Golar LNG Limited (NASDAQ:GLNG) Q3 2025 Earnings Call Transcript

Golar LNG Limited (NASDAQ:GLNG) Q3 2025 Earnings Call Transcript November 5, 2025

Golar LNG Limited misses on earnings expectations. Reported EPS is $0.31 EPS, expectations were $0.46.

Operator: Welcome to the Golar LNG Limited Third Quarter 2025 Results Presentation. After the slide presentation by CEO, Karl Fredrik Staubo ; and CFO, Eduardo Maranhao, there will be a question-and-answer session. [Operator Instructions] I will now pass you over to Karl Fredrik Staubo. Karl, please go ahead.

Karl Staubo: Thank you, operator, and good morning from our head office in Bermuda. Welcome to Golar’s Q3 2025 Earnings Results Presentation. My name is Karl Fredrik Staubo, the CEO of Golar, and I’m accompanied today by our CFO, Eduardo Maranhao. Before we get into the presentation, please note the forward-looking statements on Slide 2. Starting on Slide 3 and an overview of Golar. Following our announcement on October 23, our existing fleet of 3 FLNGs are now fully contracted on 20-year charter durations with a total EBITDA backlog of $17 billion before commodity upside and inflationary adjustments. Now that the existing fleet is fully contracted, the key focus of the company is now on developing our fourth FLNG unit. During the quarter, we’ve made significant technical and commercial progress in deciding on size and design of our next units.

As you can see on the bottom half of the slide, we have 3 different growth designs, the Mark 1, 2 and 3, which differ in liquefaction size ranging from 2.5 million tons all the way up to 5.4 million tons. We’re on track to decide on the next FLNG project in the coming months. Over the course of the last 5 months, we’ve also concluded just over $1 billion in new corporate debt facilities and retired our October Norwegian bond maturity of $190 million. Following these developments, we now have a cash position of $1 billion and a net debt position of around $1.4 billion. Over the last 12 months, we generated $221 million of adjusted EBITDA, mainly from the operations of the Hilli. Our EBITDA generation is set to quadruple from contracted EBITDA once our existing fleet is fully delivered during 2028.

Turning to Slide 4 and the highlight of the quarter is, for sure, the final FID and successful fulfillment of all CPs for Mark II’s 20-year charter in Argentina. We now have earnings visibility for all our assets through 2045 and beyond. The total earnings backlog stands at $17 billion before commodity upside and inflationary adjustments, and this creates a very solid base to add further attractive FLNG projects to the portfolio. Turning to Slide 5, we highlight some of the key characteristics of our FLNG charter agreements. Golar aims to structure our long-term contracts as solid infrastructure cash flow with meaningful contractual protections. Some of the key attributes to these protections include that all of our contracts are paid in U.S. dollars.

All cash flows are paid offshore and net of any local taxes in the country where we operate. All of our contracts are on English law. And for all our long-term contracts, operating costs and maintenance CapEx is either passed through or reimbursable by our counterparts. In addition to these strong protections, we have further fiscal protections for our 2 contracts in Argentina, including 30-year noninterruptible export licenses, environmental assessment approvals and protection from any changes to fiscal or regulatory terms, including taxes, et cetera, through the large investment protection under the RIGI framework in Argentina. We furthermore have corporate guarantees from the parent companies of our counterparts for a significant portion of the contract backlog to safeguard the cash flows.

Our mission is to identify attractive gas reserves globally and utilize our FLNG technology to monetize these assets together with strong upstream partners. We try to structure the contract in a manner where we reduce the country risk by creating the mentioned strong contractual and regulatory protections as well as creating a buffer between Golar’s operations and the country where we operate. These buffers are essentially the charters of the unit, which in turn includes Perenco in Cameroon, BP offshore Mauritania and Senegal and the ESA Consortium in Argentina, where we have the pro rata corporate guarantees from the shareholders, which comprise Pan American Energy, YPF, Pampa and Harbour. Turning to Slide 7 and a business update for the quarter.

Q3 was one of the strongest quarter in the history of Golar, now adding $8 billion of firm EBITDA backlog through the lifting of all CPs and FID for the 20-year charter of Mark II to Argentina. In addition, we entered the U.S. rated unsecured market with Golar’s first ever U.S. documented $500 million bond with a 5-year duration carrying a 7.5% coupon. In the quarter, we also retired a Norwegian bond with a net outstanding amount of $190 million at maturity in October. We’ve also signed the Hilli redeployment scope in between her contracts in Cameroon and before starting the contract in Argentina, where the vessel will return to her original construction shipyard at Seatrium in Singapore. We’ve also approved the ordering of long lead items for the fourth FLNG, and we’ve approved a new $150 million buyback program in line with our track record of buying back over 9 million shares over the course of the last 5 years.

