Golar LNG Ltd

NASDAQ:GLNG

Earnings Call Transcript 2021-Q4

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to Golar LNG Limited Quarterly 2021 Results Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Karl Staubo. Please go ahead, sir.

[Karl Staubo, CEO]

Thank you, and welcome to Golar LNG's Q4 earnings results presentation. Thank you for taking time to dial in. My name is Karl Fredrik Staubo, CEO of Golar LNG. Before we get into the presentation, please note the forward-looking statements on Slide 2. I am accompanied today by Eduardo Maranhao, our CFO. Given that this is a Q4 presentation, we would like to start today's presentation by a review of the key events that occurred in 2021 as laid out on Slide 4. The year started with the announced sale of Golar's two subsidiaries, GMOP and Hygo Energy Transition to New Fortress Energy in January of last year. The transaction closed in April, realizing $130 million in cash proceeds to Golar, as well as 18.6 million shares in New Fortis Energy equivalent to an ownership in NFE of 8.9%. Following the sale of the two subsidiaries, in May, June, we then undertook a corporate reorganization, parted off with changes to corporate management. I moved from being the CFO of Golar to the CEO of Golar, whilst Eduardo transitioned from being the CFO of Hygo to the CFO of Golar. Furthermore, we rightsized our shore-based organization to the renewed company structure, reducing run rate G&A by approximately $5 million, of which the effects will be effective into 2022 due to redundancy packages for the majority of 2021. In July, we announced increased capacity utilization of the FLNG Hilli of 1.2 million tonnes of incremental production effective from 1st of January this year. The increased production has a tariff linked to TTF gas prices. At current TTF prices, this announcement represents increased earnings for Hilli for 2022 of approximately $80 million at no incremental CapEx to Golar. In Q3, we announced a refinancing of $682 million of new and refinancing debt facilities at improved terms from retiring facilities and also extending our debt maturities. Lastly, in December, we announced the formation of Cool Company, the business separation of our 8th LNG carriers. We then raised $275 million in external equity for that outlet and $570 million of new bank debt for the shipping fleet. In total, these activities involve the sale of assets and subsidiaries for a total enterprise value of approximately $6.2 billion and a refinancing of around $1 billion of debt. Together, these activities have simplified dollar, crystallized underlying value of our asset portfolio and significantly strengthened our balance sheet. Turning to Slide 5. Golar's new corporate structure consists of our two FLNG, Hilli which is in production, Gimi, which is 80% technically complete and scheduled to start its 20-year contract for BP in the second half of 2023. We remain with two LNG midstream assets, the Golar Arctic, which is a steam carrier; and Golar Tundra, one of the most modern available FSRUs in the market today, she is currently operating as an LNG carrier. We have furthermore developed three different FLNG designs using the same liquefaction technology and design concept, but with differences in liquefaction and storage capacity to cater for different sized potential new FLNG projects. As a result of the transactions undertaken during 2021, we have three sizable holdings in publicly listed LNG infrastructure companies. As explained, we own about 9% of New Fortress Energy, around 31% of Cool Company and around 24% of Avenir LNG. And combined, these three investments have a total value of around $600 million. On Slide 6, we have highlighted some of the key balance sheet effects of the actions undertaken in 2021. We now have cash and marketable securities of more than $1.1 billion. We have contractual net debt of approximately SEK 0.5 billion. If you include the total remaining CapEx on the FLNG Gimi, the net debt plus remaining CapEx is just under SEK 1 billion. And we expect EBITDA development from our existing FLNGs to quadruple over the next three years. On the right-hand side, you can see that we have rearranged all of our debt facilities, and we have no material debt maturities until 2025, well after Gimi's expected start-up in 2023. So turning to Slide 7. We believe we are now uniquely positioned for FLNG growth. We have a proven FLNG design. We have a market-leading operational track record with a 100% commercial uptime since Hilli started its contract in 2018. And we have now delivered 5 million tonnes of LNG, more than any other FLNG globally. To the bottom left, we have a market-leading carbon footprint and a market-leading CapEx per tonne of liquefaction. Lastly, the gas price environment is supportive of upstream investments. We are very encouraged by the progress made for new FLNG projects with existing and prospective new clients, and we expect to be awarded a new FLNG contract within 2022. Our FLNG technology is competitive down to a tolling fee in the region of $2 to $3 per MMBtu. This enables monetization of stranded and associated gas fields. As previously announced, we are exploring alternatives to obtain commodity upside exposure, whilst maintaining a base tariff similar to the structure that we have in place for the FLNG Hilli. In the current commodity price environment, Hilli is making a tariff in the region of $6 to $7 per MMBtu liquefied. I'll now hand over to Eduardo to present our Q4 results.

