Good morning, good afternoon, everyone. Welcome to the Golar LNG Q2 2020 Results Presentation. My name is Iain Ross, I’m CEO of Golar LNG. Today, I’m joined on the line by our new CFO, Callum Mitchell-Thomson; and Stuart Buchanan, Head of Investor Relations. We’re also pleased to have Eduardo Maranhao, CFO of Golar Power, on the line to participate in today’s call. I’d like to draw your attention to forward-looking statement on Slide 1. And if we turn to Slide 4, let me give you some highlights before Callum takes you through the numbers in more detail. Today, we report an adjusted EBITDA of $67 million on revenue of $102 million for the quarter, which is driven by a solid FLNG performance and better seasonal results in shipping. And again, we commend the effort of our whole team in keeping the business running remotely and to our offices and ratings on board who’ve coped with longer work cycles than normal and dealing with all sorts of restrictions and constraints in doing their jobs. And I am pleased to report further improvements in our ability to crew change, with most of our people now having been changed there. In shipping, our time charter earnings of $45,000 per day for Q2 represents an 88% rise over the same period last year. We continue to derisk our shipping portfolio and ended the quarter with a shipping revenue backlog of $105 million. Our FLNG operations maintained 100% commercial uptime through the quarter, with a further 6% reduction in operating costs compared to the first quarter and stable EBITDA generation. And in downstream, Golar Power received full capacity payments on Sergipe and Nanook, with Golar’s share of that equating to $19 million of revenue, less operating costs. The small-scale rollout was boosted by the signing of a partnership with Galileo, and the MOU signing with Norsk Hydro for the provision of LNG and regas capacity into the Alunorte Alumina refinery in Brazil will reduce the refinery’s CO2 output by some 600,00 tons per year. That’s equivalent of the carbon capture of around 10 million tree seedlings planted and grown for 10 years. It’s a great ESG story. More details on these segments later. Let me now hand over to Callum to take you through the numbers.

Well, thank you, Iain. Good morning, everybody. If you turn to Page 5, the second quarter 2020 financial results are shown in more detail here. Iain mentioned the $103 million of operating revenue. You can see that in the blue column. That is a 14% beat on the consensus $90 million for the quarter and is achieved with the stability of the $55 million of FLNG, as Iain mentioned. Given Hilli’s stability, that is a very stable and well-performing asset. And then secondly, $48 million of operating revenues from shipping and corporate, which is down due to the typical seasonality that Iain referred to in TCE rates but is an improvement over Q2 in 2019. That change is largely driven by the reduction in TCE rates, partly offset by some additional improvements on vessel management, which I’ll go to in a second. That produced a net loss for the quarter of $156 million. That net loss is largely driven by the $135.9 million impairment that we took on our shares in Golar Partners. If you remember, we own approximately 33% of that business, and U.S. GAAP requires us that at the point that we feel a drop in the stock price as anything other than temporary, then we need to take that impairment. We’ve written the business down to the current market level, which is again a U.S. GAAP requirement and something we’re happy to do. That revenue performance of $103 million generated the adjusted EBITDA of $67 million that Alex – that Iain referred to. That in itself is a 23% beat versus NASDAQ EBITDA consensus for the period, and that 23% beat is based off the 14% improved beat on revenues, plus some cost-cutting that we’ve managed to achieve that I’ll go through on the next slide in…

Thanks, Callum. If we turn to Slide 9 and shipping, the second quarter saw a continued decline in TFDE spot rates to around about $30,000 a day for much of the period before starting a slow recovery post quarter. These lower rates resulted from a combination of seasonal LNG demand decline and lower overall global economic activity resulting from the COVID pandemic. For the U.S., cancellations kept ton miles low during the quarter, but we still expect a degree of slow steaming and storage to emerge towards the end of the year, boosting rates over the northern winter before overall volumes pick up again in 2021. Our shipping strategy continues to contribute well towards our TCE protecting the downside through the shoulder season, which is clearly illustrated in the graph on Slide 9. If you compare the last three quarters, so Q4 2019 through to Q2 2020 with the prior corresponding 12-month quarters Q4 2018 through to Q2 2019, we’re generating significantly more adjusted EBITDA, and that’s largely driven through the commercial shipping strategy and associated increased utilization of the fleet. On Slide 10, you can see we’ve offset some of that seasonal decline in rates through decreased costs, as Callum showed you, albeit that some of these operating cost reductions will be incurred later in the year as we implement some deferred maintenance. But we have implemented permanent cost reductions, and we’ll continue to seek more. Despite the burn of the backlog during the quarter, our backlog remains very strong compared to 12 months ago. And you can see that in the picture on the right-hand side with around half of the backlog on fixed rates and the other half on some form of market-related or floating-rate structure. We’re focusing on building backlog and managing our costs. And at…

Thank you. [Operator Instructions] Your first question comes from the line of Randy Giveans [Jefferies LLC]. Please go ahead, your line is now open.

