UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark
One)
☐
☒
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended
December 31, 2023
OR
☐
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Date of event requiring this shell company report
For the transition period from
to
Commission file number
000-50113
Golar LNG Limited
(Exact name of Registrant as specified in its charter)
(Translation of Registrant’s name into English)
Bermuda
(Jurisdiction of incorporation or organization)
2nd Floor, S.E. Pearman Building
9 Par-la-Ville Road, Hamilton
HM 11, Bermuda
(Address of principal executive offices)
Mi Hong Yoon
S.E. Pearman Building
2nd Floor 9 Par-la-Ville Road, Hamilton
HM 11, Bermuda
Telephone: +1 (441) 295-4705
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to section 12(b) of the Act.
Title of each class
Trading Symbol
Name of each exchange
on which registered
Common Shares, par value, $1.00 per
share
GLNG
Nasdaq Global Select Market
Securities registered or to be registered pursuant to section 12(g) of the Act.
None
(Title of class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period
covered by the annual report.
As of December 31, 2023, the registrant had 104,578,080 outstanding common shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
X
No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
1934.
the
Section
Exchange
Securities
15(d)
Act
13
or
of
Yes
No
X
Note- Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
the past 90 days.
file
(2) has been
requirements
reports),
subject
filing
such
such
and
for
to
Yes
X
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes
X
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an
emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in
Rule 12b-2 of the Exchange Act. (Check one).
Large accelerated filer X
Accelerated filer
Non-accelerated filer
Emerging growth
company
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting
Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
report.
7262(b))
accounting
registered
prepared
issued
public
audit
firm
that
the
by
its
or
Yes
X
No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
Yes
No
X
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b).
Yes
No
X
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
U.S. GAAP
X
International Financial Reporting Standards as
issued by the International Accounting
Standards Board
Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the
follow.
registrant
elected
has
to
Item 17
Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes
No
X
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes
No
PART I
PAGE
INDEX TO REPORT ON FORM 20-F
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3.
KEY INFORMATION
ITEM 4.
INFORMATION ON THE COMPANY
ITEM 4A. UNRESOLVED STAFF COMMENTS
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
ITEM 8.
FINANCIAL INFORMATION
ITEM 9.
THE OFFER AND LISTING
ITEM 10.
ADDITIONAL INFORMATION
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
ITEM 15.
CONTROLS AND PROCEDURES
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 16B. CODE OF ETHICS
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
1
1
1
18
27
27
42
47
48
48
49
60
61
62
62
62
63
63
63
64
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16G. CORPORATE GOVERNANCE
ITEM 16H. MINE SAFETY DISCLOSURE
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
ITEM 16J.
INSIDER TRADING POLICIES
ITEM 16K. CYBERSECURITY
PART III
ITEM 17.
FINANCIAL STATEMENTS
ITEM 18.
FINANCIAL STATEMENTS
ITEM 19.
EXHIBITS
SIGNATURES
64
64
64
65
65
65
65
66
66
66
71
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Matters discussed in this report may constitute forward-looking statements. The Private Securities Litigation Reform Act of
1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective
information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies,
future events or performance, and underlying assumptions and other statements, which are other than statements of historical
facts.
We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are
including this cautionary statement in connection with this safe harbor legislation. This report and any other written or oral
statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to
future events and financial performance. When used in this report, the words “believe”, “anticipate”, “intend”, “estimate”,
“forecast”, “projected”, “plan”, “potential”, “continue”, “will”, “may”, “could”, “should”, “would”, “expect” and similar
expressions identify forward-looking statements.
The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon
further assumptions, including without limitation, management’s examination of historical operating trends, data contained in
our records and other data available from third parties. Although we believe that these assumptions were reasonable when
made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or
impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations,
beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements.