[Eduardo Maranhao, CFO]

Thanks, Karl, and good morning, everybody. I'm very pleased to provide an update on our group results for the fourth quarter of 2021. So turning to Slide 9. We see that this quarter has been very busy for us. We reported total operating revenues of $115 million with an adjusted EBITDA of $94 million, up 21% year-on-year. On the FLNG side, Hilli continues to operate with 100% commercial uptime. Based on encouraging market conditions, we have also managed to hedge 100% of our TTF-linked production for this year's Q2 and Q3 at around $25 per million BTU. Gimi construction is 80% technically complete, and we'll provide further details on that in the next slide. We're also making considerable progress on the commercial front. And as alluded by Karl, a new FLNG contract award is expected in 2022. Moving on to shipping. The announced formation of Cool Company followed by a successful private placement was completed in January, and closing of the sale of the 8 TFDE is in process with expected financial closing within the first quarter of 2022. Cool Company has also secured a debt facility of $570 million, which will be used to refinance six out of the eight vessels. On the corporate front, in order to provide extra financial flexibility to us and to support further FLNG growth, we have entered into a new $250 million bilateral facility with a seven years duration. We have also repaid our existing convertible bonds and have now no major debt maturities until 2025. The formation of Cool Company also reduces our contractual debt by $833 million, and we will improve our liquidity by a further $342 million. I will talk more about these in detail in this presentation. So moving on to Slide 10. I wanted to talk a bit more about our financial results, and we can see that the group had a very solid performance in the fourth quarter. Total operating revenues increased from $107 million in Q3 to $115 million in Q4. This represented an increase of 7% from the previous quarter. Operational performance was really strong and adjusted EBITDA came in at $94 million this quarter, up 27% from the previous quarter and also up 20% from the same quarter in 2020. Adjusted EBITDA from shipping was $43 million this quarter, an increase of 43% when compared to the previous one. FLNG contributed with $56 million this quarter, also reflecting an important increase of 14% when compared to the previous one. The increase in total operating revenues can be attributed to increased revenues from our operating FLNG, the Hilli and robust performance from our shipping assets. TCE earnings across our shipping fleet increased to 57,300 per day in Q4. Total operating revenues from our FLNG Hilli, including base tolling fees were $57 million in Q4, an increase of 4% from the previous quarter. This number was further enhanced when including the realized gains from Brent-linked revenues. And just to remind you all, the oil-linked component of the Hilli generates additional operating cash flows of approximately $3.1 million for every dollar increase in brand crude prices above $60 per barrel. As a result of rising prices, $12.9 million realized gain was observed in the fourth quarter, up from the 8.9% realized in Q3. This quarter, we recorded a net income of $7 million, a decline in the NFE share price between the 1st of October and December 31, resulted in a noncash mark-to-market loss of $51.6 million on our shareholding of 18.6 million NFE shares. However, this impact was more than offset by realized and unrealized gains on our oil and gas and interest rate derivatives of approximately $55 million. As a result of the new financings that were put in place in the fourth quarter, which included the issuance of a $300 million Norwegian bond, the refinancing of our FSRU Golar Tundra and the repayment of the existing $101 million revolving credit facility in November, we ended the year with a total cash position of $360 million. That shows how our financial position continues to strengthen, and I will talk more about that on the next slide with some key balance sheet development. So moving on to Slide 11. We can see that the formation of Cool Company brings great benefits to us. First of all, it emitted it will immediately reduce our contract on net debt by $833 million. Secondly, it brings cash proceeds of $217 million to be received during Q1 2022, while also adding $125 million of marketable securities through our shareholding of Cool Company. As I mentioned before, we have also entered into a new corporate bilateral facility, which allows us to draw up to $250 million until the end of Q2. Once drawn, that will have a 7-year duration with a bullet repayment maturing in 2029. Subject to certain ratios, it will carry a cost ranging from LIBOR plus 450 to 500 basis points. So considering our existing cash position, net proceeds from -- received from Cool Company, the new $250 million bilateral facility, as well as the existing $200 million revolving credit facility, we now have the right level of financial flexibility to support future growth. Our total cash and market securities position now stands at $1.1 billion, as you can see on the left side of the slide. So based on that, our contract on net debt has also substantially improved. When we account for the new financials that were put in place and also adjusting for the debt associated with the Cool Company vessels, our contract or net debt stands at $523 million. Going further, if we take into account our pro rata share of the Gimi's remaining CapEx, the contractual net debt attributable to Golar would be around $936 million. So I will now turn the call back over to Karl.