Hi, Randy.

[Operator Instructions] I think – I’m not sure he disconnected, but we’ll just take the next question. It’s coming from Jon Chappell [Evercore ISI]. Please go ahead.

Thank you. Good morning or good afternoon, guys.

Hey, Jon.

Iain, first one for you is strategic. So the press release says the strategic review has been concluded. The Board’s approved a range of specific options. But if I look at this last slide you had, it seems like every kind of near-term priority is maybe blocking and tackling within the silo. So, as we think about maybe the imminent breakup of the company and the three different business lines, which do you view as kind of stand-alone at this point with the ability to kind of self-finance themselves? And which may be need to be together as in their different stages of the evolution?

I’ll let Callum comment in a second, but rather than commenting specifically on your question, I’d really refer you to the overall strategic plan. So the GLNG Board has approved the examination of a range of strategic options management that we’re now developing. And as these strategic options mature and potentially become actionable, we’re going to take them back to the Board for consideration. And if approved for execution, we’ll announce something at that time. But Callum, do you want to add any more color on – for Jon?

Yes. Sure. I mean Jon, your point about blocking and tackling is right. That’s what we’re – we have two jobs. We have the blocking and tackling, which we can set out in real detail, which we’ve done, which is what we’re doing and what you can expect from us. That’s very different from the strategic review and the structure of the group. So that’s why it’s not on the page. The other reason why it’s not on page is if you remember from Q1, I think we’ve got broad alignment from the group that they were – got approval from the Board to target the four legs: FSRU, FLNG, shipping and Golar Power and to simplify and put the group into those four legs and ensure that each one of them was stand-alone. So that’s what we got Board approval for. We then went being back to the Board in this quarter to say here are the routes to achieve that. So not the destination, but the journey together, here are the steps we think we need to take to implement that. And we gave the Board a range of options, which we referred to in the press release. And the Board has selected some for us to then put in more detail to see if we can get them across the line to execute them, and that’s what we’re doing. And once we’ve reached that point where we think they’re executable, we would go back to the Board to say, “Here’s what we’ve done. Do you approve?” And then we’d be in a position to make an announcement. And then I go back to your question, there are two bits in your question. One was a sort of – I think there was an assumption in your question, which I think probably takes us a step too far, which is as you said as you think about the imminent breakup of the group. I don’t think we don’t see it as neither imminent nor a full breakup of the group. So, let me sort of pick you up on that if I might. I mean the broad picture of four stand-alone legs is where we’re going. And then secondly, to your question about stand-alone financing and which does one we see as being more or less mature, I think everybody would say that the shipping business is a business that is seeing some seasonality right now. It’s perhaps not as poor as – it’s not been the same seasonality that one had in previous years. I think you’ve seen that in the results of our sales and others. But certainly, the shipping business is one of the ones where that is probably less on the spectrum of financing. Whereas pick any one of the other businesses, they’re probably equally stand-alone. So hopefully – there was a lot in your question, but hopefully that’s covered it.

Yes, super helpful. So, procedural approval, maybe not execution approval. So on the follow-up then, clearly, you spent a lot of time, you made a lot of headway in Brazil. And maybe not quite a success story yet, but clearly a path towards that. The interesting commentary about replicating it in other regions. I guess the question there is, without even naming regions, are the opportunity sets similar? And are there economies of scale in the procedures that you’ve taken to penetrate the Brazilian market that you could be much quicker to market from kind of start to finish in some of these other regions you’re contemplating?

I think that’s a great question for Eduardo.

Yes. Sure, Jon. Nice to meet you and happy to answer that one. So I think when we look at our global ambitions for Golar Power, we definitely will try to replicate what we have been doing in Brazil, and we really see Brazil as a stepping stone for our global business plan. I think one of the key fundamental strategies of our development will be to try to partner with experienced local players, such as the ones that we have identified in Brazil in the case of Sergipe, in the case of our small-scale LNG distribution partnership with BR. So, we are actively discussing with a number of potential partners in some other geographies. If I were to highlight just a few key areas, I would say Southeast Asia is definitely one region that we definitely see as a potential area for development of our strategy as well as some other countries in West Africa as well as in other countries in Latin America. I think those are the areas which we believe we have a very strong position as of today.

Okay. Thank you, Eduardo. Thanks, Callum and Iain.

