Golar LNG Limited (NASDAQ:GLNG) Q4 2025 Earnings Call Transcript

Golar LNG Limited (NASDAQ:GLNG) Q4 2025 Earnings Call Transcript February 25, 2026

Golar LNG Limited misses on earnings expectations. Reported EPS is $0.3 EPS, expectations were $0.38.

Operator: Welcome to the Golar LNG Limited 2025 Q4 Results Presentation. After the slide presentation by CEO, Karl Fredrik Staubo; and CFO, Eduardo Maranhao, Tor Olav Troim will have some closing comments prior to 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 welcome to Golar’s Q4 2025 Earnings Results Presentation. My name is Karl Fredrik Staubo, the CEO of Golar and as the operator said, I’m accompanied today by our CFO, Eduardo Maranhao, to present this quarter’s results, and our Chairman, Tor Olav Troim , to give some closing remarks. Before we get into the presentation, please note the forward-looking statements on Slide 2. Starting on Slide 3 and an overview of Golar today. Golar owns 3 FLNG vessels, all with 20-year charter backlog. Starting on the top left, the Hilli is the best-performing FLNG globally and delivered another quarter of 100% economic uptime. The FLNG Gimi started its 20-year contract for BP offshore Mauritania and Senegal in June ’25 and is now producing above the contracted volume.

The Mark II FLNG is under construction and on schedule for delivery by year-end ’27 and thereafter to start a 20-year charter in Argentina alongside the Hilli. We have 3 growth designs ranging from 2 million to 5 million tonnes per annum, and we have obtained yard availability and pricing for all 3 designs during Q4. We’re listed in NASDAQ with a market cap of approximately $4.5 billion. And pre year-end, we had a cash balance of $1.2 billion and a net debt position of $1.5 billion. We have an EBITDA backlog standing at $17 billion before commodity-linked earnings and inflationary adjustments. Our adjusted EBITDA for ’25 was $232 million, and we expect this to grow to about $800 million once the fleet is fully delivered and under long-term contracts.

Turning to Slide 4. This is just an illustration of the overview of the long-term cash flow visibility of our 20-year charters. Hilli will end her existing contract for Perenco in Cameroon in July this year and go via Seatrium shipyard in Singapore for upgrades and life extension work before starting her 20-year charter in Argentina during the second half of ’27. Gimi is producing under a 20-year charter for BP Offshore Mauritania and Senegal, and the Mark II is on schedule to start her 20-year contract during first half ’28. On Slide 5, we build up the adjusted EBITDA contribution from the existing fleet. Golar’s 70% ownership of the Gimi provides us with an annual EBITDA of $150 million based on the contracted volume. Hilli will contribute $285 million once on contract in Argentina.

And similarly, the Mark II will contribute $400 million once operational in Argentina. If we then net off our G&A of around $35 million, we foresee long-term EBITDA generation of $800 million a year before commodity upside, inflationary adjustments and any incremental FLNG units. The embedded commodity upside comprised of 2 components. It’s the profit sharing mechanism in the FLNG contract as well as our 10% shareholding in Southern Energy. The commodity upside provides Golar with an incremental upside of approximately $100 million for every dollar the offtake price is above $8 Argentina and a downside of approximately $28 million for every dollar the FOB price in Argentina is below SESA cash breakeven. We believe the skewed risk reward of these commodity exposure will contribute meaningful earnings over the 20-year life of our Argentina contracts.

Illustratively, if LNG prices return to 2022 levels, the incremental earnings from the commodity upside would be an annual addition of $2.7 billion. Or if LNG prices remain at current levels, we see an additional commodity upside of approximately $200 million per year. Turning to Slide 6, highlighting some of the key characteristics of our FLNG charter agreements. We aim to structure our LNG contracts at solid infrastructure cash flow with meaningful contractual protections. Some of the key attributes of these protections include that all of our contracts are paid in U.S. dollars. All cash flows are paid offshore net of any local taxes in the countries where we operate. The contracts are made under English law. And for all the long-term contracts, our operating costs and maintenance CapEx is either passed through or reimbursable by our counterparties.

Moving to the next session and the business update starting on Slide 8. Starting on the left-hand side, Q4 was another active quarter for Golar, concluding ’25 as a record year of execution. During the quarter, all conditions precedent for the 20-year contract for Mark II in Argentina were successfully met. We concluded 2 financing transactions totaling $1.7 billion in the quarter, comprising of a new $1.2 billion bank refinancing, increasing from $630 million to $1.2 billion. The new facility has improved terms compared to Gimi’s initial financing facility and the new facility proves the bankability of our FLNG assets once operational under long-term contracts. We also entered the rated U.S. unsecured bond market with a $500 million bond offering with a coupon at 7.5%.