[Karl Staubo, CEO]

Thank you, Eduardo. Turning to FLNG on Slide 13. We are starting to see the effects of higher commodity prices on Hilli earnings. Hilli's adjusted EBITDA increased to 57 million for Q4 on the back of an increase in Brent-linked revenues and billing of $1.9 million of overproduction. We expect Hilli earnings to continue to increase on the back of higher Brent-linked earnings estimated at $17 million for Q1 '22 and the start-up of the previously discussed TTF-linked production from Q1 this year onwards. The unit continues its strong 100% operational utilization and as I alluded to, have offloaded 68 cargoes since its start-up in 2018. Slide 14 elaborates on the embedded upside in the commodity exposure of Hilli tariff. For the last 12 months, Golar's pro rata share of Hilli's EBITDA was $99 million. This is expected to grow by around 2.6x for 2022. On the back of these higher Brent-linked earnings, where Golar generated $2.7 million of EBITDA for every dollar Brent is above 60%. This will end around $80 million in year-over-year earnings. Furthermore, the start-up of our TTF-linked production unlocks an additional $80 million of Golar's pro rata Hill earnings. As Eduardo explained, during the quarter, we hedged Q2 and Q3 TTF gas prices as the summer months are normally the seasonally soft quarters, and we remain open for Q4 2022 TTF gas exposure. Perenco, the charter of Hilli has a onetime 3-year option to declare up to 0.4 million tonnes of increased production from 2023 until end of the contract in July 26. The tariff on this volume is based on the same TTF link at the 0.2 million tonnes of 2022 additional capacity utilization. The option is declarable within end of July this year and Perenco is currently undergoing a drilling campaign to prove up more gas reserves with a target to increase the gas flow to Hilli. Even if forward curves suggest a reduction in the TTF price from today's level, Hilli earnings are sustainable due to the offsetting effect of the higher utilization should Perenco declare their option. Turning to Slide 15 and a Gimi construction update. The unit is now 80% technically complete with 16 million man hours worked to date on the conversion. The reminder of the build is mainly around construction, installation and testing of equipment ahead of the 2023 sail-away and contract start-up. The contract will unlock an annual EBITDA to Golar of $151 million per year every year for its 20-year contract. On Slide 16, natural gas market fundamentals continued to improve for new upstream and liquefaction projects. COVID-related effects have installed new gas upstream infrastructure projects, which has led to an anticipated shortage of LNG supply to meet the continued strong increase in LNG demand. These developments, together with weather effects and ongoing escalation of geopolitical landscape of large natural gas exporters have caused spot and forward gas prices to lift improving economics for LNG upstream projects and also an increasing desire to diversify gas supply sources. We will now turn the attention to shipping and focus on Cool Company, which comprise the majority of our shipping portfolio. On Slide 18, we provide further granularity of the charter profile of our shipping fleets. The light blue color represents our spot market exposure where we're fully covered for Q1 this year, but with an increasing exposure to an anticipated strengthening of LNG freight rates from Q2 this quarter and onwards. In slightly darker blue, we have our floating rate charters, which fluctuate with quoted spot market rates within a band subject to floor and ceiling rates. The bottom two columns represent our fixed and charters options fixtures that generates an average time charter equivalent of just over $60,000 a day, as you can see from the bottom table. Despite short-term headwinds for LNG spot rates, term rates continue at healthy levels, significantly above our 2021 achieved rates. Hence, we expect Cool Company earnings to significantly increase as the fleet recontracts into higher charter parties. On Slide 19, we explained what this could mean in terms of the dividend potential from Cool Company. Cool Company has a clear strategy to distribute quarterly dividends once listed in New York expected later this year. The dividend potential on average spot rates for 2021 of $91,000 a day would equate to a dividend yield of 15% for 2022 or 24% in 2023 as more of the fleet are exposed to higher recontracting rates