Turning to Slide 8 and focus on Hilli. Hilli maintains her market-leading operational track record with another quarter of 100% economic uptime. We’ve now delivered 142 cargoes since start-up or producing more than 9.8 million tons of LNG. During the quarter, the unit generated $51 million of adjusted EBITDA to Golar. Turning to Slide 2 and focus on the Gimi. Gimi started her commercial operations date under the 20-year contract for BP offshore Mauritania and Senegal in June this year. We’re very pleased to see that operations are stabilizing and continuously improving in throughput. We’re now fine-tuning operations with daily production frequently exceeding base capacity. In addition, we’re actively working with the GTA partners to identify and develop value-enhancing initiatives for the GTA projects.

These initiatives include operational efficiencies and debottlenecking of production capacity to improve unit economics and overall throughput, which will then benefit the potential earnings of Gimi over and beyond the base EBITDA. We’re also pleased to announce that we’re in very advanced stages of entering into a new credit approved $1.2 billion bank refinancing facility of the Gimi. We expect this facility to close within this quarter, and Eduardo will explain this in further detail in the later section. Turning to Slide 3 and a focus on the Mark II. As already explained, the key highlight of the quarter was the FID reached in August and the CP satisfaction met in October. The project remains on schedule for delivery in Q4 ’27, and we expect to commence operations in Argentina during ’28.

To date, we have spent $1 billion out of the total conversion budget of $2.2 billion and the $1 billion has been fully equity funded by Golar to date. You can see on the pictures some of the progress made on the shipyard in China. To the left, you can see the ship, which is divided in 2 parts and now sits on land. In the middle, we have had the key laying ceremony to construct the new mid-ship section, which will be 80 meters long and 63 meters wide and will house the liquefaction plant of the units. And you can see the model structural assembly ongoing to the far right. This is part of the equipment that will be injected into the mid-section. Turning to Slide 11. Year-to-date, we’ve secured $14 billion in adjusted EBITDA backlog across Hilli and the Mark II, where all of the FID and CPs for Hilli was met in May and for the Mark II between August and October.

We see the combination of these 2 contracts as a very strong addition to Golar’s portfolio, generating a base EBITDA of $685 million over 20 years before meaningful commodity upside and inflationary adjustments, both of which Eduardo will explain in further detail later on. Turning to our key focus going forward is adding Unit #4, where we explain further details on Slide #12. As we explained on our Q2 call, we made commitments to the 3 shipyards to come up with updated pricing, delivery and payment terms if we were to go ahead with 1 of the 3 designs. We have now obtained such pricing and delivery times from all the 3 shipyards. The Mark I design is the same design of both the Hilli and Gimi. It’s a proven design. We know it well, and the current pricing works and aligns with some of the commercial discussions ongoing.

The Mark II would be a repeat of the vessel currently under construction, and we are pleased to reconfirm time and price with the shipyard. We’ve also spent a considerable amount of time getting an updated price time and schedule for the Mark III, and we continue to see yard pressure for attractive slots and delivery times. And we do think that timing is of the essence if you want to lock in attractive delivery. The key pressure item for the delivery of all 3 assets are long lead items. These long lead items see significant pressure both on delivery and price, mainly driven by the AI data center boom in the U.S. We now see relatively new entrants into some of these suppliers where companies like Google, Alphabet, Meta and so on are ordering gas turbines in large quantities, putting price pressure and delivery pressure.

Being an existing large and long-term client of these sub-suppliers helps us in securing attractive slots despite the increased competitive landscape. We have, therefore, gotten Board approval to enter into long lead items during this quarter, and we expect to do so in the coming weeks and months to safeguard the delivery times now confirmed by the shipyards through — over the course of the last few months. So what do we mean when we say we’re going to go ahead ordering Unit #4? Well, we think the case study of the Mark II over the course of the last 12 months is relevant and what’s highlighted on Slide 13. The Mark II, we placed the order in September ’24 on speculation. Even if we had very strong commercial lead, the order was initially on speculation.