During the quarter, SESA signed a letter of agreement for an 8-year offtake deal for the first 2 million tonnes of production in Argentina. The LOI was signed with SEFE, which stands for Securing Energy For Europe, a subsidiary of the German government. They are also the existing offtaker for Hilli in Cameroon today. So it’s an offtaker we know and cooperate well with. The terms of the offtake agreement is 1 million tonnes is linked to Brent prices and 1 million tonnes is linked to Henry Hub plus a premium. We expect these LOIs to be formed into a letter of agreement within Q1 of this year, at which point the details of the commercial terms will be disclosed. During Q4, we bought back and canceled 1.1 million shares at an average share price of $37.76.

We’re also very pleased with commercial progress made in the quarter for a contemplated fourth FLNG project. We’ll describe this in greater detail later in the presentation. Turning to the right-hand side for the full development for the year. ’25 was truly a record year of execution, securing $14 billion in EBITDA backlog across the two 20-year contract in Argentina. We took new financing facilities of $2.275 billion across the mentioned Gimi bank refinancing and the U.S. rated bond as well as a $575 million convertible bond issued in June ’25. We obtained the commercial operations date of Gimi and doubled our operating fleet of FLNGs. We continue to perform according to our market-leading operational uptime, and we’re especially pleased to see the Gimi join the operational excellence of our sister Hilli and both vessels produced above their contracted amounts, providing extra value to our stakeholders.

In total, during ’25, we bought back 3.6 million shares, confirming the Board’s and management’s view that we see attractive value in our own stock. We fully exited LNG shipping after 50 years in the business with the sale of the Golar Arctic and our investment in Avenir Shipping. So all in all, we’re very pleased with the year that passed and hope to keep the same progress in the year we have now started. Turning to Slide 9 and a snapshot for the Hilli. Hilli continued her market-leading track record. For the year, we generated a slight overproduction, recognizing $2.5 million of excess earnings over the 1.4 million tonnes contracted capacity. In December, we had a major production milestone, producing our 10 millionth tonne of LNG since startup of contract in 2018.

At the end of the current charter in July this year, the vessel will sail from Seatrium — from Cameroon to Seatrium Shipyard in Singapore for vessel upgrades and life extension work. The required long lead items and equipment needed for the work at Seatrium have been ordered and the prefabrication of certain work scopes has started at the shipyard. During first half of next year, Hilli will sail from Singapore to Argentina to start a 20-year contract expected to start during the summer of next year. She will then contribute $285 million of annual EBITDA or $5.7 billion of adjusted EBITDA backlog over the 20-year period. Slide 10 focuses on Gimi. As mentioned, Gimi achieved its COD in June ’25. The unit is still optimizing operations in close collaboration with the upstream partners of the GTA project.

Production is ahead of schedule and solid optimization has been achieved to date. In Q4, we invoiced day rate 3% above the contractual day rate, and we are now frequently producing at volumes that on an annualized basis would significantly surpass even nameplate capacity. It’s worth to note that the throughput capacity of any liquefaction plant is sensitive to gas quality and ambient temperatures. Throughput variation between winter and summer months should therefore be expected where colder ambient temperatures during winter benefit the production levels. However, our contracted rate is based on 90% of nameplate and any production over and beyond that number is a pro rata increase to our earnings. Based on operations to date, we expect Gimi to produce above her contracted volumes on an annual average basis, and we’ll continue to improve how meaningful that can be in the months to come.

Turning to Slide 11 and the Mark II FLNG. The construction of the unit remains on budget and on schedule for delivery by year-end ’27. Construction is now close to 50% complete, and we have spent approximately $1.1 billion of the total $2.2 billion conversion scope. The full $1.1 billion spent to date has been equity financed. As you can see from the pictures on the right-hand side, meaningful construction progress is now advancing. The midship manufacturing, which will house the liquefaction plant is now well underway, and the new midsection will be approximately 63 meters wide and approximately 80 meters long. We’ve now also surpassed 6 million man hours without any lost time injuries. On Slide 12, SESA is also making strong progress on the infrastructure required to facilitate for the gas grid connection of the FLNG Hilli as well as the required land-based infrastructure to support FLNG operations in Argentina.

