UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August, 2006
Golar LNG Limited
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(Translation of registrant's name into English)
Commission File Number: 000-50113
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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Indicate by check mark if the registrant is submitting the Form 6-K in paper by
Regulations S-T Rule 101(b)(1):
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Indicate by check mark if the registrant is submitting the Form 6-K in paper by
Regulations S-T Rule 101(b)(1):
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 99.1 is a copy of the press release of Golar LNG Limited
(the "Company"), dated August 25, 2006.
Exhibit 99.1
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SECOND QUARTER INTERIM REPORT
April - June 2006
Highlights
o Net income of $17.3 million for the quarter and $45.3 million for six
months
o Delivery of latest newbuilding Granosa into time charter with Shell
o Improved spot market rate outlook for the coming winter period
o LNG storage and forward sale provides earnings opportunities
o Completed acquisition of a 19.8% stake in LNG Limited
Results
Golar LNG reports net income of $17.3 million for the second quarter of 2006.
This is a significant improvement on the loss of $4.4 million reported for the
second quarter of 2005 although down from net income of $27.9 million reported
last quarter mainly as a result of lower spot vessel utilisation and reduced
contribution from Korea Line.
Operating income for the quarter at $22.3 million has virtually doubled from the
same period in 2005 but is down from $28.5 million reported last quarter. The
significant improvement from the same period last year has been driven by
improved spot charter rates, improved utilisation and the addition of the
Grandis to the fleet in January 2006. Although the daily charter rates our
vessels earned in the second quarter were reasonably consistent with the first
quarter of 2006, utilisation was down particularly as a result of waiting and
positioning time between charters for one of the spot traded ships. This has
affected average daily time charter equivalents (TCE's) for the fleet, which
were $49,700 for the second quarter as compared to $55,100 for the first quarter
of 2006 and $41,200 for the second quarter of 2005.
Vessel operating expenses at $10.0 million for the quarter were only marginally
increased from the same period last year despite the addition of the Grandis to
the fleet. Administrative expenses were $3.8 million, which although consistent
with last year were increased from $2.3 million in the first quarter of 2006.
The increase is mainly due to an increase in the charge in respect of share
options issued during the first half of 2006 of $0.7m.
Net interest expense for the second quarter was $14.1 million, slightly up from
$13.8 million for the first quarter of 2006 as a result of a marginal increase
in interest rates and the addition of the $120 million Granosa facility upon
delivery of the vessel in June 2006.
Other financial items was a gain in the second quarter of $11.7 million as
compared to a gain of $9.9 million for the first quarter of 2006 and a loss of
$10.1 million for the second quarter of 2005. The main component of other
financial items is interest rate swap valuation movements. The continued
increase in long-term interest rates has resulted in valuation gains of $9.3
million for the second quarter and $8.5 million for the first quarter of 2006.
Long-term rates declined during the second quarter of 2005, which resulted in a
valuation loss of $7.8 million. Other financial items for the second quarter of
2006 also includes a realised gain of $2.0 million in respect of a natural gas
future trade. In June 2006 the Company entered into a charter, the rate for
which was linked to the forward price of natural gas. The transaction was
designed to hedge the Company's expected exposure to the movement in this
forward price and the gas trade was closed once the charter rate was fixed.
The Company's share of Korea Line's net income for the second quarter is $0.2
million as compared to $5.6 million for the first quarter of 2006. Korea Line's
results for the first quarter of 2006 were significantly boosted by income
received as a result of the early termination of three charters and would be
comparable to the second quarter were it not for this additional income. The
Company has determined that it should equity account for its investment in
Liquefied Natural Gas Limited ("LNG Ltd"). As a result equity in net earnings of
associates for the quarter also includes a loss of $0.1 million in respect of
our share of LNG Ltd's loss for the quarter.
Corporate and Other Matters
The Company completed its investment in LNG Ltd having received LNG Ltd's
shareholder approval for the second tranche of shares at a cost of $8.6 million.
This makes Golar the largest shareholder in LNGL with a 19.7% shareholding.
Golar have signed a collaboration agreement with LNGL, which provides a
framework for joint project development and the Board is pleased with the
progress that is being made with LNGL's project portfolio, particularly the new
Padang LNG project planned to be built in Central Sulawesi, Indonesia.
The Company took delivery of the Granosa on June 16, 2006 and she immediately
joined the Gracilis and the Grandis on charter to Shell.
The Company's relationship with Shell has been extended to include a time
charter for the Golar Winter for the coming months. This is a particularly
innovative commercial agreement in which the charter rate is linked to future
gas prices. The LNG cargo will be sold at a price that makes storing the LNG
onboard the vessel for delivery at a later date economically attractive.