as we go further out in time. On Slide 20, the LNG freight market has grown by around 7% cumulative aggregate growth for the last 20 years. This is a trend that is expected to continue on the back of new liquefaction projects coming on stream and increasing transportation distances as most of this new capacity is coming on in the U.S., and the fastest-growing demand is in the Far East. U.S. to Far East consumes about double the vessel demand compared to a U.S., Europe round trip. Looking at the supply side on Slide 21. And as previously discussed on our previous earnings calls, new environmental regulations coming into effect from 1st of January 2023, will likely make a large part of the fleet on the water, noneconomical for international long-haul trade. In particular, steam propel vessels built before 2007 are at the heightened risk of exiting international trade corresponding to about 30% of the fleet on the water. The order book now standing at over 160 vessels are mainly built against charters to service new liquefaction projects and only 21 of the 160 ships on order are currently uncommitted. Hence the market backdrop where we have a demand side growing by about 7% a year. The supply side at the risk of seeing 30% of the fleet on the water we made obsolete by new environmental regulations and no ability to increase the supply side well into 2025 due to yard capacity restrictions, bodes well for a tightening of LNG shipping freight rates. We believe Cool Company is well positioned to benefit from this development with an increasing exposure to the spot market. Turning to corporate. Golar was awarded Best ESG Strategy for North America in 2021 by Capital Finance International. We have a history of being an LNG market entrepreneur at the forefront of some of the key technology advances in the LNG industry, including being the first mover into FSR use and later FLNGs. Repurposing of assets and innovation focused on energy efficiency, make financial sense for Golar and its customer and reduces the environmental footprint of LNG. We're grateful to be recognized by CFI for our long-standing efforts in contributing to strengthening LNG's relative competitiveness in the global energy market. Turning to Slide 24. This is a slide familiar to most of you as we have shown this in most of our previously quarter results, but it's now updated for the effects of an of the Cool Company transaction on both our earnings and balance sheet. Starting off with Hilli. As discussed, this unit has an embedded upside, which should see a 2.6x increase in the earnings year-over-year on the back of the commodity exposure and the increased production. Golar's share of net debt on Hilli stands at $317 million at the end of Q4. Gimi is currently under construction, and as such, does not yet generate earnings. She is expected to start her contract in late '23 and will add 151 million of Golar's pro rata share of EBITDA. Q4 debt stands at $287 million where Golar share of remaining CapEx stands at approximately $410 million, where about half will be covered by existing debt facility and half by equity. Our two remaining shipping and FSRU assets generated $24 million of EBITDA during '21, and we expect an increasing attraction of the FSRU Tundra for potential FSRU charters that can increase EBITDA generation and earnings visibility from this unit. Net debt on our two assets combined stand at 187 million at quarter end. Lastly, G&A for '21 came in at negative $18 million in cash and marketable securities of more than 1.1 billion. In sum, we expect earnings to quadruple within '24 from 2021 levels. Total net debt, including remaining CapEx stands at less than 1 billion or about 2x fully invested run rate EBITDA. With our current cash position and contract profile, we can fund new FLNG project, whilst starting a dividend following Gimi contract start-up. So to round off on Slide 25. Through 2021, the group simplification is now executed. We expect a quadrupling of our FLNG earnings from our existing assets from 2024 versus 2021 levels. We have a strong balance sheet position with cash and marketable securities of 1.1 billion and fully delivered net interest-bearing debt of less than 2x. We believe we're uniquely positioned for FLNG growth, and we are confident that we will see a contract award within '22. That concludes our Q4 '21 earnings presentation. Thank you all again for dialing into the call. I would like to turn over to the operator for any questions.