In May ’25, we signed a 20-year charter with SESA. FID was met in August and all conditions met in October. What we clearly saw from ordering the unit on speculation alongside the redeployment of Hilli was that we were able to drive considerable commercial value in Golar’s favor by having a firm delivery and several commercial opportunities available. We are planning to following the same recipe for Unit #4. There were several commercial interests, both on the Hilli redeployment and on Mark II that lost out to the Argentinians. We have obviously maintained those discussions, and we’ve also developed incremental units, incremental projects. Therefore, we plan on using the same methodology to drive commercial value in our favor with a similar time line expected for a new project.

The CapEx to EBITDA for the Mark II was 5.5x for a 20-year contract before the commodity upside and the inflationary adjustments. We continue to see a strong development in the commercial pipeline for new projects, and we’re therefore comfortable to go ahead with ordering the long leads imminently. Turning to Page 14. We’ve made further advances for the next unit. We’ve confirmed between 36 and 38 months of construction time, both for the Mark I and the Mark II and around 48 months for the Mark III. The primary reason for the longer lead time on the Mark III is that for that unit, we are not starting with a donor vessel, but purpose building from the get-go, and it’s also larger in size and require longer time. As already explained, we received updated pricing delivery and payment terms, which are broadly satisfactory to the project economics that we’re targeting.

We have identified and inspected donor vessels. And given the state of the current LNG shipping market, we’re very pleased with the levels in which we can source attractive conversion units. We’re now working to narrow commercial opportunity set and upstream timing and decide on FLNG design. We will target long-term infrastructure contracts, and we have positioned the balance sheet to facilitate to add one more unit. We’re now on track to decide on the fourth FLNG vessel in the coming months, but starting with long lead items imminent. Turning to Slide 15 and to elaborate a bit on the market opportunity and what we see ahead of us. It’s tempting to look to the FPSO industry’s development, which started in 1985 with its first unit and grew very quickly to around 20 units 10 years later.

We see and today stands at more than 250 units globally with 10 projects to 15 projects added annually. We see a similar development taking place in the FLNG industry. We’re very pleased to see the increasing adoption by the industry that FLNGs are the cheapest, quickest and most efficient way of monetizing stranded and associated and flare gas resources globally. Golar pioneered this business with the first delivery in 2018, and the fleet now stands at 14 units with several planned incremental projects in development. We’re pleased with our position as the only proven provider of FLNG as-a-service, and we plan on maintaining an active growth strategy for as long as we can secure economics along the lines of our existing contracts for 20-year durations.

We will, however, maintain our policy of having maximum unchartered FLNG at the time. As we’ve explained over several calls, we still — the key premise of our business. The gas liquefaction has 3 cost drivers: the cost of lifting the gas, the cost of liquefying the gas and the shipping distance from where the gas is produced to where it’s consumed. The largest current exporter in the world of LNG is the U.S. They also happen to be the largest source of growth of incremental supply over the coming 5 years to 10 years. And they also happen to be the most expensive producer, so the incremental producer. Hence, if we can source projects where we can produce the gas significantly cheaper than Henry Hub, we know we have an attractive cost competitive advantage in constructing the liquefaction units.

And more often than not, our projects are closer to end users and therefore, have a shipping advantage. And if we have this or continue to develop projects with the 3 significant cost advantages over the largest and incremental producer in this market, we believe we have a very strong business and one that we will continue to grow. Turning to Eduardo for group results.

Eduardo Maranhao: Thank you, Karl, and good morning, everyone. I’m pleased to give an overview of Golar’s financial performance for the third quarter of 2025. So moving to Slide 18, let’s review the key financial highlights of the quarter. Following Gimi’s COD in June, this was the first quarter with full operations of both of our units. I’m pleased to share that Gimi has been performing extremely well and daily production is now frequently exceeding base capacity. We achieved total operating revenues of $123 million in the quarter and net FLNG tariffs of $132 million in this quarter. Hilli contributed $51 million to our EBITDA, while Gimi added $48 million this quarter. In connection with the start-up of operations of Gimi, we incurred certain one-off expenses, which are expected to be normalized in the next quarters.

When accounting for the corporate and project development expenses this quarter, our total adjusted EBITDA reached $83 million. Total EBITDA for the last 12 months ended in Q3 was $221 million. This quarter, we reported a net income of $46 million. This figure is inclusive of $12 million of noncash items, such as adjustments in the value of embedded TTF and Brent derivatives within the Hilli contract as well as changes in our interest rate swaps. In October, we raised $500 million under our first U.S. rated senior unsecured bonds with a new 5-year note at a cost of 7.5% . Following that, we repaid $190 million of our unsecured Norwegian bonds issued back in 2021. Our liquidity now stands at approximately $1 billion of cash on hand. So following that, our net debt position right now stands at just under $1.4 billion.