SESA has now awarded approximately $500 million of investments to date, including the pipeline connection to the existing grid, support vessels such as tanks and supply vessels and construction of the land-based warehouse to facilitate spare parts and operational support for our operations in Argentina. On Slide 13, SESA is also moving ahead with a designated pipeline from Vaca Muerta to the Gulf of San Matias. The pipeline comprised of 3 key components. The first component is the turbo compressors, and the contract for those was awarded in December ’25. The second component is the line pipes, which will then bring the gas, the approximate 500 kilometers from Vaca Muerta to San Matias. Those were also awarded in December last year. The remaining component is the EPC for the actual construction of the line pipes and the compressor, where we have received 8 proposals and expect to have an award within the first half of this year, upon which construction will ramp up.

Turning to Slide 14. During the quarter, we confirmed yard availability and price for the 3 growth designs that we have in question, ranging from Mark I to be built at Seatrium in Singapore, Mark II at CIMC Raffles in China or a 5 million tonne unit that could be built at Samsung in Korea. We’re pleased to see that we still obtain attractive CapEx per tonne and around 3-year construction time for the conversion candidates and north of 4 years for the Mark III. This is helpful input in developing our commercial pipeline and the price point and delivery is confirmed interest with our clients. Turning to Slide 15. We see multiple discussions for FLNG deployments. We see an increasingly strong demand for FLNG tonnage, driving positive development of our commercial pipeline.

We’re currently in discussions for deployment of projects in Africa, Middle East and South America. Based on the pace of the commercial developments and differences in vessel design requirements of the projects, that will dictate the design that we will order in the end. We do not foresee any meaningful CapEx expenditure until the commercial terms for the next project have matured. We will revert to the market once we have a meaningful update on our fourth unit. Turning to Slide 16 and some of the overarching developments of the LNG market. Last year, the LNG market was around 434 million tonnes, expected to grow approximately 50% in the next 5 years, mainly driven by supply out of the U.S. We note with interest that U.S., which is already the largest producer in the world, will take the vast majority of incremental growth.

That’s particularly interesting as the U.S. is already the incremental producer on the cost curve of LNG. We see strong demand development driven by volumes out of the Far East, where China is currently the most active buyer in the market. Going forward, we need to see additional LNG FIDs to cater for the demand that’s coming, and this fits well with the delivery schedule that’s just been confirmed by the shipyards and for the commercial discussions under negotiations. I’ll now hand the call over to Eduardo to take us through the group results for the quarter.

Eduardo Maranhao: Thank you, Karl, and good morning, everyone. I’m happy to share an overview of Golar’s financial performance for the fourth quarter of 2025. If we move to Slide 18, let’s review some of the key highlights of the quarter. Total operating revenues significantly increased in 2025, reaching $133 million for the quarter and $394 million during the full year, an increase of over 52% when compared to 2024. This quarter, we report a net income of $23 million and a total of $113 million for the full year of 2025, an increase of 40% compared to 2024. Our Q4 adjusted EBITDA came in at $91 million, reaching a total of $265 million for the year. Some key drivers of this performance were Hilli, as Karl mentioned before, has maintained its commercial uptime level of 100% and recognized an additional $2.5 million of production in Q4 ’25, while Gimi also saw increased earnings in Q4, largely driven by higher production volumes resulting from technical improvements and also improved ambient conditions on site.

This quarter, we declared a dividend of $0.25 per share with a record date of March 9 and the payment scheduled for March 18. In November, we approved a new $150 million buyback program, of which approximately $41 million was spent during Q4 at an average price of $37.76 per share. Across the full 2025, we have been consistently active on buybacks and repurchased and canceled a total of 3.6 million shares. I’ll provide some further information on this in the next slide. Moving to Slide 19. We continue to improve our balance sheet flexibility and Q4 was a very active quarter in terms of transactions. In October, we issued $500 million under our first U.S. rated 5-year senior unsecured notes with a coupon of 7.5%. And at that time, we repaid $190 million of our previous outstanding 2021 bonds.

In November, we closed a new $1.2 billion commercial bank facility for Guinea, equivalent to just over 5.6x its annual contracted EBITDA. This allowed us to release approximately $400 million in liquidity net to Golar. Our cash position remains strong with $1.2 billion of cash in hand at year-end. Our total gross debt stood at $2.7 billion, leaving us with a net debt position of $1.5 billion. On a fully delivered basis in 2028, once all FLNGs are in operation in Argentina, our net debt-to-EBITDA ratio is set to reduce significantly to just over 3.4x. When it comes to the Mark II, we continue to fund its CapEx commitments. And so far, we have spent just over $1.1 billion to date. All of that amount has been funded with equity. So we continue to evaluate further debt optimization alternatives, which may include the refinancing of Hilli’s current facility and a new long-term debt facility backed by the Mark II.