[Operator]

[Operator Instructions] The first question is from Randy Givens from Jefferies. Please go ahead. Your line is open.

[Randall Giveans]

Congrats on the Cool Company spin. That was a long time coming, I know so nicely done there. I guess starting with FLNG you keep mentioning kind of a possible project in 2022. I guess what gives you that confidence? Can you provide a little more details around that, maybe timing and hurdles? And then staying on FLNG any updates on the Hilli expansion? I know it's kind of the same language you used a few months ago, but you're seeing how likely, is that additional option? What's Perenco doing any other color you can provide there that would be great?

[Karl Staubo, CEO]

Yes, Randy so when it comes to FLNG projects again, most FLNG projects are large infrastructure projects that obviously require a gas resource and an FLNG, but they also require governmental approvals, environmental approvals and several fairly lengthy processes. That often is outside of our and sometimes outside of our charters controlled. So even if both us and the prospective charter is ready to engage, there are still hurdles that we need to cross on time lines that we are less in control of. However, I would say that we are extremely confident by the progress made through '21, but also in particular, this quarter, both with existing but also new prospective clients. For some of the clients, we have a target time line that should boast new or contract awards very well within this year, and that is basically what gives us the confidence to be -- to say that we will get the award within '22. To turn to your second part of your question when it comes to Hilli at this gas price, I think it's pretty much a no-brainer to increase production. The unit is there, and she is available to produce more and economics of upstream are pretty amazing at current gas prices. So I think the only hold of, if any, is the results of the drilling campaign. Again, the option is declarable up until July. And we expect a decision to be made close to the end of that option window.

[Randall Giveans]

And then I guess second question, just looking at some of your other assets. You have the Golar Arctic kind of what's the status there? And then the Golar Tundra, it seems like there's some opportunity for an FSRU at the Barcarena project. Can you shed some light on those two assets?

[Karl Staubo, CEO]

I think Arctic is our last shipping asset. She's a steamer, which we, again, think will be highly disadvantaged from 1st of January '23 due to the new regulations. We're looking at basically three alternatives for her an outright sale, a charter as a ship for a potential conversion to an FSRU. We believe we will conclude on one of those three well within this year, and we are in the different processes of all three of those alternatives. When it comes to Tundra, she is one of the most modern FSRUs available in the market today. And I think as the latest geopolitical events have alluded to, it could be an advantage to have a diversified source of natural gas, and we think her relative attractiveness has increased, both for named projects like you referred to in Brazil, but also for other projects elsewhere.

[Operator]

The next question from Ken Hoexter from Bank of America. Please go ahead.

[KenHoexter]

Karl, you mentioned three different potential fling styles. I guess, just going back to your Mark III, is there, I guess, a new development in kind of maybe a midsize versus the large and small you've been talking about, maybe just talk about -- it seems like you're progressing on sales, maybe talk about the optionality there for the differentiation?

