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oslo : GOLP01
HAMILTON, BERMUDA--(Marketwired - Aug 29, 2013) -
Highlights
* Golar LNG Partners LP ("Golar Partners" or the "Partnership") reports net income attributable to unit holders of $28.0 million and operating income of $44.4 million for the second quarter of 2013
* Generated distributable cash flow of $26.4 million for the second quarter of 2013
* Declared distribution of $0.515 per unit for the second quarter of 2013
* Golar Mazo and Methane Princess drydockings completed
* Refinanced Golar Winter and Golar Grand with a new bank loan facility $225 million term loan and a $50 million revolver
Subsequent events
* Golar Winter drydocking and modification works completed and vessel delivered to new location in Brazil
* Entered into an additional $100 million interest rate swaps
* Golar LNG Limited ("Golar" or "Golar LNG") secures two FSRU contracts that represent attractive near and medium term acquisition prospects
Financial Results Overview
Golar Partners reports net income attributable to unit holders of $28.0 million and operating income of $44.4 million for the second quarter of 2013 ("the second quarter"), as compared to net income attributable to unit holders of $30.3 million and operating income of $45.2 million for the first quarter of 2013 ("the first quarter") and net income attributable to unit holders of $30.2 million and operating income of $45.3 million for the second quarter of 2012(1).
Lower operating results for the second quarter of 2013 compared to the same period in 2012 is due largely to drydocking offhire time incurred in the second quarter of 2013, with none incurred in the comparable period, and increased drydocking cost amortization partly offset by the contribution of the NR Satu and Golar Maria in the second quarter. NR Satu was on hire throughout the second quarter of 2013 but was in the final stages of its FSRU conversion and commissioning during the earlier half of the second quarter of 2012, and, therefore, not generating revenues. Comparable results for 2012 do not reflect the contribution of Golar Maria as this vessel was not under the common control of Golar at the time of her acquisition by the Partnership in the first quarter of 2013.
Operating results for the second quarter are slightly lower than the first quarter primarily due to increased drydocking offhire days and higher drydock cost amortization, partly offset by a full quarter's contribution from Golar Maria, which was acquired on February 7, 2013.
Offhire time for the Golar Winter drydocking and modification work and the Methane Princess drydocking was approximately ten weeks in total. The Golar Mazo also completed its docking during the quarter without incurring offhire due to a drydocking allowance in its time charter. Partly mitigating the impact of the above dockings has been the biennial revision of the Golar Spirit and Golar Winter time charter rates resulting in an increase to hire rates during the quarter. The second quarter drew to a close an intense program of drydockings, the next scheduled drydockings are for Golar Freeze and Golar Grand which are not due until 2015. All other vessels operated well throughout the quarter with overall utilization at 100 per cent.
Following completion of the agreed modification work to Golar Winter and her redelivery to charterers, Golar Partners will receive approximately $24 million in additional revenue spread evenly over the remaining eleven years of the contract. This uplift is before the biennial rate revisions provided for in the charter.
Net interest expenses increased to $11.7 million for the second quarter of 2013 compared to $10.1 million for the first quarter. This is largely due to additional Indonesian witholding tax allocated to interest expense rather than corporation tax. As with the other Indonesian taxes incurred in connection with the vessel concerned, this tax is effectively rechargeable to the charterer.
Other financial items for the second quarter of 2013 recorded a small loss of $0.1 million compared with a gain of $1.1 million in the first quarter. Mark-to- market valuation gains on interest rate swaps were higher by approximately $2.5 million in the second quarter of 2013 compared to the first quarter but this was offset by the write off of deferred financing fees associated with the refinancing of the Golar Winter and Golar Grand leases.
The Partnership's Distributable Cash Flow(2) for the second quarter of 2013 was $26.4 million as compared to $27.6 million in the first quarter.
On July 25, 2013, Golar Partners declared a distribution for the second quarter of 2013 of $0.515 per unit which was paid on August 14, 2013.
Financing and Liquidity
As of June 30, 2013 the Partnership had cash and cash equivalents of $61.1 million and undrawn revolving credit facilities of $70 million. Total debt and capital lease obligations net of restricted cash was $1.0 billion as of June 30, 2013.
Based on the above debt amount and annualized(3) second quarter 2013 adjusted EBITDA(4 )Golar Partners has a debt to adjusted EBITDA multiple of 4.1 times.
