Golar LNG – Updated Equity Research: Assets, Growth Pipeline, Valuation, and Strategic Review
Golar LNG is, without question, the company for which MORAM Capital is best known, and the one on which we have spent more hours than any other since our first acquisition on May 15th, 2020. We began analyzing the company following a force majeure event that nearly derailed it. Over the years, we have witnessed its spectacular transformation from a diversified entity with assets across multiple parts of the natural gas value chain into a pure-play FLNG company and the undisputed global benchmark in its niche. During this journey, we have seen the divestment of the shipping segment (now CoolCo), the sale of the downstream division to New Fortress Energy, the extraordinary spike in natural gas prices in 2022, Perenco acquiring a significant stake, and the signing of the Argentina contracts, among many other milestones.
We have modeled every scenario, read every filing, made the right calls, and rebuilt the spreadsheet more times than we can count. Fortunately, our initial investment was made at $5.15 per share. Over time, Golar’s weight in the portfolio increased, at certain points representing as much as 45% of our total exposure. Through disciplined entries and exits, as well as derivative positioning, we have generated nearly a 12x return on our original investment over these six years — an absolute game changer in the history of MORAM Capital.
Today, we want to update our investment thesis on Golar, as we believe the company is entering a critically important phase in its history. Despite having all three of its core assets tied to 20-year contracts, 2026 and 2027 are expected to be negative free cash flow years. Until the Argentina FLNG contracts (Hilli and Mark II, commencing in 4Q27 and 4Q28 respectively) become effective, the company will only have Golar Gimi operational (its least attractive contract) and Hilli until July 2026. Meanwhile, Golar must fund approximately $350 million in capex to adapt Hilli to its new contract and complete the construction of Mark II.
In other words, the market remains far from fully valuing the ~$800 million of EBITDA potential from 2029 onwards and is showing limited patience regarding the announcement of a fourth FLNG unit — an announcement that has taken considerably longer than initially expected.
At the same time, following an impressive refinancing effort over the past months, management has announced a strategic review aimed at unlocking near-term shareholder value. However, they have also decided not to proceed with ordering long-lead items (approximately $400 million in capex) for FLNG #4 in order to shorten delivery timelines, prioritizing cash preservation over the next two years. This decision comes at a time when the cost of such items — particularly gas turbines — is increasing due to rising demand from AI-driven data center construction. The market has received this shift as a cold shower, as it contrasts sharply with the much more aggressive tone management conveyed just a few months ago.
If this were happening at another company, we would likely conclude that management miscalculated and that liquidity will be tight over the next two years (let alone buybacks). However, with Golar LNG, we believe — and we have asked extensively — that something more structural has changed. Understanding the broader strategic picture is essential before drawing conclusions or taking further action.
Today we are sharing:
- A detailed analysis of the three assets (Gimi, Hilli, and Mark II) and their respective contracts, including simulations based on FOB pricing, TTF bridge assumptions, EUR/USD sensitivity, and more
- Potential FLNG growth opportunities, compiling all publicly available information on potential contracts and negotiations across Africa, the Middle East, and South America
- A complete analysis of the debt structure (annual amortization profile, interest rate hedging, SOFR exposure, etc.) and the capital allocation framework
- An ultra-detailed DCF valuation model including full contract-level data, commodity price assumptions, and multiple scenarios (downloadable spreadsheet)
- Our independent view on how the Golar story is likely to evolve in the coming months – and the strategy we have in place to maximize returns