Thanks, Jon.

Thank you. Your next question comes from the line of Ben Nolan [Stifel, Nicolaus and Company]. Please go ahead, your line is now open.

Yes, thank you. And maybe, Eduardo, I’ll follow with you. Obviously, I think as Jon mentioned, a lot going on with Golar Power at the moment. And what I’m hoping that you might be able to do is just maybe put a bow on it a little bit or take all of those moving pieces and codify them into a few simple numbers, specifically sort of based on what you have line of sight on and including a lot of the smaller things. How much is sort of the CapEx requirement going forward? And then also again, maybe not even including any merchant power but sort of as you do include a lot of the smaller scale and incremental developments, what do you see as sort of the potential for cash flow generation on an annual basis out of, let’s say, Brazil specifically but that being a proxy for Golar Power in general?

Okay. Hi, Ben. I think when you look at the future developments of our future projects, I think it’s important to highlight the fact that we are yet to take FID on certain projects, so those detailed CapEx figures as well as the full EBITDA projection will be announced by that point in time. But what we can say is that the ability to generate, for example, merchant power will not require any further incremental CapEx from what we have in place today. So the Golar network is fully connected to the power plant, which is able to generate power during the times of the year when it’s not generating under the PPA. So, this is definitely something that is incremental whenever we are able to run the plant. Another important point is with regards to the small-scale strategy, which is highly modular in a way that the CapEx will be proportionate to the number of contracts that we’re able to secure. So, we are not going to go speculative, spend a substantial amount of money without having the corresponding contracts fixed. So I think that, that growth goes hand in hand with the commercial development with regards to the contract – the offtake contracts that we’re able to secure. When we look at Barcarena, I think we have announced the MOU with Norsk Hydro, which is a very important milestone towards our FID, which we believe we’ll be in a position to take a final investment decision in the next four to six months. So, I would say that with regards to the future CapEx plans, they will be more detailed in the future as soon as we take a fund investment decision on those projects.

Okay. All right. And I’ll leave it at that, I guess. But another thing that – maybe jumping over, I guess, from my second question over to the FLNG side. Obviously, it’s been pretty slow going for a while. I’m curious, firs of all, if there’s been any change in the pace of conversations, maybe also I know that you were selected as one of the potential participants for a possible deal in the Mediterranean and Chevron moving in there, whether anything has happened with that. But maybe just a little bit more of a sort of a pace of progress with respect to conversations and discussions on the technology side.

So Ben, I’d describe the pace of conversations is steady. So it hasn’t disappeared, and it hasn’t really accelerated. And I think that’s to be expected with all the turmoil in the world that’s going on. And I think it’s a good thing that despite the fact that we’ve got low LNG prices, we’re still having active dialogues with potential customers. As I mentioned, we had one arrangement with one of the bigger IOCs that expired, and they’ve asked to extend that for another year to continue looking at possible applications of our technology to their development. So, I think it’s there. And as I’ve said many times before in the call, as the supply/demand lines cross in the future and more LNG needs to be built out, we believe we’ll be at the front of the queue, because we are the cheapest and fastest liquefaction projects that can get to market. And we don’t have any of the issues that onshore-based facilities have around land, taking on land and dealing with local labor issues and all that kind of stuff. So, we think we’re super competitive. And I’m very pleased with the development in the Mark III work that’s being done because that’s ending up at this stage to look like it’s as competitive in dollars per ton as the Mark I, the smaller facilities, and we can do up to 5 million tons in those vessels. So, really looking forward to continuing the discussions with potential customers on that.

Okay. And on the Mediterranean side?

No, nothing’s changed. You’ve said – you seen the news. I mean I don’t expect anything will happen to that deal with Chevron closes. I wouldn’t imagine any movement, and that will happen, but it’s really something to ask Noble.

Okay, great. Appreciate it.

Thanks, Ben.

Thank you. Your next question comes from the line of Randy Giveans [Jefferies LLC]. Please go ahead, your line is now open.

Gentlemen, yes. Sorry, my call dropped earlier. I think Chappell cut my phone line, but back here. Now first, congrats obviously on the Golar Bear refinancing. Doing what you said you were going to do there is good. Now what is the LTV of that 120 million sale-leaseback? And what are the terms of the financing? And I guess following that, if you plan on dropping your debt into each entity, what happens with the converts?

