Golar LNG – Analysis post Argentina deal

Golar LNG, the company for which MORAM Capital is probably best known, the one we’ve spent the most time analysing and of which we’ve been investors for 5 years now (this week), has signed this week an agreement of vital importance, committing two of its three assets for 20 years in Argentina.

Golar has completed its transformation over the past few years, evolving from a shipping company (operating LNG transport vessels) into a pure liquefied natural gas infrastructure company. This shift was driven by its flagship value proposition, the FLNG (Floating LNG)—a specialized type of vessel that functions as an offshore LNG terminal. Golar is a pioneer in this solution and the world’s leading company in this field. These assets are characterized by long-term contracts, providing fixed and predictable free cash flows, with potential upside from natural gas prices (such as those announced this past Friday).

Golar has two operational FLNG units (Golar Gimi 2.7 MTPA, being commissioned to begin this month a 20-year contract with BP in Senegal/Mauritania—it recently announced the receipt of a $220MM indemnity for the delay in the start; Golar Hilli 2.45 MTPA, under contract in Cameroon with Perenco until July 2026, after which it will go to Argentina), another under construction (Golar Fuji, 3.5 MTPA for Argentina) and a fourth planned for which they are negotiating contracts in several countries in Africa, Southeast Asia, and Latin America. It also has Macaw Energies. The FLNG negotiations usually take quite some time (Golar’s last contract signing was in 2018), which is why this week’s step is so important (we’ll comment later on the market reaction / sell the news).

In Argentina, both units will work together, Hilli starting around 3Q27 and Fuji (Mark II) in 4Q28, in what will be the first phase of the Argentina LNG project, led by YPF in consortium with Pan American Energy, Harbour Energy, Pampa Energía, and Golar itself, which holds a 10% stake in the project (we analyse the business case of Southern Energy in detail further below). The second and third phase of the project will also be carried out using FLNG but with owned vessels (Shell and ENI) and not Golar’s, due to the tremendous economics of the deal for the company providing the liquefaction vessels (in Phase I, Golar)

The contract is complex, and we’ve spent the whole weekend making calls here and there to confirm (as much as possible) some of the things that are said and not said, but as of today, we believe that the DCF model we’re sharing (downloadable) to value the company, the level of detail analyzing the assets (FLNGs), and our share in the company and independent opinion on the situation is among the most complete you can find on the internet.

Today, we are sharing:

• Explanation of the details of the new contracts in Argentina and assumptions necessary to understand all dependencies
• Economics of Southern Energy
• Economics of the new Hilli and Fuji (Mark II) contracts
• Valuation (DCF model & metrics) under different scenarios (downloadable spreadsheet)
• Our perspective on the current situation

Incredible level of detail, for the company we know best.