In June 2013, the Partnership refinanced the Golar Winter and Golar Grand leases with a new 5 year $275 million loan facility. The facility is split into two tranches, a $225 million term loan and a further $50 million revolver, which remains undrawn as of June 30, 2013. The loan bears interest at LIBOR plus a margin and is repayable in quarterly instalments of $5 million with a final balloon payment of $130 million payable in July 2018.
As of June 30, 2013, Golar Partners had interest rate swaps with a notional outstanding value of approximately $906.5 million (including swaps of notional amount of $227.2 million in connection with the Partnership's bonds) representing approximately 90% of total debt and capital lease obligations, net of restricted cash. The average fixed interest rate of swaps related to bank debt and capital lease obligations is approximately 2.4% as at June 30, 2013. Subsequent to the quarter end the Partnership entered into a further $100 million seven year swap at a fixed rate of 2.16%. As of June 30, 2013 the Partnership had outstanding bank debt of $778 million with average margins, in addition to LIBOR or fixed swap rates, of approximately 2.3%. In addition, the Partnership has bonds of $214 million with a fixed rate of 6.485%.
Outlook
The announcement by Golar LNG of the contracting of two FSRU vessels provides Golar Partners its first two potential acquisitions from Golar LNG's fleet of 13 newbuildings.
The first contract is for the FSRU Igloo, which delivers in the fourth quarter of 2013, and is contracted to Kuwait National Petroleum Company ("KNPC") for an initial period of 5 years. The contract comprises the provision of portside FSRU services for an anticipated nine months of the year together with a three month window where the vessel is free to pursue spot carrier and other short term business opportunities. Winter scheduling of the three month stand-down period together with favourable positioning mean that the vessel should have realistic trading prospects. The contract is set to commence in March 2014 and has a total contract value of approximately USD$213 million covering both capital and operating elements over five years.
The second contract is with the Government of the Hashemite Kingdom of Jordan, represented by the Ministry of Energy and Mineral Resources ("the Government"). The FSRU Golar Eskimo will be moored at a purpose built structure that is to be constructed by the Aqaba Development Corporation off the Red Sea port of Aqaba. The FSRU will connect to the Jordan Gas Transmission Pipeline that delivers natural gas to power plants throughout the Kingdom. Earnings under the ten year contract are due to commence during the first quarter of 2015. Annual EBITDA contribution for the first five years of the contract will be approximately $46 million and approximately $43 million per year for the second five year term. The Government has the option to terminate the time charter after year five, subject to payment of an early termination fee.
With the recent contract announcements by Golar LNG and its remaining newbuild fleet of 11 as yet uncontracted vessels, the Board is confident that Golar Partners can continue to strongly grow its earnings and distributions over the longer term.
With the recent drydockings now completed the Board expects a significant improvement in operating results in the third quarter of 2013 with no drydocking offhire and high operational uptime expected. This will be enhanced by increased charter rates for the Golar Winter and Golar Spirit which were escalated according to the contract during the second quarter and the rate increase on the Golar Winter as a result of the modification work which is expected to take effect during the third quarter. Based on current operational performance of the vessels, the Partnership expects operating income in excess of $50 million in the third quarter.
With the growth opportunities outlined above, the Board remains very excited about the prospects of Golar Partners.
August 29, 2013
Golar LNG Partners L.P.
Hamilton, Bermuda.
Questions should be directed to:
C/o Golar Management Ltd - +44 207 063 7900
Brian Tienzo or Graham Robjohns
(1)Following the acquisition of the Golar Grand and NR Satu from Golar, the comparative results for the second quarter ended 2012 assume that the Golar Grand and NR Satu were wholly owned by the Partnership for the entire period that the vessels have been under the common control of Golar.
(2)Distributable cash flow is a non-GAAP financial measure used by investors to measure the performance of master limited partnerships. Please see Appendix A for a reconciliation to the most directly comparable GAAP financial measure.
(3)Annualized means the figure for the quarter multiplied by 4.
(4)Adjusted EBITDA: Earnings before interest, other financial items, taxes, non- controlling interest, depreciation and amortization. Adjusted EBITDA is a non- GAAP financial measure used by investors to measure our performance. Please see Appendix A for a reconciliation to the most directly comparable GAAP financial measure.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Golar Partners Q2 2013 Results: http://hugin.info/147317/R/1725799/575627.pdf
This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Golar LNG Partners L.P. via Thomson Reuters ONE
[HUG#1725799]
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