Good question. So, it’s not – we don’t want to disclose publicly what the LTV is on the Bear so – nor the terms. You can think of the terms as being broadly similar to previous financing, maybe a touch longer in – maybe a bit longer in duration. So when we look at it, we think it’s commercially attractive business for us, because it both increases leverage but – increase in good liquidity but increases duration. So we think that is good. I’m sorry that I’m going not going to answer your LTV question, but that’s sort of – that’s reasonably market sensitive, and it’s dependent on each blender. To your question about the restructuring of the business and putting the businesses on a stand-alone basis, yes, we do. Yes, we do want to do that. But that in – on a through-cycle basis, we’ll still generate free cash flow to equity up to the group. And one of the things that we feel confident about is that by having these four legs, it increases our financing – financial flexibility to match, as we’ve discussed in the past, investor appetite, risk/return with – the risk/return profile of the different businesses. And that’s something that’s very important to us, and I think it’s important to our investors as well. So, I’ve slightly not answered your question on what are our plans for the converts, because we will announce anything when we to have something to announce. And when I’ve been asked about – when we’ve been asked about converts in the past, we’ve said, yes, there’s a clear – given the state of the convert market, there is a clear and sensible refinancing for ALM route for the converts, but we’re prioritizing liquidity at the moment. And that’s sort of commitment we’ve made, and that’s one of the reasons why our cash flows is steady. So, forgive me for not giving you all the detail, but I hope you can see how we think of it at least.

Sure. That’s understandable. So, it sounds like you don’t necessarily have to refinance the convert if you do silo the other debt into the other entities. But I guess...

No.

Yes. That’s fair. And second question, turning to Golar Power and those contracts and the MOUs. I guess what specific hurdles are maybe required to convert some of those contracts and take that positive Barcarena FID in the next, I think you said, four to six months in the release?

Sure. Eduardo, would you like to comment?

Yes, sure. Hi, Randy. I’m happy to answer that one. So, I think the final investment decision of Barcarena is not necessarily linked to the rollout of the small-scale contracts. I think they do in some way they are complementary in their strategy, but we view them as a separate kind of a business development. So I think Barcarena, it’s much more a matter of progressing with the required permits and regulatory approvals to be in a position to take a final investment decision. We have been awarded the PPA back in the power auction that took place in October last year. And now with the recently announced MOU with Norsk Hydro, we believe that once all those permits and approvals are met, we will be in a position to take FID for Barcarena. When it comes for the small-scale contracts, I think as you can see, there are a number of contracts and discussions being taken with a number of our customers. And those customers, they range from small customers in some cases to very large industrial customers, which, despite the relatively small volumes, the conversion to LNG could require some time. So, our final commercial decision to move ahead to switch to LNG, in some cases, it does take a bit of a time. But it’s just a matter of really those customers really progressing their internal approval processes to be in a position to fully commit under the contract. So, I think we have given a breakdown of the status of the different commercial initiatives that we have today in order to provide a sense of how those discussions are progressing. What we can say is that despite the challenging environment due to COVID, we have been able to secure additional contracts. We have been able to continue to engage with all of the customers in a vehicle way. And we believe that the thesis is we’re the strongest before the pandemic, so we really believe and we are extremely confident that the business plan will be achievable according to our expectations.

Excellent. Thanks for all that color. And I guess finally, just on that, is there an expiration date where they have to kind of secure or convert those MOUs or contracts? Or is it just kind of whenever they’re ready?

No. there is no specific deadline on those specific MOUs and LOIs. As I said, it’s a matter of, in some cases, some commercial aspects. In some others, some technical requirements that take a little bit longer for the customers to take a decision to commit to LNG.

Got it. Good to hear. That’s it from me. Glad to see Golar above double digits. So, keep it going.

Thanks a lot.

Thanks, Randy.

Thank you. Your next question comes from the line of Mike Webber [Webber Research]. Please go ahead, your line is now open.

Hey, good morning, guys. How are you?

Hi, Mike.

Hi, Mike.

So, the first question is on the strategic review and just to kind of follow up on Jon. So for – I guess for those of us that have been following Golar for a few – for several years, it can feel – you feel a little bit like window dressing in terms of the technicalities of completing a strategic review and putting it to the Board. I mean this review in effect has been going on for several years at this point. So, I’m curious as you stand now, what are the major hurdles? And are you any more or less likely to involve third-party capital today than you were, say, 1 year, 1.5 years ago when – towards the early innings of this review?