In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause
actual results to differ materially from those discussed in the forward-looking statements include, among other things:
•
•
•
•
•
•
•
•
•
•
•
•
our ability and that of our counterparty to meet our respective obligations under the 20-year lease and operate agreement
(the “LOA”) with BP Mauritania, a subsidiary of BP p.l.c (“BP”), entered into in connection with the Greater Tortue
Ahmeyim Project (the “GTA Project”), including the timing of various project infrastructure deliveries to site such as the
floating production, storage and offloading unit (“FPSO”). Delays to contracted deliveries to site could result in
incremental costs to both parties to the LOA, delay commissioning works and the start of operations for our floating
liquefaction natural gas vessel (“FLNG”) Gimi (“FLNG Gimi”);
continuing uncertainty resulting from our claim for certain pre-commissioning contractual prepayments that we believe we
are entitled to receive from BP pursuant to the LOA, including timing of eventual resolution, whether our claim will be
upheld and any eventual recovery or amounts that we may be required to settle;
the recoverability of other pre-commissioning contractual prepayments that we believe we could be entitled to receive from
BP;
our ability to meet our obligations under the liquefaction tolling agreement (the “LTA”) entered into in connection with the
Hilli Episeyo (“FLNG Hilli”);
our ability to recontract the FLNG Hilli once her current contract ends in July 2026 and other competitive factors in the
FLNG industry;
that an attractive deployment opportunity, or any of the opportunities under discussion for the Mark II FLNG (“Mark II”),
one of our FLNG designs, will be converted into a suitable contract. Failure to do this in a timely manner or at all could
expose us to losses on our investments in a donor vessel for a prospective Mark II project, the Fuji LNG (the “Fuji LNG”),
long-lead items and engineering services to date. Assuming a satisfactory contract is secured, changes in project capital
expenditures, foreign exchange and commodity price volatility could have a material impact on the expected magnitude
and timing of our return on investment;
continuing uncertainty resulting from potential future claims from our counterparties of purported force majeure (“FM”)
under contractual arrangements, including but not limited to our future projects and other contracts to which we are a party;
failure of shipyards to comply with schedules, performance specifications or agreed prices;
failure of our contract counterparties to comply with their agreements with us or other key project stakeholders;
our ability to close potential future transactions in relation to equity interests in our vessels, including the Golar Arctic,
FLNG Hilli and FLNG Gimi or to monetize our remaining equity method investments on a timely basis or at all;
increases in operating costs as a result of inflation, including but not limited to salaries and wages, insurance, crew
provisions, repairs and maintenance, spares and redeployment related modification costs;
continuing volatility in the global financial markets, including but not limited to commodity prices, foreign exchange rates
and interest rates;
•
•
•
•
•
•
•
•
•
•
•
•
•
•
global economic trends, competition and geopolitical risks, including impacts from the length and severity of future
pandemic outbreaks, rising inflation and the ongoing conflicts in Ukraine and the Middle East, recent attacks on vessels in
the Red Sea and the related sanctions and other measures, including the related impacts on the supply chain for our
conversions or commissioning works, the operations of our charterers and customers, our global operations and our
business in general;
changes in our relationship with our equity method investments and the sustainability of any distributions they pay us;
claims made or losses incurred in connection with our continuing obligations with regard to New Fortress Energy Inc.
(“NFE”), Energos Infrastructure Holdings Finance LLC (“Energos”), Cool Company Ltd (“CoolCo”) and Snam S.p.A.
