Dániel Stemler

My call on $GLNG was accurate. Golar has just made a Final Investment Decision (FID) on its fourth FLNG. This new unit will be an MKII model with a capacity of 3.5 mtpa, matching the one currently under construction at the same yard. The budget is $2.45 billion, and the unit will be available to begin operations by late 2029, although the contract has not yet been signed. Golar has already secured the donor vessel and all essential long-lead items, completing key steps, including securing the yard slot and funding. This budget amounts to $700 per tonne of annual capacity, slightly higher than the $629 for the first MKII, due to well-known inflation. Aside from that, I would highlight the option for an incremental FLNG order and its delivery timeline. With 2029 not too far away, there is potential to boost GLNG’s earnings by approximately 50% if chartered under similar terms as its current MKII unit, the FLNG Esperanza. This will greatly enhance the NAV and dividend capacity. Let’s see what they share during the earnings call; however, I anticipate there will be little detail on the commercial terms beyond reiterating that Hilli and MK2 are comparable, since revealing them could put them at a disadvantage. If I were to make a prediction, I believe Venezuela is a strong candidate for deploying the unit alongside West Africa. I’m uncertain how the market will react. Bears might view this news as somewhat negative, given the sizable investment and the absence of a contract, whereas those familiar with management’s track record will likely remain very optimistic, as I am. Note that Golar postponed the FID earlier this year to avoid committing significant capital expenditure to its fourth FLNG until the commercial terms for the next project are matured. Management has historically been very cautious about the balance sheet, and I anticipate a contract within the next 3 to 6 months, similar to past MKII steps, which is expected to be deployed in Argentina in 2028. This news is a clear positive for the potential strategic review conducted by Goldman Sachs. Golar has not only demonstrated that it is the most reliable FLNG supplier globally, but also shows a substantial and credible pipeline that will support the company's growth over the next decade. Golar is the only company to deliver both units (Hilli and Gimi) on time and within budget. In addition, Hilli remains the only FLNG to achieve 100% economic uptime during the 8-year offshore Cameroon contract, successfully offloading 156 cargoes. Meanwhile, Gimi has begun its 20-year contract with performance well above the committed output. Overall, I believe this news moves us closer to the $100 target price by 2030, which was set in 2020 when the stock was around $5. Golar has demonstrated success by expanding its fleet with new FLNGs that deliver exceptional ROICs.