turned in a second quarter loss Tuesday but the results were in line with Wall Street forecasts.

Nasdaq-quoted Golar racked up a deficit of $24.2m in the three months to 30 June, versus a gain of $59m in the same period a year prior.

The company, which is based in Bermuda and Norway, reported earnings before interest, taxes, depreciation and amortization of $1.1m and an adjusted loss of $0.02 per share.

Golar pointed out that its newbuilding programme is fully funded but failed to shed light on the status of contract negotiations related to the deployment of its first FLNG unit.

While many forecasters were hoping for more insight Erik Nikolai Stavseth of Arctic Securities, like some of his peers, believes the unit will end up in Cameroon.

In the absence of an update the analyst argued that one of the most important takeaways from Golar’s earnings report was commentary in which the company indicated the unit will operate at reduced capacity upon completion.

“Shareholders should be aware that it is likely that the first employment might only cover two or three of the present four trains, each producing up to 0.7 million tonnes,” the operator told investors, adding:

“Such a solution will initially dampen income, but provide some spare capacity in the startup period and will position the vessel well for further gas reserves from the same area to be connected to the vessel at a later stage.”

Management also pointed out that the company believes it will be capable of delivering four to five units before its competitors “enter the market in a serious way,” a revelation that Stavseth billed as another piece of important news.

“This suggests a tight timeline and high activity as we would estimate that competitors could deliver by 2020,” he said. “This gives us confidence to assume more than just the three initial older vessels for conversion and should provide for more upside to the share long-term.”

Golar also mentioned the possibility of an alliance with a counterparty described as a “dynamic and fast-growing E&P company”, a development the forecaster described as the first phase of the “next step for Golar beyond FLNG”.

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