Poised for a breakthrough 100% commercial uptime on Hilli
FRA DNB
GOLAR LNG Poised for a breakthrough 100% commercial uptime on Hilli, capex below budget, its fast-track FLNG solution, rising LNG prices, and only three liquefaction FIDs since mid-2016 put Golar LNG in a unique position to monetise on stranded gas over the next two to three years with its FLNG concept. We would expect the number of FIDs to increase over the next 12 months, which in combination with Hilli utilisation upsizing, an improving LNG shipping market, and BP FID guided end-2018 would all be significant catalysts. Cash flow from the Sergipe project now also appears only 16 months away. We reiterate our BUY recommendation and USD39 target price.
Smaller underlying changes to operating forecasts. We have lowered our 2018e EBITDA by 3% adj. for gains on unrealised Brent oil linked mark-to-market income of USD95m, while keeping 2019–2020e unchanged. We have raised 2018e net profit by 103%, 2019e by 29% to USD6.5m, while raising 2020e by 1%. From high risk and weak balance sheet to proven concept and strong balance sheet. In the course of six months, Golar LNG has changed from a company with a potentially weak balance sheet to a strong balance sheet following the acceptance of Hilli and from high execution risk to proven concept with 100% commercial uptime since the acceptance of FLNG Hilli. Golar LNG is now also transforming from a deferred cash flow company to one with current cash flow, not only with FLNG Hilli, but also through higher shipping rates on the LNGC fleet; additionally, the Sergipe project is now only 16 months away. If we assume USD75k/day shipping rates, USD75/bbl oil price, Hilli at 100% utilisation, and Sergipe and Nanook up and running, a sensitivity analysis would calculate pro forma EBITDA at USD670m.
BUY and USD39 target price reiterated, based on 1.0x our one-year forward SOTP of USD39. Our current SOTP is USD17.5 (up from USD17.4) and our target price includes USD10 from FLNG Hilli utilisation rising from 50% to 100% and USD12 for FLNG no.2 with BP.
BUY
GOLAR LNG Poised for a breakthrough 100% commercial uptime on Hilli, capex below budget, its fast-track FLNG solution, rising LNG prices, and only three liquefaction FIDs since mid-2016 put Golar LNG in a unique position to monetise on stranded gas over the next two to three years with its FLNG concept. We would expect the number of FIDs to increase over the next 12 months, which in combination with Hilli utilisation upsizing, an improving LNG shipping market, and BP FID guided end-2018 would all be significant catalysts. Cash flow from the Sergipe project now also appears only 16 months away. We reiterate our BUY recommendation and USD39 target price.
Smaller underlying changes to operating forecasts. We have lowered our 2018e EBITDA by 3% adj. for gains on unrealised Brent oil linked mark-to-market income of USD95m, while keeping 2019–2020e unchanged. We have raised 2018e net profit by 103%, 2019e by 29% to USD6.5m, while raising 2020e by 1%. From high risk and weak balance sheet to proven concept and strong balance sheet. In the course of six months, Golar LNG has changed from a company with a potentially weak balance sheet to a strong balance sheet following the acceptance of Hilli and from high execution risk to proven concept with 100% commercial uptime since the acceptance of FLNG Hilli. Golar LNG is now also transforming from a deferred cash flow company to one with current cash flow, not only with FLNG Hilli, but also through higher shipping rates on the LNGC fleet; additionally, the Sergipe project is now only 16 months away. If we assume USD75k/day shipping rates, USD75/bbl oil price, Hilli at 100% utilisation, and Sergipe and Nanook up and running, a sensitivity analysis would calculate pro forma EBITDA at USD670m.
BUY and USD39 target price reiterated, based on 1.0x our one-year forward SOTP of USD39. Our current SOTP is USD17.5 (up from USD17.4) and our target price includes USD10 from FLNG Hilli utilisation rising from 50% to 100% and USD12 for FLNG no.2 with BP.
BUY