[Karl Staubo, CEO]

I think Mark, one is basically what we have for Hilli and Gimi. It's plus/minus 2.5 million tonnes of liquefaction capacity, and it's based on a conversion of an existing ship. Mark II is a slightly more flexible solution that can range between 2 million to 3 million tonnes. It's also based to a large extent on a conversion, but it's got shorter construction time and can be built at shipyards that provide attractive financing. Lastly, you have the Mark III, which is a new build design, which would typically be built in a shipyard in Korea and that can go up to 5 million tonnes. So it's for larger projects. And it's also got significantly larger storage capacity -- income is a small mid product

[KenHoexter]

Yes, and then does the sale of CoolCo, which still kind of was like the embedded base of potential vessels that you could use for some of the conversion opportunities. I guess that doesn't really make an impact given you mentioned how many are going to be coming off of international trade going forward. Is that where you would look for some of the opportunities for conversion potential or is this more developing Mark III projects going forward?

[Karl Staubo, CEO]

I think for conversion, we will focus on Mostafa carriers. All of the ships that went into Cool Company are membrane type and not suited for FLNG conversion. So there's no impact in terms of conversion in candidates of Cool Company on the FLNG side of the business.

[KenHoexter]

And then, I guess just switching to kind of our current events. Maybe talk about the impact of Ukraine developments on Europe's increasing need for gas and what that could mean for potential opportunities or negotiations as you look forward into '22, '23?

[Karl Staubo, CEO]

I think the most immediate there is obviously the increase or potential increased production on Hilli-linked to TTF. It makes sense for Perenco, makes sense for us and a higher gas price makes it even more attractive. So I think that's the most immediate. I think somewhat longer term, the need for diversifying LNG sources. I think it's quite relevant for pretty much anyone in the market and should bode well for the supportive actions to -- for new FLNG projects.

[KenHoexter]

And then lastly for me, just I guess, a more numbers question is, I guess now maybe talk about your outlook for, I guess, direct interest expense. You talked about the refinancings. Maybe can you talk about what your interest expense looks like going into '23, given the refinancings?

[Karl Staubo, CEO]

Eduardo, do you want to take it?

[Eduardo Maranhao, CFO]

Yes, sure so Ken, so coming into 2023, as we mentioned before, we have managed to issue the $300 million bond in October, and that was mainly used to repay the convertible bonds in February of this year. So if we look further for 2023, our interest expense would be pretty much in line to what we had previously. I think the main effect of the different refinancings that took place and the formation of Cool Company will really come with the deconsolidation of $833 million of debt, which at the time of closing of the Cool Company's acquisition of the eight vessels will take effect. So I think this is really like the most important impact to us.

[KenHoexter]

Great. We'll have a follow-up with Stuart on some of the other minor details. But appreciate the time and congrats on the CoolCo payment and good luck on the next FLNG project.

[Operator]

The question from [Chris Chung] from Webber Research. Please go ahead.

[Unidentified Analyst]

Just to follow-up on the potential options for the Golar Arctic. I know you said sale, charter or conversion as an FSRU. If it's the latter, if it's a conversion of the FSRU -- could it be something like what you've done with the Golar Viking and converted it for a customer and then sold it and then subsequently manage this?

[Karl Staubo, CEO]

That's an extremely simple yes, is the answer.

[Unidentified Analyst]

Is that on the table, is that what you're looking at now?

[Karl Staubo, CEO]

That is a potential venue and yes, there are projects that could suit that.

[Unidentified Analyst]

Okay that was easy take. And so speaking of the LNG Croatia, I note that Nicolay is being paid about $2 million a year for managing this. And with the carrier spend down to CoolCo and along with the commercial and technical teams, like does that $2 million still sit with Golar or is that split with CoolCo or does it all go down to CoolCo?

[Karl Staubo, CEO]

The absolute vast majority of that sits with Golar and stays with Golar.

[Unidentified Analyst]

And just one last one on the Hilli extension I know there is an option for Franco July 2022 and there's no discussions on possible expansions until - extensions until Franco until Hilli is fully contracted, right? So is the bogey like the full 2.4 million tonnes or is this somewhere just above where it's at now?