Let me tackle that. That doesn’t feel that one is where do we want to go. We did that last quarter, four legs. Step 2 was identified the routes to get there. We did that this quarter. Board approved us to move those routes to get them executed. That depends on agreements that need to be struck and plan put in place that involves other people. And so the Board said, “Yes, go ahead and have those conversations. Get that organized,” in some cases. In other cases, it doesn’t, and we’re getting that all lined up. And then as soon as we’ve got that lined up, we go back to the Board and say, “Here we go.” And then they’ll either say yes or no. So that’s the sort of – that’s the clear path. I can’t draw a conclusion from the past before certainly at least I got here. To your question about involving third-party capital, I now speak personally, I think the benefit of having – I think we’ve signaled quite clearly. The benefit of having four legs is that it does, as we’ve said in the past, it allows us to align the business, the risk/return of each one of those businesses to the risk/return of different sector investors. So, I think there’s a benefit there of doing that. And one wouldn’t seek to get a line like this if it wasn’t to make it easier for third-party investors to come in, right? So I’m sort of answering your question, and that’s why we’re doing it. So that makes all the sense in the world. What I can’t do is prejudge a Board prejudge a Board decision or market conditions or interest from everybody else because that’s outside my control. But the purpose of getting agreement to line up in those four columns is to make this easier, and the agreement and the debate with the Board is to identify the path to get there. That’s sort of...

Yes. No, the angle of my question is that this – in one form or another, let’s put it this way, this review has been going on for several years, right, and so there are a number of solutions that have been on the table, some of which I’m sure involves third party or private equity, some of which they don’t. And I guess what I’m asking is, as we are now further into, I guess, this iteration of the strategic review, is it fair to say it’s less likely to involve third-party capital? And/or is it something that you think would be done in a series of transactions or maybe as a group of kind of a bundled transaction where we come in one day and we see a release that clearly lays out what the new Golar structure would look like?

It’s clear in my mind, Mike, what it needs to be, but I’m one of – I’m part of the team, right, and so it’s about getting that organized. So, it’s not a lack of certainty. But one has to build all the pieces together and get everything ready in, and there’s a lot of bits and pieces that need to – moving parts that need to work. So that’s how I see it. To your question about is it a series of steps, is it a bundle? That depends on the path that the Board chooses and different steps. So it’s sort of bit of both would be my view. But here is how...

I’m asking whether – I was asking whether one’s more likely or not now at this – that we’re a few years into it, I guess, of multiple iterations of this. Just trying to see how that process has changed and what we should expect without holding you to a specific answer. Just a bit more color on that in terms of what the most likely scenario is going to look like.

Yes, I’m going to pass that one, if I can. I'm sorry because it does – it requires agreements to be struck with other people, and it requires Board's approval and all kinds of different steps, right? And it would be wrong with me to give you guidance on that now when those pieces are not in place. I'm clear where the pieces need to move. But until they've moved, I really shouldn't – I shouldn't – I wouldn't be doing my job right if I gave you the detail that I have in my head about what I think is going to happen, right? So I'm sorry, but we need to wait for the sort of agreement to be struck and the Board to approve or not as I think you said.

No, we've been waiting. I guess I'm just looking for like any indication of what – how it's progressing, but I can take that off-line. Eduardo, on the downstream, the part of what makes Golar Power so unique and what has made it so successful relative to its peers has been really kind of thoughtful and deliberate strategy to kind of surround Brazil. So when you've got a lot of competitors kind of swinging and missing and feeling like they're stretched a bit on the global – like a global scale, you guys have had success really kind of being all in on Brazil. So within the context of expanding that elsewhere, I'm curious, is that – to what degree is that a function of maybe having picked the majority of the low-hanging fruit you think are there – is there in Brazil? And to what degree is that a function of looking at markets with maybe more amicable power auctions? Or I'm just trying to get a bit of context around how realistic it would be for you to go all in on another geography, I guess, and why considering the degree of success you're having there.

Okay. Hi, Mike. How are you doing? So, I think when we look into Brazil, I think it's important to note that we have been developing this opportunity for over the past five years now. That was when we were awarded the PPA in Sergipe back in April 2015. So, I wouldn’t say that we have gone all in from day one. I think that our exposure to Brazil, it has grown over time. I think it’s – the more we have been getting to know the market and being exposed to the opportunity, I think we increased our presence in the country. I think what was actually extremely important to our current status of – in the market was the fact that we were able to identify very strategic partners. In the case of Sergipe, we teamed up with Barcarena in Brazil. In the case of a small-scale development, we teamed up with the BR Distribuidora. Golar has been working with Petrobras for a number of years since 2007. So I think that all helped to position ourselves to where we are today in the Brazilian market. And I think that particularly to that market, everything that is going on with regards to the opening up of the gas market is extremely positive to our thesis, and this will help to accelerate the development of our strategy across the whole country. But when we go and when we look at the global growth strategy, I think it’s important to highlight that one of the key pillars of our strategy is to build strategic hubs from which we are able to not only sell power, able not only to sell gas, we’re able not only to sell LNG, we’re able to do a number of different activities, which as we build up those incremental revenues, they become extremely attractive. So in some cases, we’ll be able to understand an investment in a given terminal with a relatively low rate of return. But as we grow and as we establish the presence, I think that the moat will become extremely attractive. We used to say that in certain countries, whoever comes first will be the last one to come because it takes a long time to establish an LNG terminal from a regulatory point of view, from an environmental point of view and from a commercial point of view as well. So I would say that different countries will require different strategies. One of the key ways that we believe that we’ll be able to be successful in that will be to find the right partner in the right market.