(“Snam”);
the ability of Energos, CoolCo and Snam to meet their respective obligations to us, including indemnification obligations;
changes in our ability to retrofit vessels as FLNGs or floating storage and regasification units (“FSRUs”) and our ability to
secure financing for such conversions on acceptable terms or at all;
changes to rules and regulations applicable to liquefied natural gas (“LNG”) carriers, FLNGs or other parts of the natural
gas and LNG supply chain;
changes to rules and regulations applicable to companies with securities listed on an European Union (“EU”) regulated
market, or with an EU presence, including but not limited to the European Union’s Corporate Sustainability Reporting
Directive ("CSRD");
changes in the supply of or demand for LNG or LNG carried by sea for LNG carriers or FLNGs and the supply of natural
gas or demand for LNG in Brazil;
a material decline or prolonged weakness in charter rates for LNG carriers or tolling rates for FLNGs;
increased tax liabilities in the jurisdictions where we are currently operating or have previously operated;
changes in general domestic and international political conditions, particularly where we operate, including in Senegal, or
where we seek to operate;
changes in the availability of vessels to purchase and in the time it takes to build new vessels or convert existing vessels
and our ability to obtain financing on acceptable terms or at all;
actions taken by regulatory authorities that may prohibit the access of LNG carriers and FLNGs to various ports; and
other factors listed from time to time in registration statements, reports or other materials that we have filed with or
furnished to the U.S. Securities and Exchange Commission (the “Commission”), including our annual report on Form 20-F.
Please see our Risk Factors in Item 3 of this report for a more complete discussion of these and other risks and uncertainties.
We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their
dates. These forward-looking statements are not guarantees of our future performance, and actual results and future
developments may vary materially from those projected in the forward-looking statements.
All forward-looking statements included in this report are made only as of the date of this report and, except as required by law,
we assume no obligation to revise or update any written or oral forward-looking statements made by us or on our behalf as a
result of new information, future events or other factors. If one or more forward-looking statements are revised or updated, no
inference should be drawn that additional revisions or updates will be made in the future.
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
Throughout this report, unless the context indicates otherwise, the “Company”, “Golar”, “Golar LNG”, “we”, “us”, and
“our” all refer to Golar LNG Limited or any one or more of its consolidated subsidiaries, including Golar Management
Limited, or Golar Management, or to all such entities. References to “Golar Partners” or “GMLP” refer, depending on the
context, to our former affiliate Golar LNG Partners LP (previously listed on Nasdaq: GMLP) and to any one or more of its
subsidiaries. References to “Hygo” refer to our former affiliate Hygo Energy Transition Ltd and to any one or more of its
subsidiaries. References to “Avenir” refer to our affiliate Avenir LNG Limited (Norwegian OTC: AVENIR) and to any one or
more of its subsidiaries. References to “NFE” refer to New Fortress Energy Inc. (Nasdaq: NFE), the third-party purchaser of
Golar Partners and Hygo, which acquisition closed on April 15, 2021. References to “CoolCo” refer to Cool Company Ltd
(Euronext Growth/NYSE: CLCO) and to any one or more of its subsidiaries. Unless otherwise indicated, all references to
“USD” and “$” in this report are to U.S. dollars.
A. Reserved
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
The risk factors summarized and detailed below could materially and adversely affect our business, our financial condition, our
results of operations and the trading price of our common shares. We have categorized the risks we face based on whether they
arise from our FLNG business, projects, financing and operational activities or from the industry in which we operate. We have
listed these risks based on management’s assessment of priority. Where relevant, we have grouped together related risks into
the following categories:
◦
Risks related to our FLNGs and our FLNG growth projects
■ Our ability to meet our continuing obligations under the LOA entered into in connection with the FLNG Gimi;
■ Continuing uncertainty on the recoverability of certain pre-commissioning contractual prepayments claim
pursuant to the LOA;
■ Our ability to meet our continuing obligations under the LTA entered into in connection with the FLNG Hilli;
■ Our ability to recontract the FLNG Hilli once her current contract ends;
■ Our operating revenue is dependent on a high customer concentration wherein a loss of any of our customers
could have an adverse effect on our earnings, cash flows and financial condition;
■ Our efforts to manage commodity and financial risks through derivative instruments could adversely affect our
results of operations and financial condition;
■ Our ability to convert Mark II commercial leads into a long-term profitable contract;
■ Our ability to complete a Mark II conversion could have a material adverse effect on our business, financial
condition, results of operations, cash flow, liquidity and future prospects;
■ Our ability to secure funding for our Mark II project; and
■ Our heavy reliance on a limited number of contractors and shipyards with relevant specialized experience, given
the sophisticated nature of FLNG conversions.