During the last few years the Company has spent a considerable amount of time
developing LNG infrastructure projects. This has been done in order to increase
the expected return from the Company's assets and the project portfolio is
currently developing in a positive direction.
The Livorno FSRU project, the longest running project, is progressing well. All
necessary regulatory and government permits have now been received. Golar is
currently having ongoing discussions with the terminal company (OLT-O)
shareholders, which include Endesa and Amga about the future operational
structure of the project. Agreement on the final shareholding of OLT-O is
expected during the third quarter 2006 with project FID expected by year-end.
The Livorno terminal may well be the first new LNG terminal in operation in
Italy.
The FSRU conversion project at Keppel Shipyard is progressing well with the
procurement of long lead-time items such as loading arms, process equipment and
mooring turret substantially completed. Due to the increased demand in both the
offshore and cryogenic industries the lead times for this particular equipment
is now around 12 months and therefore the entry of the vessel into the shipyard
for conversion will not be until mid 2007.
The Floating Power Generation Plant (FPGP) project in Cyprus is progressing
again after a short delay incurred whilst waiting for a new Natural Gas Market
Regulation Law to come into force. The law was passed by the relevant
authorities in July 2006 and in addition to our initial application for a
license to construct and to operate a FPGP, Golar has applied for a license to
construct and operate LNG facilities for the use of natural gas. Furthermore a
hearing at the Cyprus Environmental Service has been scheduled for October 2006
to review the Environmental Impact Assessment Study submitted by Golar in
relation to the FPGP.
The Company drew down on a $120 million bank loan facility in connection with
the delivery of the Granosa on June 16, 2006. As at June 30, 2006 the Company
had total outstanding debt and net capital lease obligations of $1,107 million
of which $485 million accrued interest at a floating rate and $622 million, or
56%, accrued interest at a fixed rate.
Market
The second quarter was not able to sustain quite the high level of activity and
market rates of the first quarter. Spot rates fell to the low $50,000's per day
early in the period before recovering to above $60,000 by the end. The market
was dominated by the irregularity of available cargoes. The number of
`unallocated' ships did not rise materially during the quarter, as most of the
new buildings have been absorbed into the Oil Majors trading structures or into
new projects. The price for LNG in the Far East finally came down during the
period but the continuing relative price weakness in the US meant that available
tonnage continued to be fixed to the Far East, with very little going to the US.
As the period progressed storage throughout Europe, principally Spain, neared
capacity and by the end of the period relative pricing now means that the US is
once again a destination for LNG cargoes. The resulting relatively shorter trade
routes have had a limiting effect on demand for shipping.
From Golar's point of view the improved utilisation of the fleet continued,
albeit not as good as the first quarter of 2006. Gracilis and Granosa both
delivered to Shell in the second quarter under arrangements previously announced
and there was some associated `off hire' for these ships during positioning
periods.
Project slippage has eased any apparent pressure on the Shipyards as berths
assigned for projects in Qatar, Russia, and Nigeria have become free. However so
far the yards have been able to maintain prices and a standard 155,000-m3 vessel
is still priced at $215-220 million.
Escalating LNG project construction costs and project complexities are slowing
the rate of development of the industry. Raw material price increases ranging
from 25% to 100% have been experienced in several liquefaction projects and many
US and Canadian import projects are also suffering higher EPC costs than
previously anticipated.
A further 11.5 MTPA (million tonnes per annum) is scheduled for commissioning in
2007, however there is an estimated decline in output from Arun and now Bontang
amounting to nearly 3.5 MTPA.
Currently there are 201 existing LNG carriers above 70,000 m(3) with around
143 more on order.
An interesting trend in the LNG market over recent years has been the
differential in the price of LNG between the different geographical markets and
the strong seasonal difference between spot and forward gas prices. These two
factors create an interesting environment for trading and also the use of ships
as floating storage. Golar is looking to capitalise on the opportunities that
these market trends create and has already benefited from net income in the
second quarter linked to this type of activity.
Outlook
The LNG shipping market is currently well balanced. Delays in the construction
and commissioning of new LNG capacity may influence this balance negatively
whilst geographical market price differentials, general seasonality and
technical inefficiencies may well have a positive impact. It is likely therefore
that the 'spot' market will remain volatile for some time yet.
The Board expects that earnings in the third quarter from the Company's spot
vessels and those under charter to Shell will show some improvement as the
winter season approaches. Some improvement in rates is anticipated but these and
levels of utilisation will remain highly sensitive to the development in global
gas prices and the price differences between the various markets for LNG as
these impact on the requirement for shipping. One of our vessels on long-term
contract commenced dry-docking during the later part of June and a second vessel
entered dry-dock in August, which will result in reduced earnings for these
vessels during the third quarter.