Got you. Would it be fair to assume – and this is the last one, I’ll turn it over. But in terms of kind of laying the groundwork for one of these strategic hubs, is that something where you would want to have boots on the ground and kind of deliver – kind of develop some degree of local expertise while you’re sourcing that partner? And is that something you – should we see noticeable CapEx, if you will, even if it’s on the smaller side as you look to kind of build out that presence in a specific hub?

Absolutely. I would not say a very relevant CapEx in the beginning. But for sure, we intend to increase our presence in the strategic markets by having boots on the ground and having a dedicated team in certain strategic locations. I think that’s a key fundamental strategy to achieve that growth.

Got you. Okay. I’ll turn it over. Thanks for your guys.

Thank you. Your next question here is coming from the line of Joe Ringheim [ph]. Please go ahead your line is now open.

Hi, gentlemen. How are you?

Hey, Joe.

So Callum, first on financing and liquidity. You’ve refinanced the Bear and said that you expect within the coming quarters to refinance Frost and Seal as well as the loan security against the equity in power and the margin loan. Could you provide any details around how much cash you expect to release on these refinancings?

Yes. Nothing, zero cash release on the Seal. That’s about removing the put that occurs in January or at least addressing the put that occurs in January. For the Frost, I think we had guided previously in last quarter with setbacks. We were expecting to generate between $50 million and $90 million of additional liquidity across all the vessels, and you will note that we’ve just done the Bear that generated $40 million. So I think for the Frost, you should expect us to make good on that commitment and generate something in the region of the balance needed to achieve that, so probably around another $30 million or $40 million. That is – that takes care of the vessels. When it comes to the RCF, I think the additional liquidity from that will be minimal. We would expect that we’re refinancing a $30 million and $150 million, and we’ve said that we were looking at an RCF in the region of $200 million and above. So you should assume that the additional liquidity from that is small.

Thanks. And then regarding Power, you’ve announced several partnerships and downstream development in Power recently. And in my opinion, clearly capitalizing on the presence in Brazil, and as Eduardo is pointing out, you could also be able to replicate the business all in other regions. My question is New Fortress Energy, a company involved in internal and downstream operations in other regions, do you consider that company to be a relevant peer for Golar Power? And given the metrics and also that the stock is that up 70% this year, is that something you’re monitoring in order to consider a potential listing of Power?

Joe, good to talk to you. I would say that if you look at our businesses, we do have some complementary and some similar activities and business lines as New Fortress Energy. I think that we view the market on which we are most exposed, which is Brazil, as a market big enough for us to dedicate most of our time, as we have been doing over the past four years since the foundation of Golar Power. We believe that as we have said earlier today that the view is really the stepping stone for our global growth ambitions. If we get it right in Brazil, we’re extremely confident that we’ll be able to replicate in some way, not necessarily with the same strategy, but we’ll be able to replicate a hub strategy in other countries. When you look at all the work that New Fortress is doing in the countries they operate, I think in a way, there are some similarities to what we’re doing. But we believe that our businesses and the activities that we’re pursuing in Brazil, they are in a way broader in the sense that we are able to generate power, we’re able to capture the upside and the incremental revenues from merchant power. We are in the downstream sector. We are positioned with our small-scale LNG distributions. And we are positioning ourselves in a way to capture the spreads between the substitution of more expensive and more pollutant fuels such as diesel, LPG, heavy fuel oil for LNG. So I would say that the range of activities that we are developing and we are currently operating are in a way wider than what they are currently doing.

Thanks for explaining. I think that’s it from me. So have a good one.

Thanks, Joe. You too.

Thank you. Your next here is coming from the line of Chris Wetherbee [ph] [Citigroup]. Please go head. Your line is now open.

Hey, guys, good morning and good afternoon. This is James on for Chris. Just wanted to touch on the small-scale distribution detail you provided. How should we really think about sort of – what should we really expect from the LOIs and then conversions to executing contracts and then sort of like EBITDA per contract on average? Just trying to get a sense of really what we should expect from that either in the near term or maybe a few years out?