Lastly, we’re pleased to declare a dividend of $0.25 per share this quarter with a record date of November 17 and payment scheduled for November 24. Now moving to Slide 19. We continue to focus on accretive growth while maintaining a sustainable policy of shareholder returns. As our units come online, we plan to return most of operating cash flow after debt service to shareholders, while we’ll continue to recycle capital through asset level financings and existing debt optimization to fund accretive growth. These are not mutually exclusive. Over the last 5 years, we returned more than $800 million to shareholders, including dividends of over $260 million and buybacks of more than 9.3 million shares at an average price of $125 per share, bringing the total share count to 102 million shares outstanding at the end of Q3.

In line with that, I’m pleased to announce that our Board has approved a new buyback program of up to $150 million. Now moving to Slide 20. Following the announcement of the Mark II FID and CP’s fulfillment, we now have full visibility of our earnings for the next 20 years. This gives us a clear path to cash flow growth and increased shareholder returns. By 2028, when our 3 FLNG units are fully delivered in operation, we expect our EBITDA to grow by more than 4x compared to the last 12 months. This can grow even further, subject to further commodity upside from Hilli and the Mark II. This incremental free cash flow upside under the SESA charters in Argentina can be estimated at approximately $100 million per year for every dollar per million Btu increase in FOB prices above $8 per million Btu.

In 2028, when the Mark II comes online, our free cash flow to equity generation could be around $500 million to $600 million or approximately $5 to $6 a share before further commodity upside. Now moving to Slide 21. So how do we plan to fund that growth? Going forward, we plan to use the liquidity released from debt financing proceeds to be allocated to fund accretive FLNG growth. We have now received final credit approvals for a new $1.2 billion bank facility for FLNG Gimi at improved terms, and we expect it to close within Q4. This facility carries improved terms and conditions compared to the current one and is expected to release net proceeds of over $400 million net to us. At 5.6x the Gimi’s annual contracted EBITDA, this is a good example of what can be achieved on the back of our long-term charters.

When looking at our existing debt at Hilli and targeting a level of 4x to 5x its annual contracted EBITDA, in that case, even at a lower level than the Gimi one, we could release up to $1 billion in proceeds from that by refinancing the existing debt with a new facility. Similarly, if we apply the same multiples to the Mark II, which is currently completely unencumbered, we could be looking to raise up to $2 billion from new financings. Combined, these 2 transactions could raise up to $3 billion in fresh proceeds, which can be used to fund further FLNG growth. Now moving to Slide 22. Following the confirmation of the contracts in Argentina with the FIDs of Hilli and the Mark II, we now have a total firm EBITDA backlog of more than $17 billion before commodity upside and further inflation adjustments.

I wanted to recap how this is built up once all units are in operation. So starting with our share of the Gimi earnings. This is expected to add $150 million, followed by the $285 million from Hilli, as you can see on the slide, and $400 million from the Mark II. When you deduct our corporate expenses, we’re left with a base EBITDA of $800 million fully secured for the next 20 years. As I explained before, changes in LNG prices could significantly give a very high upside to us. And in that case, we have a limited downside with a very significant and uncapped upside. For example, if we assume FOB LNG prices of $10 per million Btu, our EBITDA could be in excess of $1 billion per year. At $15, this number could grow to $1.5 billion. As a reference, if all the units were in operation in ’22 and assuming LNG prices during that time, we could be earning close to $3.5 billion in that given year.

This really shows the huge upside potential of our commodity upside. So lastly, on Slide 23, I wanted to summarize the different ways our investors can have exposure to Golar. Our shares are listed on NASDAQ, and I’m pleased to see increased volumes with daily liquidity exceeding $50 million per day. Following our latest issuance of our new U.S. rated $500 million unsecured bonds in October, we now have 2 unsecured bonds trading in the market with a total outstanding amount of $800 million. We have also issued $575 million of convertible bonds back in June. So I think that ends this slide here. I’ll now hand the call back to you, Karl.

Karl Staubo: Thanks, Eduardo. Turning to Slide 25 to summarize. We’re very pleased with the development of the quarter and in particular, 2025 year-to-date. We remain the only proven service provider of FLNG as-a-service, combined between Hilli and Gimi having now delivered more than 150 LNG cargoes. Our earnings backlog now stands at $17 billion of EBITDA before commodity upside and inflationary adjustments. This will further increase as we add additional units. Our EBITDA is set to quadruple between now and 2028, and the pathway to multiple return in shareholder returns is beyond the quadruple as the EBITDA growth is far in excess of debt service growth. We remain a strong balance sheet position to provide for additional growth units.