The Board remains of the opinion that several of the Company's projects
currently under development continue to have promising prospects. In particular
the Livorno FSRU conversion project is now entering a critical phase ahead of
taking financial close later this year. In addition to the existing portfolio of
regasification projects the Board is looking to develop new project ideas with
the focus on LNG liquefaction projects and LNG trading where the profitability
is expected to be higher due to the current shortage of supply and volatility in
the market.
The Board feels that overall progress has been made and is increasingly
optimistic about the future. The ships on fixed time charter, together with the
ships on charter to Shell form a solid basis for the Company, while the
development of new projects and open tonnage has good potential to create upside
for shareholders
Forward Looking Statements
This press release contains forward looking statements. These statements are
based upon various assumptions, many of which are based, in turn, upon further
assumptions, including examination of historical operating trends made by the
management of Golar LNG. Although Golar LNG believes that these assumptions were
reasonable when made, because assumptions are inherently subject to significant
uncertainties and contingencies, which are difficult or impossible to predict
and are beyond its control, Golar LNG cannot give assurance that it will achieve
or accomplish these expectations, beliefs or intentions.
Included among the factors that, in the Company's view, could cause actual
results to differ materially from the forward looking statements contained in
this press release are the following: inability of the Company to obtain
financing for the new building vessels at all or on favourable terms; changes in
demand; a material decline or prolonged weakness in rates for LNG carriers;
political events affecting production in areas in which natural gas is produced
and demand for natural gas in areas to which our vessels deliver; changes in
demand for natural gas generally or in particular regions; changes in the
financial stability of our major customers; adoption of new rules and
regulations applicable to LNG carriers; actions taken by regulatory authorities
that may prohibit the access of LNG carriers to various ports; our inability to
achieve successful utilisation of our expanded fleet and inability to expand
beyond the carriage of LNG; increases in costs including: crew wages, insurance,
provisions, repairs and maintenance; changes in general domestic and
international political conditions; changes in applicable maintenance or
regulatory standards that could affect our anticipated dry-docking or
maintenance and repair costs; failure of shipyards to comply with delivery
schedules on a timely bases and other factors listed from time to time in
registration statements and reports that we have filed with or furnished to the
Securities and Exchange Commission, including our Registration Statement on Form
20-F and subsequent announcements and reports.
August 25, 2006
The Board of Directors
Golar LNG Limited
Hamilton, Bermuda
Questions should be directed to:
Tor Olav Troim - +44 7734 976 575
Golar Management (UK) Ltd - +44 207 517 8600:
Gary Smith: Chief Executive Officer
Charlie Peile: Executive Vice President, Head of Commercial
Graham Robjohns: Chief Financial Officer
GOLAR LNG LIMITED SECOND QUARTER 2006 REPORT (UNAUDITED)
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INCOME STATEMENT 2006 2005 2006 2005 2005
(in thousands of $) Apr - June Apr - June Jan- June Jan- June Jan - Dec
unaudited unaudited unaudited unaudited audited
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Operating revenues 53,682 38,907 111,022 83,103 171,042
Vessel operating expenses 9,972 9,645 20,363 19,217 37,215
Voyage expenses 3,918 1,402 6,692 2,446 4,594
Administrative expenses 3,805 3,452 6,119 6,637 13,563
Depreciation and amortisation 13,669 12,821 26,990 24,956 50,991
Total operating expenses 31,364 27,320 60,164 53,256 106,363
Operating income 22,318 11,587 50,858 29,847 64,679
Interest income 9,941 9,479 19,054 18,189 35,653
Interest expense (24,016) (20,913) (46,961) (40,346) (82,479)
Other financial items 11,732 (10,107) 21,650 (7,510) 7,507
Income/(loss) before taxes and minority 19,975 (9,954) 44,601 180 25,360
interest
Minority interest (2,501) (1,504) (4,551) (3,783) (8,505)
Taxes (215) (295) (406) (420) (818)
Equity in net earnings of investee 84 7,403 5,644 16,994 18,492
Net income/(loss) 17,343 (4,350) 45,288 12,971 34,529
Basic earnings/(loss) per share ($) $0.26 ($0.07) $0.69 $0.20 $0.53
