Interim results for the period ended September 30, 2015

Hamilton, BERMUDA


  • Golar LNG Partners LP reports net income attributable to unit holders of $32.7 million and operating income of $71.7 million for the third quarter of 2015.
  • Generated distributable cash flow of $51.8 million for the third quarter with a coverage ratio of 1.34.
  • Strong operational performance with 100% availability of the fleet for scheduled operations and 99.7% availability after accounting for 3 days of the Golar Freeze drydock.

Subsequent Events

  • Successfully refinanced amounts outstanding in relation to the Golar Eskimo.
  • Identified potential 2016 acquisition target, the FSRU Golar Tundra.
  • GoFLNG Hilli Cameroon project takes FID and becomes a firm 2017 acquisition prospect.

Financial Results Overview

Golar LNG Partners L.P. ("Golar Partners" or the "Partnership") reports net income attributable to unit holders of $32.7 million and operating income of $71.7 million for the third quarter of 2015 ("the third quarter or 3Q"), as compared to net income attributable to unit holders of $41.0 million and operating income of $62.3 million for the second quarter of 2015 ("the second quarter or 2Q") and net income attributable to unit holders of $66.9 million and operating income of $65.4 million for the third quarter of 2014.

(USD '000) Q3 2015 Q2 2015 Q3 2014
Revenue 114,133 105,715 104,505
EBITDA 94,965 84,845 86,218
Net Interest Expense (13,909) (13,784) (11,098)
Other Financial Items (19,045) (1,468) 145
Taxes (3,542) (3,417) 15,116
Net Income 32,668 41,028 66,930
Net Debt 1,275,516 1,305,351 991,218

An increase in revenue net of voyage expenses from $103.6 million in the second quarter to $111.9 million in the third quarter reflects two key items.  Firstly, the Golar Freeze incurred 51 days offhire related to its drydock in 2Q as opposed to only 3 days in 3Q.  This accounts for around $6.6 million of the $8.3 million increase.  Secondly, the Golar Eskimo was chartered back to Golar LNG Limited ("Golar") in 2Q at a pre-agreed rate equivalent to $12.4 million. From July 1, Golar Partners retain all revenues received from the Hashemite Kingdom of Jordan and this exceeds the quarterly revenue previously receivable from Golar. This contributed an additional $1.9 million to 3Q revenues.

Vessel operating expenses at $15.3 million were $1.9 million lower than the second quarter cost of $17.2 million.  Repair costs across the fleet were high in the second quarter, in particular the Golar Freeze non-drydock related repairs. Operating cost reductions were also noted against the Golar Eskimo, Golar Spirit and the Golar Grand.  Administration expenses at $1.6 million were slightly higher than the prior quarter cost of $1.5 million.

Net interest expense at $13.9 million for the third quarter was also in line with the second quarter.  Other financial items for the third quarter were a loss of $19.0 million compared to a $1.5 million loss in the second quarter. A second quarter non-cash mark-to-market valuation gain of $6.0 million became a $13.3 million non-cash loss in the third quarter following a 24bps and 37bps decrease in 3-year and 5-year interest rate swap rates respectively.

The Partnership's Distributable Cash Flow1 for the third quarter was $51.8 million as compared to $41.4 million in the second quarter and the coverage ratio was 1.34 as compared to 1.07 for the first quarter. The coverage ratio was negatively impacted in the second quarter by the scheduled drydocking of the Golar Freeze.

1Distributable 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

Corporate and Other Matters

Our General Partner, Golar, announced on August 4, 2015 a unit purchase program of up to $25.0 million worth of Golar Partners outstanding units over the subsequent 12 months. To date, Golar has purchased 240,000 shares in open market transactions increasing its stake in the Partnership to 30.4% inclusive of its General Partner stake.

On October 27, 2015, Golar Partners declared a distribution for the second quarter of $0.5775 per unit. The third quarter distribution was paid on November 13, 2015 on total units of 62,870,335.

At the annual meeting of limited partners on September 23, Kate Blankenship resigned her position as Director and member of the Partnerships Audit Committee. The Board of Golar Partners is incredibly grateful for her long standing and invaluable service.  To meet NASDAQ Listing Rules, the Partnership must appoint a replacement no later than March 21, 2016.  This position is appointed by the Partnerships General Partner and a replacement appointment is anticipated ahead of this date.

Operational Review

The fleet continued to operate at a very high standard during the quarter with 100% utilization of all vessels during scheduled operations and 99.7% utilization after accounting for the concluding 3 days of the Golar Freeze drydock. The Golar Grand represents the only remaining vessel in the fleet scheduled for a near-term drydock but this has been postponed until 2016.  The FSRU Golar Eskimo completed its commissioning for the Hashemite Kingdom of Jordan without issue on July 12 and has been regasifying almost continuously ever since.  The Middle East has seen a significant increase in demand for LNG in recent years and Jordan is now a new contributor to this market having concluded tenders to buy 19 cargoes through to the end of 2016.