[Karl Staubo, CEO]

You're absolutely right but we have been very adamant in the past. We were not there to talk about extension until they at least declare to 0.4. And for any extensions, we need to see that we are paid for the full capacity of the unit. We think it's unlikely that the unit will produce up to 2.4 million tonnes at its current location due to gas flow. So today -- last year, we produced 1.2 million tonnes. This year, we produced 1.4 million tonnes due to the TTF linked. And next year is potentially then up to 1.6 million tonnes. If that's declared, then the unit is making business money until July 26. And beyond that, we will then look for a contract that will compensate the full 2.4 billion ore of capacity, and we need to see the 1.6 billion to be willing to have that discussion at all with Perenco. I think another caveat is that -- there is some construction time for new FID. And very soon, Hilli is the fastest available FLNG in the world. It's got no construction risk and the best operational track record in the market. So we believe her relative attractiveness is only increasing the closer we get to end the contract than the opposite.

[Operator]

The next question from Chris Wetherbee from Citi. Please go ahead.

[Unidentified Analyst]

It's James on for Chris. Just wanted to touch on something you had said about a potential FLNG project on the horizon and it's getting a customer order around it. When we sort of think about assuming it's a Mark III, essentially the economics around cost, just generally given the inflationary environment and the potential delivery? And is there any sort of other aspect that we should really be thinking about relative to sort of the Hilli the other projects that you have online at the moment?

[Karl Staubo, CEO]

I think CapEx wise, you're looking at pretty much around the sort of same rule of thumb of $500 million per tonne of liquefaction capacity. So if you can talk about a 5 million unit, it's basically $2.5 billion roughly. Yes, there is some inflationary pressure at CPR prices details but there are also some economies of scale of going from 2.5 million tonnes of production on one hole to 5 million tonnes of production on long haul. So the rule of thumb I think, is still valid for that point. So call it around $500 million in CapEx per tonne liquefaction.

[Unidentified Analyst]

Got it. And what about the potential delivery time, just given if you put the order in now and the specifications tightness in order book across shipping generally, what would be sort of a potential delivery date if it was put in a sort of midyear this year?

[Karl Staubo, CEO]

Plus/minus four years from the start.

[Unidentified Analyst]

And you also now have...

[Karl Staubo, CEO]

Sorry, sorry, that for 5 million tonnes -- that's for 5 million tonnes. If you do the Mark II, you can significantly shorten it 2.5 to three years.

[Unidentified Analyst]

Understood got it. And then you called out basically three sizable equity investment. Just wanted to understand sort of your plan for those over time you mentioned that you view the met strategic, but now that sort of some of the broader refinancing and restructuring is done, how do you sort of think about those? Are these something that you essentially want to hold on to or potentially could sell down in order to finance sort of construction of another FLNG project. Just kind of wanted to understand how you thought about those strategically and sort of any long-term plans around them if you had it?

[Karl Staubo, CEO]

I think the key rationale as to why we ended up with them. It's important to understand before we discuss the next step. And we think all of them are very attractive businesses. And we think all of them have very attractive risk reward from the current share prices. Our rationale for ending up a significant shareholders of the fact that we've been focused on simplifying Golar to be a pure-play FLNG owner and operator and to enable us to crystallize underlying value and strengthen our balance sheet to take on new FLNG projects. So for now, we are holders of these names. We think that we will remain holders until the earlier of when these stocks better reflect the underlying value embedded in these companies or when we can recycle the capital for FLNG growth. With the new financing facilities that Eduardo has explained during this call, we don't need to pretty much do anything if we're lifting on FLNG project. If we're lifting more, we need to start considering.

[Unidentified Analyst]

Got it. And then one quick one, essentially on the $250 million sort of delayed draw any specific uses that have been earmarked for that? And then just, I guess, broadly, is there anything else that you sort of have on the horizon from sort of the debt financing side in terms of things that you want to address and that's all from me?