Our fully delivered net debt-to-EBITDA stands at around 3.4x with a current cash position of around $1 billion. We’re on track to order our fourth FLNG unit, and we’re in the process of ordering long lead items during this quarter. Our focus remains on shareholder returns, and we’re pleased that the Board approved yesterday a new $150 million buyback program, which is in line with the $812 million returned to shareholders in the last 5 years. That concludes the prepared remarks of today’s presentation. I’m happy to turn the call back to the operator for any questions.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Chris Robertson from Deutsche Bank Securities.

Christopher Robertson: Just we saw some correlation in the share price recently with some — with the Argentine market due to the recent election cycle. And one of the things that could help reduce the market’s perception of risk around Argentina, perhaps if SESA is able to lock in long-term offtake agreements. So I was wondering if you could comment on SESA’s current strategy, what they’re currently doing if they’re out competing in the market for long-term offtake sale purchase agreements and where things stand on that front?

Karl Staubo: We’ve observed the same, which is interesting. I think we tried to explain the structure of our contracts on Slide 5 in this deck. These contracts are for 20-year durations, and we’ve structured them independent of political parties. We subjectively are pleased to see the outcome of the election. However, our contracts — the FID for the Mark II was taken before the outcome of the election. And we do not think that it would have any material impact on our earnings irrespective of outcome. But subjectively, we’re pleased to see the development. To answer your question on long-term offtake, that’s a SESA decision. We are obviously shareholders of SESA. So the current plan is to initially lock in the offtake for the Hilli volumes for a decent period of time.

And we’re pleased to see the activity level and interest for that offtake. As earlier explained, the world is looking to diversify sources of LNG and the attractiveness of Argentina sitting on the world’s second largest shale discovery is very interesting because it will be a long-term and very significant exporter of LNG for the coming decades. So we see very strong interest from all the big industrial and trading houses for that volume. We do expect them to sign the first offtake contracts within this quarter.

Christopher Robertson: Great. Just turning to the donor vessels at the moment, they seem to be relatively cheap. That being said, there’s a little bit of cost inflation as you probably saw here on long lead items and also from the shipyards just being relatively full. So with that in mind, can you comment if the future projects could target a similar potential CapEx to EBITDA ratio of 5.5x, as you noted in the slides here? Or is that calculation a bit different with recent costs? And if you could comment on where total CapEx stands today on some of the new potential projects?

Karl Staubo: I think it’s fair to say that the topside equipment, the topside equipment cost inflation and construction time offsets the saving of the donor vessel and more so. The cost inflation pressure is higher than what you save on the ship, even if they do partly net off each other, but stronger pressure on the upside to put it that way. However, we’re pleased to see that, that’s also the case for liquefaction fees. And we are planning or targeting to do new projects with similar economics on CapEx to EBITDA ratios versus the existing projects.

Christopher Robertson: And just as a follow-up on that. If you were to move forward with the Mark II having that option at the shipyard, would that be locked in at the similar price of the Fuji? Or has there been some cost inflation that could impact that as well?

Karl Staubo: It’s — you have a cheaper donor vessel than the Fuji. You have a higher long lead items. But the overall price, I would say, for this context is broadly in line with a slight increase. Broadly in line with the existing Fuji.

Operator: Your next question comes from the line of Even Kolsgaard from Clarksons Securities.

Even Kolsgaard: So I have a question related to Gimi and the capacity of that ship. I know you answered something similar before and touched upon it in your presentation, but one of your partners is very vocal about the potential raising the nameplate capacity of that ship. I think the specific number is about 10% to 20% above the current nameplate capacity. So do you have any comments or color on that statement? And if it’s possible?

Karl Staubo: Yes. So when you make reference to nameplate, there’s a few different numbers. So let’s talk about nameplate. The nameplate capacity of Gimi is 2.7 mtpa. The contracted volume is 2.4 mtpa. So when we say that the unit makes $215 million of annual EBITDA, that’s with reference to the 2.4 mtpa, which is 90% of the 2.7 mtpa. Is it possible that you can produce more than 2.4 mtpa and up towards 2.7 mtpa? Yes, absolutely. Is it possible that we can produce more than 2.7 mtpa? We are evaluating that through the debottlenecking exercise that I mentioned during the call. That could include upgrading certain equipment. The magnitude in percentages over and beyond 2.7 mtpa, we are not in a position to have a clear stance on today.