Financing and Liquidity

As of September 30, 2015, the Partnership had cash and cash equivalents of $38.7 million and undrawn revolving credit facilities of $70 million.  Total debt and capital lease obligations net of total cash balances was $1,275.5 million as of September 30, 2015.

Based on the above net debt amount and annualized2 third quarter 2015 adjusted EBITDA3, Golar Partners' debt to adjusted EBITDA multiple was 3.4.

As of September 30, 2015, Golar Partners had interest rate swaps with a notional outstanding value of approximately $1,208.4 million (including swaps with a notional value of $377.2 million in connection with the Partnership's bonds but excluding $100.0 million of forward starting swaps) representing approximately 95% of net debt. No new swaps were entered into during the quarter, nor did any mature. The average fixed interest rate of swaps related to bank debt is approximately 2.14% with average maturity of approximately 2.9 years as of September 30, 2015.

As of September 30, 2015, the Partnership had outstanding bank debt of $956.8 million with average margins, in addition to LIBOR or fixed swap rates, of approximately 2.35%, a Norwegian Krone (NOK) bond of $152.7 million with a fixed rate of 6.485% and a $150.0 million Norwegian USD bond with a swapped all-in rate of 6.275%. The Partnership has a currency swap to hedge the NOK exposure for the Norwegian Krone bond. As the US dollar has appreciated against the NOK during the quarter, the value of this bond in USD terms has decreased whilst the swap liability has risen. The total swap liability as at September 30, 2015, which also includes an interest rate swap element, was $85.5 million.

At quarter end, the Partnership also had a $100.0 million vendor loan from Golar entered into in connection with the acquisition of the Golar Eskimo. On November 25 the Partnership successfully concluded and drew upon a refinancing facility in respect of the Golar Eskimo. This $256.5 facility, which has a tenor of 10 years, has been used to refinance the FSRUs existing $156.0 million debt and to repay the $100 million vendor loan.

2Annualized means the figure for the quarter multiplied by 4.

3Adjusted 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.


There are no drydocks planned for the fourth quarter, Golar Grand drydock having been postponed until 2016. Additionally, for the second year running, KNPC have extended the regas season for the Golar Igloo from its usual 9 month period to 10 months. Full hire will therefore be received until December 31 and this year's winter downtime period will only be for January and February 2016. Fourth quarter operating earnings, distributable cash flow and coverage are therefore expected to be approximately in line with the third quarter.

As at September 30, 2015, Golar Partners had a total revenue backlog of $2.5 billion, an average remaining contract term of 5.2 years and a coverage ratio for the third quarter of 1.34. The Partnership also benefits from the fact that its highest earning assets have the longest contracts. Seventy percent of the current fleet have contracts extending beyond 2017. These assets account for a disproportionate 81%4 of net revenue and this share will likely increase with the potential acquisitions of FSRU Golar Tundra in 2016 and GoFLNG Hilli from 2H 2017.

Good progress was made by Golar during the quarter with regards to the contracting of its assets.  The Golar Tundra FSRU was contracted for a five year period in Ghana with an expected annual EBITDA of approximately $44 million to a venture jointly owned by NNPC and Sahara Energy. The Golar Tundra FSRU is therefore expected to be the Partnership's next dropdown candidate with a likely timing sometime in the second quarter of 2016. Golar Partner's current relatively low net debt to EBITDA ratio of 3.4 affords it the flexibility to fully debt finance this acquisition if deemed beneficial.

All contracts for the GoFLNG Hilli project have now been signed and the project has taken FID.  An LNG Sale and Purchase Agreement for the gas off-take has also been executed by Perenco, SNH and Gazprom.  GoFLNG Hilli will deliver an approximate minimum level of expected EBITDA of $170 million in the first full year of operation, based on the utilization of 2 of the available 4 liquefaction trains. GoFLNG Hilli will commence operations in Cameroon in Q2 2017 and the contract has an initial duration of 8 years.  The GoFLNG franchise now represents a transformational growth opportunity for both Golar and the Partnership. It should be noted that Golar Partners will consider, together with Golar, the possibility of acquiring FLNG assets in a piecemeal fashion by acquiring percentages of the asset owning company.

The current weakness in the Partnership's unit price and the wider MLP market is to a large extent linked to low oil prices and concerns around the future growth of US oil production. However, low natural gas and LNG prices are stimulating demand for LNG and increasing activity in the FSRU market.  The lack of a secure supply of LNG at a reasonable price has often been an obstacle for FSRU projects in the past. Golar's recent order of a newbuild FSRU delivering in 2017 plus options was driven by this increasing demand for FSRU services.  Five FSRU's have been contracted over the past 12 months and many more are expected over the coming years.