Eduardo?

Sure. Hi, nice to talk to you. I think that when we look at the pace of development of our small-scale strategy, as I said, despite the COVID environment, we have been able to continue to execute and to continue to engage with customers. We believe that we’ll be able to accelerate the pace of conversion from LOIs to actually firm contracts over the past – over the next few quarters. I think it’s important that we bring online the other terminals that we are developing, such as the Suape terminal, which is one initiative that we are extremely excited with. And we believe that we’ll be in a position to – in some point next year to commence operation of that terminal. And I think there’s always a bit of a chicken-and-egg situation in which some customers, they want to see the commencement and the real start of the activities to really engage. So as you imagine if you have a sizable industrial operations and something that is – the energy supply is a critical component of your operations. So it’s not something that we can switch from one day to the other without having 100% sure that what we are promising will be delivered to them in accordance to all the specs and to the level of reliability that is required. So we believe that once operations start, the pace of conversion from LOIs to actual contracts will accelerate.

Got it. And then any color on how to think about the average EBITDA or maybe ranges for the executed contract?

Currently, I think we are just disclosing the number of actual contracts. As you can imagine, those contracts, they vary quite a bit in terms of volume and also in terms of margin. I don’t think it will be appropriate to give a specific margin or specific average volume as of today. I think we – as soon as we commence operations, we’ll be able to disclose a bit further those information.

Actually, just before I hand it over, just maybe to follow up on that. Can you just maybe give a sense of the direction possibly? Will you imagine to stay relatively stable? Or should it just move – take a step function higher at some point as the project ramps up further?

Eduardo, that’s a further question on the small-scale ramp-up.

Yes. So as I was saying, we believe that once operations start, we’ll be able to further accelerate the pace of conversions. Another point on which we are extremely hopeful that we’re going to have a great development is with regards to our partnership with BR Distribuidora. As it was announced, we entered into a commercial partnership with BR, which can expand its scope into the form of a corporate partnership. And we continue a very close dialogue and a very close engagement with BR in order to try to develop that opportunity, which we believe is the greatest opportunity that we have when you look into the Brazilian market. I think Brazilian market has over 2.7 million trucks with the consumption of LNG equivalent volume of close to 35 million tons of LNG. And if we’re able to tap that into that market, it’s a market which is substantially big and attractive for us to pursue. So we’re very excited with the prospects of that opportunity, and we believe that BR is the right partner in the right country.

Okay. Thanks. I’ll turn it over.

Thank you. Your next question comes from the line of Mandy Ramat [Bank of America]. Please go ahead. Your line is now open.

Sorry. I think the operator got my name wrong there. It’s Sanjay calling from Bank of America. Maybe just some color on the state of the capacity in the LNG market. I think, Iain, you prior mentioned that there are about 27 vessels scheduled in 2020 to be delivered and about 75 in 2021 and 2022. So maybe just your expectations on that and whether that’s changed in a pre-COVID, post-COVID. Some color on that would be helpful.

I think that the – there’s two things happening. One is of course, we’ve got new capacity coming on stream, particularly out of the U.S. Some of that’s been delayed, and we’ve got a whole pile of cargoes delayed. And as we got vessels planned for delivery, there’s an anticipation or an expectation that some of these will be put back by a number of months to try and align themselves. And most – and forgive me, I forget the exact number. But most, the majority of those vessels, so certainly over half are already linked into some of these new contracts coming on. So you’ve got a sort of linkage there, and then obviously there’s some vessels coming into the spot market. What’s also interesting is that we have a number of steam turbines in the fleet – in the global fleet, they’re due to come off charter over the next two, three, four, five years. And they’re coming off in a regular number per year. And the interesting thing for those vessels is whilst they – some of them may be completely debt-free, they have a very relatively high – I’m sorry, low operating efficiency, and for that, a high operational cost. And it will be interesting to see just how many of those can survive in the spot market. And therefore, do we see the start of the first wave of LNG carriers being scrapped? So I think the dynamic is changing over the next few years. Yes, there’s new builds, and I think there’s a deferral of new builds happening. But equally, we’ve got some long-term charters coming to the end and question about what will happen to those vessels, and then what does that do as a knock-on effect and consequence to the rest of the fleet.

Okay. That’s helpful. In terms of percentages, would you be able to talk maybe about the percentage of those long-term charters coming to the end of that duration? Is there a split there?

In terms of the number of vessels, I’d be making it up. I can get that afterwards. We can text you afterwards, we’ll give you the detail.