[Karl Staubo, CEO]

I think on the 250 is a, fairly attractively priced corporate facility. It's got a bullet repayment seven year duration. It enables us to do FLNG growth without having to tap into are publicly listed stocks. So for us, it's an attractive risk reward in securing that facility, having flexible draw for the next six months and hopefully tie that with new FLNG projects. We have learned from experience that these are fairly capital-intensive projects that we are undertaking, and it's good to have secured long-term attractive facilities before FID versus after. So you should see that, that is really the key rationale. We have no other debt maturities whatsoever until 2025. And we have low near-term ambition to do any further debt optimizations. We do think that there is a potential to significantly improve the debt facility on Gimi on or around delivery, but there's no need or desire to do that at this point in time.

[Operator]

The next question from Omar Nokta from Clarkson Securities.

[Omar Nokta, Clarkson Securities]

Karl, Eduardo, congratulations also on the official completion of the Golar simplification process I just wanted to ask -- I had a couple of questions. But first, just on the FLNG contract award you're anticipating for this year. Could you maybe talk just about what kind of contract do you think that would look like? Is that one that would similar -- would be similar to that 20-year BP contract on the Gimi or do you kind of want to have a bit more skin in the game as you've talked about in the past and something that maybe emulates the Hilli contract?

[Karl Staubo, CEO]

I think on the balance, it's more of a long-term tolling fee-based contract, more similar to that of Gimi. But as we explained during the presentation, we are seeking to obtain some commodity exposure, and we're working to see if we can achieve that for the 2022 expected award as well.

[Omar Nokta, Clarkson Securities]

And I guess just regarding the Gimi, you mentioned instituting a dividend after that starts up. Have you thought about what kind of dividend that would look like? Do you envision that being a regular quarterly payout or do you anticipate some sort of securitization of that $3 billion backlog and doing maybe a special dividend or some kind of dividend recap?

[Karl Staubo, CEO]

I think if you talk about return to shareholders and capital allocation, we still have around $25 million of buyback that we can enable. Due to the bond we concluded last year, we are not allowed to pay dividends until Gimi delivers despite the fact that we can on the basis of Hilli earnings alone. But the plan is to start a regular quarterly dividend following delivery of Gimi and as we have this infrastructure like returns over time, we should create this to be a stable yield play. And then with this liquidity position we have, we can afford to pay that dividend while still funding FLNG growth project out of our cash position.

[Omar Nokta, Clarkson Securities]

Okay. And then just on the Gimi project that given where LNG prices are in the forward curves over the next several years, any sort of updates that you're seeing from the greater for two project is that getting expanded and whether that could potentially lead to more business for Golar?

[Karl Staubo, CEO]

I think it's an extremely large gas discovery. There's a publicly announced plans to eventually get that to at least 10 million tonnes of production. And with Gimi, we get them a 1/4 of the way there. And so on the balance, they are significantly closer to cash flow start-up. I think the gas price is significantly higher than the base at something that the DTA partners assumed for when they took FID. So, on the balance, getting closer to cash flow, infrastructure in place and better economics than anticipated when taking FID should support growth in our view.

[Omar Nokta, Clarkson Securities]

And Karl, just one final one, and you may have addressed this in the past, but I just wanted to ask about the Brent-linked component of the Hilli. The dollar of incremental -- or sorry, the $3 million of incremental EBITDA for every dollar that you're above 60%, it takes you up to a contractual ceiling. Have you disclosed what that ceiling is?

[Karl Staubo, CEO]

We did back in '15, it's just over $100.

[Operator]

Thank you, there are no further question at the moment.

[Karl Staubo, CEO]

Okay. Then we would like to thank you all for dialing in to the call today, and we look forward to speaking to you again on our next quarter results. And please do reach out if you have any further follow-ups. Have a good day.

[Operator]

And that concludes the conference for today. Thank you for participating. You may all disconnect.