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BALANCE SHEET 2006 2005 2005
(in thousands of $) June 30 June 30 Dec 31
unaudited unaudited audited
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ASSETS
Short term
Cash and cash equivalents 65,532 87,794 62,227
Restricted cash and short-term investments 47,546 41,131 49,448
Other current assets 20,427 14,467 17,898
Amounts due from related parties 2,271 432 17
Long term
Restricted cash 729,807 718,127 696,308
Equity in net assets of non-consolidated associate 78,941 65,601 65,950
Newbuildings 32,381 108,002 111,565
Vessels and equipment, net 1,487,495 1,238,044 1,209,044
Other long term assets 41,103 11,116 18,238
Total assets 2,505,503 2,284,714 2,230,695
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term
Current portion of long-term debt 73,048 65,759 67,564
Current portion of capital lease obligations 4,962 2,466 2,466
Other current liabilities 43,563 56,391 53,077
Amounts due to related parties 71 435 886
Long term
Long term debt 839,606 792,654 758,183
Long term capital lease obligations 947,949 836,264 801,500
Other long term liabilities 83,703 84,326 84,878
Minority interest 32,138 30,065 27,587
Stockholders' equity 480,463 416,354 434,554
Total liabilities and stockholders' equity 2,505,503 2,284,714 2,230,695
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STATEMENT OF CASH FLOWS 2006 2005 2006 2005 2005
(in thousands of $) Apr - June Apr - June Jan - June Jan - June Jan - Dec
unaudited unaudited unaudited unaudited audited
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OPERATING ACTIVITIES
Net income/(loss) 17,343 (4,350) 45,288 12,971 34,529
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortisation 13,669 12,821 26,990 24,956 50,991
Amortisation of deferred charges 383 323 741 2,349 3,035
Income attributable to minority interests 2,501 1,504 4,551 3,783 8,505
Undistributed net earnings of 1,095 (5,856) (4,465) (15,447) (16,948)
non-consolidated investee
Drydocking expenditure (349) (508) (650) (9,383) (9,373)
Stock-based compensation 1,029 - 1,349 - -
Change in market value of equity, interest (15,824) 15,950 (28,091) 14,746 4,605
rate and currency derivatives
Interest element included in capital lease 1,302 1,527 3,266 3,731 7,351
obligations
Unrealised foreign exchange loss/(gain) 5,594 (5,605) 7,351 (9,303) (15,709)
Change in operating assets and liabilities (7,938) (4,261) (1,633) 3,773 4,040
Net cash provided by operating activities 18,805 11,545 54,697 32,176 71,026
INVESTING ACTIVITIES
Additions to newbuildings (119,052) (31,013) (223,574) (136,465) (140,028)
Additions to vessels and equipment (8,183) (1,916) (9,193) (3,504) (5,700)
Long-term restricted cash 1,122 (46,586) 1,144 (47,839) (56,953)
Purchase of unlisted investments - - (500) (3,000) (3,000)
Purchase of marketable securities (10,386) - (10,386) - -
Proceeds from disposal of marketable 2,248 - 2,248 - -
securities
Short-term restricted cash and investments (2,363) 5,815 1,902 822 (7,495)
Net cash used in investing activities (136,614) (73,700) (238,359) (189,986) (213,176)
FINANCING ACTIVITIES
Proceeds from long-term debt 120,000 - 120,000 420,000 420,000
Proceeds from long-term capital lease - 44,800 102,983 44,800 44,800
obligation
Repayments of long-term capital lease (1,098) (544) (1,556) (1,961) (3,004)
obligation
Repayments of long-term debt (21,066) (9,763) (33,094) (264,540) (297,206)
Financing costs paid (1,353) (916) (1,366) (3,626) (3,944)
Dividends paid to minority shareholders - - - - (7,200)
Payments to repurchase equity - - - (667) (667)
Net cash provided by financing activities 96,483 33,577 186,967 194,006 152,779
Net (decrease)/increase in cash and cash (21,326) (28,578) 3,305 36,196 10,629
equivalents
Cash and cash equivalents at beginning of 86,858 116,372 62,227 51,598 51,598
period
Cash and cash equivalents at end of period 65,532 87,794 65,532 87,794 62,227
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Notes
1. The financial information included in this interim report has been derived
from information prepared by the Company in accordance with accounting
principles generally accepted in the United States of America.
2. The number of shares outstanding as of June 30, 2006 was 65,562,000 (March
31, 2006: 65,562,000). The weighted average number of shares outstanding
for the second quarter and first half of 2006 was 65,562,000 and was
65,567,616 for the twelve months ended December 31, 2005.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GOLAR LNG LIMITED
(Registrant)
By /s/ Graham Robjohns
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Graham Robjohns
Chief Financial Officer
Dated: December 11, 2006
SK 03849 0004 729844