This will allow us to continue to release significant liquidity to continue to support our fund — our growth projects. Now moving to Slide 20. We continue to focus on accretive growth while maintaining a sustainable quality of shareholder returns. Our plan is to allocate most of operating cash flow after debt service to shareholders, while continue to recycle capital through asset level financings and existing debt optimizations to fund growth. In 2025, we returned approximately $250 million in the form of dividends and buybacks, of which $103 million were paid in dividends over the course of the year and $144 million in buybacks as explained before. During that same period, we continued to grow, and we’ve invested over $750 million on CapEx for our FLNG units.

Moving to Slide 21. We can see that our share count has been significantly reduced over time with a total of just over 101 million shares outstanding as of today. Over the course of last year, we bought back and subsequently canceled 3.6 million shares, as explained before. We currently have a remaining allowance of up to $190 million under our buyback program, and we plan to continue our active approach to accretive buybacks from time to time. Moving to Slide 22. When our 3 FLNGs are in full operations in Argentina, we expect our EBITDA to grow to over $800 million before further commodity upside. This can grow even more, subject to further upside from LNG prices under the contract for Hilli and Mark II. Based on that, our free cash flow generation could reach around $500 million per year or approximately $5 a share before commodity upside.

This could represent a total increase of over 5x our current dividend level of $1 per share, which we were currently paying. Incremental free cash flow could also be resulting under the SESA contracts and can be estimated at approximately $100 million per year for every dollar per million Btu increase in FOB prices above $8. Moving to Slide 23. I just wanted to recap that there are many ways that investors can get exposure to Golar. We are listed in NASDAQ and our market cap was just over $4.5 billion with an average daily volume of over $50 million per day. We currently have $800 million on the 2 unsecured bonds issued in ’24 and ’25 and also an existing convertible bond of $575 million, which was issued last year. So there are many different ways that investors can gain exposure to Golar, and this is a summary of how you can play that.

I’ll hand now the call back to you, Karl.

Karl Staubo: Thank you, Eduardo. And turning to Slide 25 and a look ahead at what’s our focus on continued value creation. Near term, we see increasing commodity prices that will boost the commodity-linked earnings for Hilli until end of contract in July this year. Based on the strong performance of Gimi, we also expect to see increased capacity utilization payments that will somewhat improve the adjusted EBITDA from Gimi. We believe one of the most or least understood parts of Golar is the commodity upside of our Argentina contracts. And within this quarter, we expect the commercial terms for the SESA offtake to be announced. And hopefully, that can ease the market’s understanding of those — of that potential offset. We have done — we’ve proven to do accretive buyback and cancellation of Golar shares, and we have more capacity under the existing buyback program.

Through last year, and we’ll continue to look for asset level debt optimization, and there’s plenty of opportunity to do so across Hilli and the Mark II that could release significant liquidity to fund a fourth FLNG unit and enhance equity returns. The start-up of the Hilli and the Mark II contract in Argentina these are obvious step changes in earnings growth as well. The commercial pipeline of new projects — new FLNG projects remains under strong development, and we see the terms in which we believe we can obtain to be highly accretive to our platform value. The commodity exposure on the SESA contract will come into fruition as the 2 units become operational. As Eduardo just explained, the dividend capacity and the capacity to multiply increase that is evident once we’re fully operational.

We continue to see structural strong LNG demand beyond 2030 onwards. And our focused FLNG strategy with proven FLNG conversion expertise and the recently reconfirmed price and delivery schedule from the conversion shipyards is a further testimony to our business model. Another interesting thing to note is that the net present value of Golar is increasing daily until both FLNGs are operational in Argentina as a function of time. Turning to Slide 26. Golar remains the only proven service provider of FLNG globally. We have an adjusted EBITDA backlog of $17 billion before commodity upside and inflationary adjustments. We remain with strong balance sheet flexibility of around 3.4x net debt to EBITDA once fully delivered. This enables growth whilst still increasing shareholder returns.

I’ll now hand the call over to our Chairman, Tor Olav Troim, for some closing remarks before we open up for Q&A. Please go ahead, Tor.

Tor Trøim: Yes. Thanks, Karl. First of all, I want to give some thanks to management for a good execution in the year we have behind us to effectively secure $14 billion in EBITDA backlog and do more than $2 billion in financing, pay more than $1 billion in debt — in installment on the Mark II and end the year with more than $1 billion in cash. It puts us in a very strong position to execute what we think should be an aggressive growth strategy being the world’s leading FLNG player in the market. We see today significant more demand for products than we ever have seen. And it’s more a question about concentrating our efforts into the projects we think can give the highest possible overall return. It’s one of the Board’s mission to maximize the value of the company for all shareholders, both on a long and short-term basis.