Golar's GoFLNG projects also potentially benefit from low LNG and gas prices. Demand for natural gas and LNG is growing at a faster rate than other hydrocarbons, and, most significantly, at current low prices could trigger coal to gas switching in some markets. However, the more expensive land based LNG projects may well struggle to make FID in the current environment. This will not impact demand and Golar's low cost GoFLNG units have the opportunity to capture greater market share. An additional advantage for Golar's GoFLNG projects is that development of stranded gas reserves, particularly in Africa, has a potentially much lower cost than Henry Hub gas for US export projects. Golar Partners has a first class operational track record, a solid revenue backlog, a diversified asset portfolio, acquisition prospects in sight and a strong balance sheet. The Board believes that this financial stability together with the forecast growth in the global LNG market and the fact that Golar Partners business can actually benefit from low natural gas prices puts the Partnership in a good position for future growth.

4Net of 40% Non-controlling interest of the Golar Mazo and based on 3Q 2015 net time charter earnings


This press release contains certain forward-looking statements concerning future events and Golar Partners operations, performance and financial condition.  Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe", "anticipate", "expect", "estimate", "project", "will be", "will continue", "will likely result", "plan", "intend" or words or phrases of similar meanings. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond Golar Partners control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to:

  • statements about market trends in the floating storage and regasification unit (or FSRU), liquefied natural gas (or LNG) carrier and floating liquefied natural gas vessel (or FLNGV) industries, including charter rates, factors affecting supply and demand, and opportunities for the profitable operations of FSRUs, LNG carriers and FLNGVs;
  • statements about Golar Partners and Golar's ability to retrofit vessels as FSRUs or FLNGVs and the timing of the delivery and acceptance of any such retrofitted vessels by their respective charterers;
  • Golar Partners ability to increase distributions and the amount of any such increase;
  • Golar Partners ability to integrate and realize the expected benefits from acquisitions, including the acquisition of the FSRU, Golar Eskimo, which we acquired from Golar in January 2015;
  • our estimates of annual contracted revenues that may be generated by the acquisition of the Golar Eskimo;
  • Golar Partners anticipated growth strategies;
  • the effect of the worldwide economic slowdown;
  • turmoil in the global financial markets;
  • fluctuations in currencies and interest rates;
  • general market conditions, including fluctuations in charter hire rates and vessel values;
  • changes in Golar Partners operating expenses, including drydocking and insurance costs and bunker prices;
  • forecasts of Golar Partners ability to make cash distributions on the units or any increases in cash distributions;
  • Golar Partners future financial condition or results of operations and future revenues and expenses;
  • the repayment of debt and settling of interest rate swaps;
  • Golar Partners ability to make additional borrowings and to access debt and equity markets;
  • planned capital expenditures and availability of capital resources to fund capital expenditures;
  • the exercise of purchase options by the Partnerships charterers;
  • Golar Partners ability to maintain long-term relationships with major LNG traders;
  • Golar Partners ability to leverage Golar's relationships and reputation in the shipping industry;
  • Golar Partners ability to purchase vessels from Golar in the future;
  • Golar Partners continued ability to enter into long-term time charters, including charters for floating storage and regasification projects;
  • Golar Partners ability to maximize the use of its vessels, including the re-deployment or disposition of vessels no longer under long-term time charter;
  • timely purchases and deliveries of newbuilding vessels;
  • future purchase prices of newbuildings and secondhand vessels;
  • Golar Partners ability to compete successfully for future chartering and newbuilding opportunities;
  • acceptance of a vessel by its charterer;
  • termination dates and extensions of charters;
  • the expected cost of, and Golar Partners ability to comply with, governmental regulations, maritime self-regulatory organization standards, as well as standard regulations imposed by its charterers applicable to Golar Partners business;
  • availability of skilled labor, vessel crews and management;
  • Golar Partners general and administrative expenses and its fees and expenses payable under the fleet management agreements and the management and administrative services agreement;
  • the anticipated taxation of Golar Partners and distributions to Golar Partners unitholders;
  • estimated future maintenance and replacement capital expenditures;
  • Golar Partners ability to retain key employees;
  • customers' increasing emphasis on environmental and safety concerns;
  • potential liability from any pending or future litigation;
  • potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists;
  • future sales of Golar Partners securities in the public market;
  • Golar Partners business strategy and other plans and objectives for future operations; and
  • other factors listed from time to time in the reports and other documents that Golar Partners file with the U.S. Securities and Exchange Commission. 

Factors, may cause actual results to be materially different from those contained in any forward-looking statement. Golar Partners does not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Golar Partners expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

November 30, 2015

Golar LNG Partners L.P.

Hamilton, Bermuda


Questions should be directed to:

c/o Golar Management Ltd - +44 207 063 7900

Brian Tienzo - Chief Finance Officer

Graham Robjohns - Chief Executive Officer


Interim Results for the Period Ended September 30 2015