The way it works is that if you change one single component, that component itself could be like 15% or 20% production increase, but then you face a bottleneck elsewhere in the liquefaction plant. So it’s a knock-on effect, and you need to go through the entire system to really gauge the total potential debottleneck potential. So for now, producing more than 2.4 mtpa, whether that’s feasible? Yes, we think so. It’s subject to operations upstream and ambient temperature. Are we — is it possible to do over the design nameplate? Perhaps, but that’s through the debottleneck exercise, and we’re not going to commit to any percentages until that exercise is done.

Even Kolsgaard: Okay. So my second one is on the market for FLNGs. As you’ve said, there has been a growing numbers of LNGs and interest in that market. But we also see new companies that are doing FLNGs like Delfin LNG and Amigo LNG. And these companies are private, so we don’t really know much about the CapEx or contract structures that they get for the tollings, et cetera. But do you have any information when it comes to how does these units compare to yours in terms of competitiveness? And are you also seeing more competition when it comes to potential projects that you are looking at?

Karl Staubo: So we’re pleased to see that more people adopt FLNG technology. I don’t think I want to go into any of the specific projects that you mentioned, but we’re pleased to see increased adoption. I think it’s still fair to say that there are more PowerPoint FLNG companies than real FLNG companies. But even including the projects that you mentioned, none of them are offering FLNG as a service. All of them are utilizing gas that they control or in areas where they control. They’re not offering this to an upstream partner — an external upstream partner. So do we see increased competition for shipyard slots and long leads? Yes. Some of that is not driven by FLNGs. It’s by AI data centers, it’s by container ships, it’s by LNG ships, but it’s also FLNGs for sure. Do we see competition for FLNG as a service right now? No.

Operator: Your next question comes from the line of Spiro Dounis from Citi.

Spiro Dounis: First question, I wanted to hit quickly on the buyback. The buyback was linked to those notes you did early this summer. Curious how you’re thinking about deploying this program and what metrics you’ll be looking at each quarter to decide how much you’re going to repurchase?

Eduardo Maranhao: Spiro, this is Eduardo here. So as we stated during the call, over the last 4.5 years, we bought back over 9.3 million shares. I think we have taken a pretty opportunistic approach to that. Following the convertible bonds, we bought back 2.5 million shares and the previously approved program had then been exhausted. So I think we have received approval yesterday from the Board for a new program of up to $150 million, which we will continue to actively and opportunistically execute in the market in the coming months. I think we will not change our approach to buybacks as we have been consistently doing over the last 4.5 years.

Spiro Dounis: Got it. So that’s great to hear. Second question, maybe just moving to the fourth FLNG unit. Curious if you could put a finer point on maybe some of the gating items here to moving forward. I realize you talked about some of them, but you also mentioned going back to potential customers you had spoken to before. Curious how big that list is and maybe why they’re stronger candidates now versus not prior?

Karl Staubo: So well, the list of existing clients is very obvious. It’s Perenco, BP, Kosmos and the SESA partnership. I think we’re obviously with Hilli departing in Cameroon. Cameroon has more gas reserves that are currently not being monetized. The day we leave, there will be no LNG exports from Cameroon. I think we have a proven operating model there. It’s been a very successful partnership across all the parties, and we would be pleased to continue to work in Cameroon if we can find the right resource and agree the right terms. I think for the GTA project, many options are being evaluated to enhance the unit economics of that project, which could include increased liquefaction capacity. In Argentina, there’s an expressed interest to continue to grow exports.

I think as late as yesterday, there was an announcement between YPF, Eni and XRG. We — so those are obviously the existing clients. There were other clients that were — or other prospective clients that we’re competing for the Mark II and Hilli. Some of them have now developed further since sort of losing has to the Argentinians last year and have gotten gas approvals, export rights and so forth that make the project more mature and more positioned to lock in an FLNG. So those are the ones we develop in addition to the continuous business development our BD team continues to develop. And some of them are in areas we’re currently not operating in as well. And we do see strong demand pull, obviously, from West Africa and South America, but it would be interesting to see if it would be possible to open other areas as well that we’re currently in discussions for.

Operator: Your next question comes from the line of John Mackay from Goldman Sachs.