To have an effectively priced equity is a major condition for growing this business. The value of Golar today, as Karl alluded to, is linked to 3 things. It’s the value of the existing contract. It’s the value of the options agreement we have, which is pretty much a one-sided call on gas for the next 20 years, and it’s effectively the value of the Golar franchise. I know everybody is pretty good in calculating the value of the existing contracts. I don’t think anybody really pay attention to the value of the options, but I’d like to focus a little bit about the third thing, the value of the Golar franchise. It’s 26 years since Fredriksen took over Golar, and we effectively started the venture to build a massive LNG company. It’s now 16 years since we effectively started the work on the FLNG activities, which started in 2010.

In ’14, we ordered the fourth vessel — the first vessel. It was in operation in 2018, and we now have 8 years of extremely successful operation. That franchise, I don’t think anybody fully understands the value of. But to illustrate a little bit, we have been approached by one of the largest oil companies in the world who effectively said we cannot do this. Can you be your service arm to deliver FLNG activities going forward? I think that’s a question to take those kind of things is probably a limited return compared to a lot of the other things we can do. But I think in many ways to illustrate the value of the franchise we have built, which I think people are grossly estimating when they’re trying to do the value. When it comes to the way we and the Board look at the value, I think so far, it’s represented by the fact that we’re buying back stocks, and that’s a reflection of the fact that we don’t think the value — we think that it’s almost better to buy back our own stock at an undervaluation than to effectively do anything else.

We have also decided to push out the investment #4 and maybe also investment #5 a little bit not because of lack of projects, but we go into 2 years in ’26 and ’27, where we have limited cash flow because the Mark II has not started and we lease in for repair. So I think what we want to do is to push the investment phase closer to the period where we are effectively running with an $800 million EBITDA and are actually self-serviced with capital for growth purposes. I was on the call in connection with the Q1 numbers, and I said then that if an undervaluation compared to the real value exists over time, then the Board will kind of start processes, which try to take out part of that benefit. Even if the share price in the latter weeks have shown some signs of recovery, the Board still feels that the value of this company, including the value drivers I just mentioned, particularly #2 and #3, should mean that the share price should have been higher than where it is today.

What we have seen in other situations in this industry is that the valuation typically come when the cash is coming. It doesn’t come when the contract is signing. I’m referring to companies like Cheniere, where you actually saw that the share price started to move when the cash finally came from the discussions. So in order to kind of look at what we can do in the meantime, we have to explore alternative ways to enhance the value for the period under the cash flow come in 2028. We have, as the Board started a process where we go and seek external advice to consider several ways to improve this — the value for our shareholders. This thing includes processes, which includes talk to shareholders and includes talk to industrial and financial potential partners, which can help us in enhancing the value of the company on a more shorter-term basis.

The market should be aware that we several years ago, received unsolicited offer for the company, several ones. We structured that into a process and then all the offers were at that time, significantly higher than the share price. The Board decided, however, not to recommend the sale of the company, which I think in retrospect has been the right decision to see how we later have built the company. The Board of Golar today consists of Board members, including myself, which represent significant capital invested in the company. And you should be assured that the Board have no other consideration than to do what we believe is the best interest for all shareholders. There is no other agendas here. The outcome of such a strategic process, which kind of we are in the process of starting, combined with the Board’s internal discussion is too early to be expected, but we’ll keep the market updated if these processes are likely to lead to material changes in Golar’s operational or corporate structure.

I hope this confirm the commitment I gave to the shareholders in connection with the Q1 report last year. where I said that we intend to do things if you don’t see a material improvement of share price. We have seen some, but I think we still feel with $17 billion of EBITDA backlog and an industry-leading position, including a derivative, which is significant value that there are rooms for improvement. And I genuinely hope that you all guys kind of give us some time to go through this process. And as I said, no outcome is given, but I can assure you that the commitment we gave a year ago to explore alternative way to extract value is kind of on the agenda for the Board. That’s the only thing I want to say about this thing, and we will report back to shareholders as we make progress on this thing.

In the meantime, as Karl said, the value of the company should increase day by day as closer we get to the window in 2028. What I want to end with is that the venture we started 16 years ago, which was to effectively become a dominant FLNG player pays off. I’m very proud of the performance of the Hilli contract. I’m equally proud that we now can deliver to BP and probably be the only part of the [indiscernible] project, which have delivered on time and on budget and effectively now delivering more than we should according to the contract. So thanks. I hope that was enough to confirm that what we’re saying in earlier calls are lived up to by the Board. Thank you.

