Oppdatering fra Stifel Nicolaus (som har samme kursmål som DNB)

This morning, Golar LNG announced the company has received a limited notice to proceed
from BP on a floating liquefaction vessel to be located on the Tortue field offshore Mauritania
and Senegal. While not a firm final investment decision (FID) on the part of BP, this indicates a
clear plan to move forward and sanctions the expenditure of capital on the part of Golar. GLNG
shares have languished despite extremely strong LNG shipping rates, solid cash flows from
the first FLNG project, and good progress throughout the rest of the business. With everything
going well, it has been a bit of a mystery to us as to why the shares have not been stronger, but
we do believe this could be a catalyst for re-rating.

Key Points

• Still no details on economics. Golar has not given details with respect to the economic
impact of the Tortue FLNG project. However, we are estimating the annual EBITDA
generation from the 20-year contract to be between $225 and $250 million per year against
a construction cost of about $1.25 billion. Importantly, BP has an option for a second vessel
from Golar and is ultimately planning the project to be 10 million tons per year (each Golar
FLNG is 2.5 mtpa). Consequently, progress on the first vessel significantly increases the
likelihood of a second, and potentially third and fourth.

• What it means to the shares. While cash flows are unlikely to materialize until 2022, we
estimate each Tortue FLNG to be worth $9-$10/share in GLNG equity, none of which is
currently reflected in the share price. While shares may not immediately respond due to the
lack of clarity on financial impact, we do believe over time the impact of Tortue and the option
value for growth beyond the first unit should be reflected in share price.

• How to pay for this thing. At year-end 2018, we expect Golar to have about $750 million
of cash and restricted cash. While the restricted cash cannot currently be used, over time,
it should be released and made available to the company. In our view, the existing liquidity
alone should be sufficient to fund the equity portion of the vessel, which should be easy
to finance, given a 20-year contract from BP. However, we estimate operating cash flows
of $292 million in 2019 and $369 million in 2020, with the startup of the Sergipe project in
Brazil. Consequently, we expect cash flow generation to materially exceed debt repayment
obligations, leaving at least $200 million available to the company of free cash flow after debt
to fund Tortue FLNG. In other words, we do not expect Golar to need outside equity for this
project.

• Putting the pieces together. We estimate the NAV of GLNG to be about $24/share based on
the market value of the ships, the remainder of Hilli, cash, GMLP interest, less debt. However,
Sergipe should begin operations next year, which should add at least $4/share. Also, this
Tortue #1 unit should add $10/share, the Delfin project in Louisiana is making progress, there
are expansion opportunities in Brazil and elsewhere for FSRUs and power, and the list could
go on. Consequently, we have little trouble arriving at our $42 target price and reiterate our
Buy rating as we expect these catalysts to drive shares higher in the next 12 months.