John Mackay: Maybe I’ll just pick up on that last one. It sounds like you are lining up for a fourth vessel order effectively before we know exactly where it’s going, similar to what you did last time, makes sense. But I guess my question is going with the Mark I or Mark II or Mark III, each of those kind of has a different market where it could end up going. So I was just wondering if you could kind of talk about where you’re seeing the commercial opportunities relative to each of those 3 options.

Karl Staubo: John, so you’re right. As we said in the prepared remarks, we are planning to narrow the design in the coming months. The long lead items, the critical long lead items are, in fact, the same or interchangeable between the designs. It’s mainly the gas turbine and the cold box. The difference is the magnitude of how many turbines you order for the different designs. When we make the slot reservation and commitments to the long leads, it is interchangeable. And therefore, the reason for going ahead with that now is that, that’s still flexible to design, subject to the deciding design in the next coming months. And that’s where we’re targeting. Where we see the smaller ones, so the Mark I, that’s West Africa business, the way we see it.

Mark II is more versatile in terms of geographical or geography. And Mark III effectively currently has 2 projects that we’re working on. So that it’s fewer projects for Mark II than necessarily for Mark III than the other 2. But yes, so we’re now planning to narrow that range to decide on which vessel to go for.

John Mackay: I appreciate that. A quick second one for me. Just can you remind us the status of the pipeline for Argentina, kind of what we should look for next? When we kind of need to see something moving forward? Any updates there?

Karl Staubo: So there are 2 relevant pipelines. The least cumbersome one is the one that connects the existing grid to the Hilli. That’s under construction and very much on track. The one you are referring to is the new pipeline from the Vaca Muerta to the Gulf of San Matias — that pipeline is a SESA work stream is independent of our contracts because we are paid as long as we’re on site and available, irrespective of whether we liquefy or not. However, it’s obviously important for us that, that pipeline is built because that is what speaks to the upside and the overall economics. SESA is now in an active round where they are auctioning out the EPC contract and/or a tariff-based service agreement, subject to which model they go for.

And our understanding is that they expect to enter into a contract and award it in the first half of next year. The construction time of the pipeline is less than 2 years. Hence, that should be well within the timeline for Mark I’s arrival. They’re also in parallel working on all the regulatory framework needed, including right-of-way RIGI protection and so forth. The good thing is that the absolute majority of the distance, the pipeline will go next to the oil pipeline that was approved last year. Hence, right-of-way is already — that path has already been laid because you can just go exactly next to it. So we think this is a repeat, and we understand that SESA is happy with the engagement from the potential EPC providers of that pipeline.

Operator: Your next question comes from the line of Alexander Bidwell from Webber Research & Advisory.

Alexander Bidwell: Just wanted to pick up on just a couple of the previous questions on some of the commercial demand or rather demand for FLNG units. Are there any pockets of demand that surprise you? Any specific regions where you feel commercial discussions have picked up more so than others?

Karl Staubo: I don’t think surprise is the right word. These are very large infrastructure projects that require a lot of stakeholder and a lot of time. So to say that it’s surprising, I don’t think it’s right to characteristic. But what we do see is that as we’ve said a few times on the call, there’s an increasing industry adoption. People are not scared of deploying an FLNG anymore. And it’s a bit like if your neighbor has one, you want one, too. And if you just look at where FLNGs are deployed or being planned to be deployed in terms of contracts already sanctioned and just look at the neighboring countries, they all have pretty much the similar reserves. Why would your neighbor do something and make billions of dollars of LNG cash flows a year when you’re not. And that dynamic is now ongoing, stronger than previous because more people are adopting the projects.

Alexander Bidwell: Interesting. That’s a great analogy. And for my second question, could you talk to, I guess, the key steps to greenlighting and optimization or debottlenecking at on the Gimi? And then once you approve or decide the path forward, could you walk us through how the actual work might be executed? Could there be any potential impact to production, et cetera?

Karl Staubo: The question is probably just as well placed to BP or Kosmos. But the way this works is it’s an interaction, right? So the gas comes is lifted from the ground, then goes through a BP-operated FPSO. Then the gas is sent to the Gimi, then circulated on a hub that’s BP operated and then offloaded. So when you talk about debottlenecking, it’s not just Gimi. It’s the whole process from the gas is lifted until it’s loaded onto a ship. For example, one of the key performance measure of an FLNG is the quality of the gas entering the unit and ambient temperature. Now ambient temperature is a little bit tricky to play around with, but you can do smart things like air inlet cooling and so forth. So when you talk about debottlenecking, it’s not just on the FLNG on itself, it’s through the value chain and where does each dollar deployed make the maximum output and how do we work together to optimize that output.