Karl Staubo: Thank you, Tor. So operator, we are now ready for Q&A.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of John Mackay from Goldman Sachs and Co.

John Mackay: I appreciate all the thoughts around the strategic review. I just want to drill into the details a little bit. I understand it’s kind of a multifaceted process. But can you walk us through what the specific process you’re focused on right now looks like? What could timing be? What are you watching to decide how to move forward? And maybe to put a bow on it, you mentioned you were approached. Is one of the options on the table here a potential sale of the company?

Tor Trøim: I think in view of the discussion we have had in the Board, how we want to orientate the market around this, I don’t want to give any further comments than what I’ve effectively already said. I think hopefully, the shareholders have some respect for the fact that these kind of processes kind of needs to be kept a little bit close to the Board and not effectively be a public process.

John Mackay: Okay. Maybe asking it a different way. You highlighted the current value of the company, your desire to push maybe some of the next vessels to the right a little bit to reallocate capital. Is the message here that the focus right now should be on further buybacks specifically? And I guess, at what point do you decide to switch from maybe investing in the base business to — buying effectively the base business to commercializing the next vessel?

Karl Staubo: I can answer that one. So there’s no change in our committed focus to develop attractive FLNG projects and none of the actions taken today will pause the pace of the commercial evolvement of the contracts in discussion. That said, an FLNG project, if it’s just to agree commercial terms with the counterpart, that would be fairly easy. These are very large infrastructure projects that require significant regulatory, governmental, tax and environmental approvals, including LNG export laws. And most of the — or some of the countries we’re in discussions for didn’t export LNG before we started it. That’s true for Cameroon, that’s true for Mauritania, that’s true for Senegal, and it’s true for Argentina. So there is absolutely no change whatsoever in Golar’s committed focus for accretive FLNG growth.

What we’re saying is some of the projects in discussion have different vessel design requirements. Hence, instead of going on speculation, number one, because of the different requirements from the various commercial discussions; and number two, for the cash flow profile reasons mentioned by Tor, we’ve decided to not go on speculation as speculatively as we have previously done and then continue to mature the commercial pipeline before we commit significant capital, both because we believe that’s right from a vessel design selection point of view and also for the cash flow profile that Tor alluded to.

Tor Trøim: Let me add a little bit to that, Karl. I think kind of just have one thing in mind, the process, which we’re talking about now where we’re seeking some external advice for what the kind of options is for the future of Golar is not in any way influencing the day-to-day business. What the Board has given a clear mandate to management is run the business as we run it to the best interest of things and don’t let any kind of strategic discussions influence what we do in short term. I think any kind of strategic discussion will benefit from building — continue to building the company like we do. So I think that’s the most important thing. This is business as usual and nothing else happening, but I think we’re looking at some other alternatives.

If there are cheaper access to capital, for instance, than effectively we have today. So I think that’s important. I think when Karl — what Karl says about ’27 and ’28 is — or ’26 and ’27 is that if we push the kind of cash back a little bit, maybe half year to a year, we will be in a very different situation because in the end of the period when we have the heavy installments on ship 4 and potential 5, you will also meet that with a massive cash flow coming out from the business. So I think it’s a pretty thought out decision, which I also know is supported by some of our major shareholders who have given us the same input. We have been through a history here in this company where we’ve done $3 billion projects or more than $1 billion project with a pretty tiny balance sheet that had put the balance sheet under stress in some of the cases.

I don’t think we want that. We want to have a very, very strong and solid balance sheet to execute on multibillion-dollar projects, which we’re talking about here.

Operator: Our next question comes from the line of Chris Robertson from Deutsche Bank Securities, Inc.

Christopher Robertson: Just given the strong operational performance of the Gimi over the last several months, it’s producing slightly above nameplate, as you say here. How are the counterparties now thinking about the future of expansion at GTA? What other data points do they need to see or evaluate to make a decision around that? And what’s the current thinking potentially around if an expansion would include a floating asset?

Karl Staubo: That question is probably better placed to BP and Kosmos, but the fact — what BP has consistently said is that they want 12 to 18 months of well data before a decision is made on expansion, but it has to do with how the wells perform. Given that we are now producing above the contracted amount suggests that the — not only the FLNG, but the flow from the upstream and the other infrastructure is also working at least as expected, if not better, and that should help a decision for expansion. And given that the incremental cost of expansion should be significantly lower than the initial phase, any growth should be accretive to the project economics.