Sure. That’s helpful. And maybe just to talk through the development of the Mark III, maybe just providing some color on the time line there and perhaps the different cost economics versus Hilli. I think in the release, it was mentioned that it’d be one of the lower cost per ton LNG solutions versus greenfield. So maybe just color on that would be helpful.

There’s two ways to look at it. There’s the cost per ton, and we’ve been public in saying that we can do Hilli cost per ton all in for less than $500 per ton. And that compares extremely favorably with even the brownfield LNG developments around the world. So that’s a kind of a "finger in the air" number. What we’re seeing is with the new build coming through that cost to us is all of similar nature, and what that means as you translate it through is that the tolling agreement that we can offer customers on our lease arrangements is very competitive in terms of dollars per MMBtu to give us a required return on the project over the lifetime of that project. So what we’re seeing is as we’ve gone through the Mark III design, and I think surprisingly to some of our people, is that the costs that we’re able to come up with is in keeping the design simple. And I keep saying simple design, but I think it’s a very, very important part of what we’re trying to do here: keep the design simple, repeatable. And the smarts have gone into what the sort of the basic design to start with both the hull and the topsides. And as we start to push the envelope on capacity, we see the economy scale kicking in for cost per ton, and those vessels are looking like they’re going to be very competitive. And I did mention in the prepared remarks, we’re also seeing our carbon footprint of those on a like-for-like basis being globally competitive as well. So we’re pleased with the progress and still pushing.

Sure. That’s helpful. And just maybe the time line on the Mark III in terms of…

Time line on the Mark III, we’ve completed our FID. So client-specific activities, we really were in advance discussions with the yard around what EPC costs would be. What we need is a customer that’s prepared to stand up and do this with us, and we’ll be ready to go. And I think you’re talking about a four-year cycle from start to finish from the point we take FID.

That’s all from me. Thanks.

Operator, just an interest of time, can we make this a last question please.

Sure. Your next question – your last question comes from the line of Jason Gabelman [Cowen and Company]. Please go ahead. Your line is now open.

Hi, thanks for squeezing me and taking my question. I wanted to ask on Golar Power and the cash flow that it’s kicking back up to Golar right now. Following the Sergipe startup, are you getting any distributions from Golar Power? And how do you see that evolving over the next few years given the projects that you’ve laid out to execute within Golar Power? Thanks.

Hi, Jason, good morning. I think when you look at the future cash flow distribution from Golar Power, it was stated before that we intend to use that excess cash flows to fund our existing growth plans. So in a way, we are self-funding our growth strategy. And we believe that with the cash flow from Sergipe and from the Nanook, we will be able to be in a position to fully fund the development of our operations in the small scale and other projects.

Okay. So is that to suggest no cash flow coming up to the parent right now or in the next couple of years?

In the near term, we don’t expect to – we believe that we’ll be in a better position to fund the existing growth opportunities that we have in our portfolio then to distribute the excess cash flows to the parent shareholders.

Got it. And if I could just ask a quick question on the restructuring efforts. You’re talking about entering new territories and building out storage hubs that could do multiple activities. And I wonder if you do go forward breaking up the company, do you get into a scenario where you’re now bidding against competitors for some of those other activities that you’re trying to build out from hub? For example, if you’re building a power project and you want to do it with an FSRU but the FSRU is in a separate company than the power projects in, are you then opening yourself up to potential competitors to bid on the project as well? Thanks.

Let me take that one, guys. So the beauty of the exercise that Callum has explained I think very well that it creates the opportunity for investable companies that are split by asset classes, so shipping, power, the FSRU and the LNG companies. The beauty of working across the group is that we have the opportunity to collaborate. And I think if you talk about the FSRU power example, I think there’s a big difference between responding to a tender in the market to do a bareboat charter for an FSRU. And the taking of an FSRU, and as Eduardo described, putting that through development into a hub to create a very strategic asset that multiple downstream businesses can sort of develop from. And I think the – having that structure, having the assets in one particular part of the group of companies, if you want to call it that, it actually makes it easier for us to do inter-company deals and arrangements. And I don’t see that an FSRU-alone company will have the ability to do what, for example, Golar Power is doing. And vice versa, I don’t think Golar Power has the appetite to simply respond to tenders for the provision of an FSRU when it can make so much more business out of taking that FSRU and putting it to work. So to the contrary, we actually see great synergies between the groups. And the restructuring that we’ve talked about as we try to make that go forward will create simplicity in the business and facilitate that collaboration in a far easier way.

Great. Thanks for the color.

Thank you, operator. Thanks to everyone for your participation and your interest in Golar. Please stay safe in this COVID time, and we look forward to sharing our progress with you next quarter. And with that, goodbye.