So for now, that’s the discussion. Maybe you can tweak the gas treatment on the FPSO to send a more optimized gas stream to the FLNG and thereby increase throughput, as an example, right? So the work we are currently discussing does not require any movement of Gimi — she stays where she is. It might entail maintenance shutdown of the trains, but you never shut down all 4. You just do like shut down a train for 1 week, maybe do certain upgrades or change some of the equipment to get that back up and running before you do the next one. And that would obviously be in accordance with the upstream to boost output. And the NPV of that would be massively positive if nobody is incentivized to do it because it’s working today. So this is an opportunity set, which could benefit everybody.

Operator: Your next question comes from the line of Liam Burke from B. Riley Securities.

Liam Burke: You’re talking about future projects, and you pretty much have an idea of what the cost of the FLNG is. When you’re looking at the implicit returns on that project, are you looking at just tolling agreements? Or do you factor in some sort of commodity premium on the cash flow generation of future LNGs?

Karl Staubo: The latter. So to explain, we do not want to be in any project if the cash breakeven of the project is not competitive. Then it’s a partnership that sets up for failure over time. And by competitive, we mean competitive to U.S. exports. So the way we try to structure the project is to charge what we think is a fair but also attractive to Golar firm tolling part and then a commodity upside if the achieved FOB price significantly overshoots the cash breakeven of the project. In that way, we can make a project with an attractive cash breakeven to all the stakeholders and aligned structure on making money together if and when gas prices go up. The only thing we know is over the next 20 years, nobody knows where the gas price is going. It will be volatile. So it’s important to have an attractive cash breakeven and capture the upsides when they’re there.

Liam Burke: Great. In terms of the Gimi operational efficiencies and debottlenecking, are you gleaning anything from that process that can help you on future FLNG projects?

Karl Staubo: Yes. So if you look at our units, they’re getting more efficient. The Gimi is more — slightly more efficient than the Hilli Mark II is quite a bit more efficient than the Gimi, both in terms of fuel consumption, emissions, water intake, many different things. So we’re constantly adopting technology advances. Like think of it as a car. If you bought the Volkswagen Golf 5 years ago and you ordered a new one now, it looks very similar, but it’s got a nicer radio, better sound system and whatever else it has, better headlights. It’s the same car, but it’s nicer.

Liam Burke: I’ll be sure to consider that when looking at the golf.

Operator: We will take our final question. The final question comes from the line of Sherif Elmaghrabi from BTIG.

Sherif Elmaghrabi: So the buyback program was reloaded in Q3. And in the past, you’ve shown some flexibility regarding how to reinvest in the company. So my question is, how are you thinking about shareholder returns through buybacks versus that outstanding 30% interest in the Gimi given where the stock is today?

Karl Staubo: That’s for us — so the $150 million is set for share buybacks, right? When it comes to the Gimi, that’s obviously — the 30% stake is owned by Keppel Capital. If that can be acquired accretive to where we can do other FLNG growth and/or where we are trading on the market, we will, for sure, consider it. If not, we don’t need to buy it.

Sherif Elmaghrabi: Got it. And then turning to the fleet. If we fast forward a year and you secured a contract for a fourth FLNG, but the order book for gas turbines has obviously grown. Do you have a sense of how that affects delivery timelines for a fifth unit? Is it a few months more than I think you said up to 48 months for Mark III, for example?

Karl Staubo: Okay. To just give you an example, up until June this year, the delivery time for a gas turbine was 24 months. In June, some of these are down to almost single suppliers. In June, one of these suppliers sent a letter to all its clients saying lead times just went from 34 months — to 24 months to 36 months. So that’s a 1-year delay. If you’re an existing client and you have an existing program, maybe you can sneak in the middle there somewhere. But you’re talking significant potential delays unless you lock in the long leads, which is why we’re going ahead now because in developing these projects, you need to know when you start up to drive commercial value. And if you keep letting the critical items slide, even if the shipyard is ready on everything else, if you can’t get the topside equipment there, you don’t get the ship.

Operator: This concludes today’s question-and-answer session. I will now hand back for closing remarks.

Karl Staubo: Thank you all for dialing in. As we said, we’re now in Bermuda. Eduardo and I will head to New York later today and hope to see some of you there over the course of today and tomorrow. Other than that, thank you for listening in, and we’re pleased to stay in touch. Thank you.

Eduardo Maranhao: Have a good day.

Karl Staubo: Thank you.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.