Christopher Robertson: My follow-up question here is, Karl, you mentioned getting quotes at the yards recently. This is kind of a 2-part question. One, what’s the current thinking around the cost for Hilli upgrade and redeployment work? Has that range narrowed at all as we get kind of closer here to the summer months? And then two, could you clarify kind of where things are shaking out in terms of where you’re getting quotes at in terms of a dollar per metric ton? Have we seen any cost inflation since the Fuji project? Any commentary around that would be helpful.

Karl Staubo: Sure. So on Hilli, the conversion budget, when we say conversion budget, that includes everything from disconnecting in Cameroon, towing and bunkering the vessel from Cameroon to Singapore, the yard stay and sailing back to Argentina and connecting and commissioning, OpEx, training, spares and upgrade work, all in, we estimate $350 million, including a certain level of contingencies. We — as we continue to execute on the Hilli redeployment as most of the equipment is now ordered, we feel comfortable with that budget, and we’ll try not to eat into all of the contingencies built into the $350 million, but that’s the budget. But it’s important to highlight that, that includes everything, not just the upgrades to the ship.

And then the second part of the question, do we see price inflation? Yes. The price inflation is not so much on the yard scope. It’s more on the top side and in particular, the long lead equipment on the top side. The primary driver of that cost inflation is competition for the equipment, mainly from AI data centers. We’re using the same gas turbines and some of the other critical components. And the massive surge in such developments has caused lead times to go out and prices for that equipment to go meaningfully up. If we then look across an FLNG, we see a very limited cost inflation of the Mark II compared to where we ordered last time. We do see a higher cost inflation on the Mark I compared to where we ordered, but that’s obviously a function also of it’s a longer time since we ordered the Mark I.

And the biggest cost inflation is without a doubt on the Mark III and that for the Mark III, it’s also driven by competition at the shipyard, namely Samsung. So that’s how we see it, but we still see that we can obtain a cost advantage compared to land-based of up to 40% lower CapEx per ton for Mark I and II, not so much for Mark III.

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

Alexander Bidwell: With the performance thus far on Gimi, how should we think about production above contractual base going forward? You had mentioned ambient temperature and gas composition are both key drivers. Are there any other factors such as maintenance, which would impact production quarter-over-quarter?

Karl Staubo: Sure. So maintenance is built into the difference between nameplate of 2.7 and the contractual amount of 2.4. So that’s already taken into account scheduled maintenance. When it comes to the ambient temperature effects, you will see a level of seasonality over and above the 2.4. We don’t expect to go under the 2.4 in the summer months, and we expect to be meaningfully higher in the winter months. So if you smooth it out on average, we expect to be well above the contracted amount for — in the case of Q4, that amount was 3%, but we’re still undergoing optimization, and we think more than 3% is fair to assume across the year. Exactly percentages we don’t want to commit to right now as we are in the midst of these optimizations. To have this type of production this early in the project exceeds the expectation both of Golar and of the charter.

Alexander Bidwell: All right. Great color there. Turning over to Argentina. Could you walk us through the start-up and commissioning cadence for Hilli and the Mark II once the assets are actually on site? And are there any lessons learned from Cameroon and GTA that you plan to apply for the deployments?

Karl Staubo: Yes. So when it comes to — they will be slightly different because Hilli has obviously operated for 8 years, whilst the Mark II will be — has never operated. So we expect the commissioning process of Hilli to be quicker than the Mark II. And for simplicity, we expect commissioning of Hilli to be around 3 to 4 months, and we expect up to 6 months for the Mark II simply because the equipment hasn’t been running in December. The actual process is that we arrive on site, we connect to the mooring system and then we start commissioning through gas, gas in production. The key learning effect that we are debating with setup but are likely to adopt is that we do expect to arrive cold. What that means is that we will arrive or likely will arrive with some LNG on the tanks that allows us to start commissioning before we are reliant on gas flowing through the pipeline.

Hence, we can save any time that it would take to connect to the grid. And secondly, the cooldown process itself. That has a slight cost, but in the scheme of FLNG CapEx, almost negligible. But this can save significant time and it’s the same as what we did both for Hilli and Gimi commission.

Operator: Our next question comes from the line of Sherif Elmaghrabi from BTIG.

Sherif Elmaghrabi: Maybe to start off, sticking with the Gimi, are project partners — given production has been surprised to the upside, are project partners still interested in debottlenecking? And what needs to happen to debottleneck given Gimi is already capable of exceeding nameplate by a fair margin?

Karl Staubo: Again, it’s a question for the upstream partners more than us, but it’s in everybody’s interest. to debottleneck provided you can do so and at, call it, CapEx accretive to the CapEx — to the unit economics of the project. And we do expect that such debottlenecking will be at a very meaningful accretion to unit economics and as such is in the interest of all stakeholders, including Golar.

Sherif Elmaghrabi: Okay. And then turning to a fourth or fifth unit. Can you elaborate on these Middle Eastern opportunities? That’s not something that was on my radar, but it’s interesting. And I’m wondering if that’s linked to ramping unconventional gas production in the region.

Karl Staubo: You are right that, that is a region that has, call it, saved up as more and more actively pursuing FLNG. And it’s one of the regions where we like the pace of progress in our commercial — or in the project development of a potential FLNG project. So for that one, you are right, that one we haven’t spoken as much about previously, but what we are hopeful that we can continue to develop at pace.

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

Spiro Dounis: I wanted to go back to demand. I think I heard you guys say several times that you’re seeing more demand than ever before for this LNG infrastructure. I was just wondering if you could expand on that. Is that macro related? Or is that specific to more of an FLNG solution or maybe both?

Karl Staubo: I think it’s twofold. One of it is the increasing industry recognition of the efficiency of FLNG versus alternative liquefaction solutions. The fact that you can construct this unit at up to 40% discount to land-based and the flexibility a movable FLNG provides versus land-based is one key driver. The other key driver is that the vast majority of incremental production of LNG will come out of the U.S. and all U.S. projects or the vast majority of U.S. projects source at Henry Hub. So the attraction is when you can find reserves that you can source in addition to the CapEx saving, but significantly cheaper gas sourcing than Henry Hub. That’s the other component that drives the interest. So for us, it’s increasing industry recognition and the attraction of sourcing cheaper [indiscernible].

Spiro Dounis: Got you. That’s helpful color. Second one, maybe for you, Eduardo. Just you mentioned on this latest refinancing or financing that it sort of proves out the bankability of these structures. Could you maybe expand on that as we think about the go forward here? You obviously have a lot more financings to do. Does this latest one prove as a blueprint? What lessons did you learn during this last go around?

Eduardo Maranhao: Yes, that’s a great point, Spiro. So you’re absolutely right when it comes to the data point that we had on the latest financing. So when we look at the Gimi deal that we closed in November, we raised $1.2 billion, which is just over 5.6x Gimi’s annual EBITDA. So if we try to apply and we are in discussions of potential similar transactions to that one. If we were to apply the same multiple to both Hilli and/or the Mark II, we could be looking to raise in excess of $1.5 billion for Hilli and over $2 billion for the Mark II. So that really shows the whole potential of financing capacity that we have under these contracts. These are long-term 20-year agreements, and we really believe on the bankability of these contracts that we have signed up to.

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

Liam Burke: Karl, you talked about a lot of interest in potential negotiations for future FLNG projects. Does shipyard capacity ever come into the negotiation? Or does that — I mean, Chris touched on cost. But shipyard capacity, does that ever come into future discussions?

Karl Staubo: Absolutely, yes. That is why it’s been critical as part of this commercial pipeline development to have confirmed yard availability and updated yard pricing in continuing such discussions because delivery is obviously a key part of this. What we see is that for the conversions Mark I and II, we are still able to maintain a very, very competitive conversion period of somewhere between 36 and 40 months, whether or not we go Mark II or Mark I. What we see is that if you go bigger on the Mark III, it’s meaningfully pushed out even since we had the update with the shipyard 6 to 9 months ago. So on that one, we see the yard availability as a negative. On the first two, we still see it as attractive.

Liam Burke: Great. And then other FLNGs out there mostly operated by the major energy companies. Has there been any potential competition on the FLNG as a service only from any other providers?

Karl Staubo: Nobody else in the world has done vessel conversions, FLNG vessel conversions. We think that the CapEx and delivery time is better obtained in the current yard and long lead situations for vessel conversion than it is for newbuilds. As part of the update we’ve had with the shipyards, we have also explored newbuilds on the smaller sizes that reconfirms that conversion is the cheapest and most efficient way to do, but obviously comes with significant engineering complication that Golar has built up over time. So we do see that there are more and more majors going for this type of technology, but there are significant advantages doing it with us as a service provider as opposed to replicating this through a new build because you cannot obtain the same benefit.

Operator: There are no further questions at this time. So I’ll hand the call back to Karl for closing remarks.

Karl Staubo: Thank you all for dialing in and listening to the Q4 presentation. Have a great day.

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