1
◦
Risks related to the financing of our business
■ We may not be able to obtain new financings to meet our obligations as they fall due or to fund our growth or our
future capital expenditures, which could negatively impact our results of operations, financial condition and ability
to pay dividends;
■ We are exposed to volatility in the Secured Overnight Financing Rate (“SOFR”) and the derivative contracts we
have entered into to hedge our exposures to fluctuations in interest rates could result in charges against our results
of operations, being higher than market interest rates;
■ Most of our financing agreements are secured by our vessels and contain operating and financial restrictions and
other covenants that may restrict our business and financing activities;
■ We entered into guarantees for certain parties. If these parties are unable to service their debt requirements or
comply with certain provisions contained in their loan agreements, this may have a material adverse effect on us;
■ The inability of certain parties to satisfy their indemnity obligations to us could have a material adverse effect on
our financial condition and results of operations;
■ If the Hilli letter of credit (the “Hilli LC”) is not extended, the results of operations and financial condition of
Golar Hilli Corp. (“Hilli Corp”) could suffer;
■ Servicing our debt agreements substantially limits our funds available for other purposes and our operational
flexibility;
■ Our consolidated lessor variable interest entity (“VIE”) may enter into different financing arrangements, which
could affect our financial condition, results of operations and cash flows; and
■ Our cash and cash equivalents and restricted cash are dependent on a limited number of financial institutions,
wherein a collapse of any of these financial institutions could have an adverse effect on our cash flows and
financial condition.
◦
Risks related to our operations
■ We are subject to certain risks with respect to our contractual counterparties, and failure of such counterparties to
meet their obligations could cause us to suffer losses or otherwise adversely affect our business;
■ We may experience increased labor costs, the unavailability of skilled workers or the failure to attract and retain
qualified key personnel, which may negatively impact the effectiveness of our management and our results of
operations;
■ A cyber-attack could materially impact our reputation, operations or financial performance;
■ Our operations face several industry risks and events which could cause damage or loss of a vessel, loss of life or
environmental consequences that could harm our reputation and ongoing business operations;
■ Technical operational risk, human operational errors and wear and tear of equipment may impact uptime and have
an associated impact on financial performance of our FLNGs;
■ We are subject to the economic, political, social and other conditions in the jurisdictions where we operate;
■ Failure to comply with the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”), the Bribery Act of the UK
(the “UK Bribery Act”) and other anti-bribery legislation in other jurisdictions could result in fines, criminal
penalties, and contract terminations;
■ Vessel values may fluctuate substantially and, if these values are lower at a time when we are attempting to
dispose of vessels or a decrease in their estimated future cash flows during our recoverability assessment, we may
incur a loss which will have a material adverse effect on our results of operations;
■ We will have to make additional contributions to our pension scheme because it is underfunded;
■ We are exposed to U.S. Dollar, Euro, Norwegian Krone, British Pound, Brazilian Real and other foreign currency
fluctuations and devaluations that could harm our results of operations;
■ We are subject to the risk related to Macaw Energies’ business which may not achieve anticipated profitability as
expected or at all; and
■ Our equity method investments may not result in sufficient profitability to justify our investment, and could lead
to future impairment.
◦
Risks related to our industry
■ Our results of operations and financial condition depend on demand for natural gas, LNG, FLNGs and LNG
carriers;
■ Our operations are subject to extensive and changing laws, regulations, reporting requirements and environmental
and social attitudes towards fossil fuel, may have an adverse effect on our business; and
■ Environmental, social and governance (“ESG”) and sustainability considerations may adversely impact our
operations and markets.
2
◦
Risks related to our common shares
■ The declaration and payment of dividends or repurchases of our own shares are at the discretion of our board of
directors;
■ Our common share price may be highly volatile and future sales of our common shares could cause the market
price of our common shares to decline and could lead to a loss of all or part of a shareholder’s investment;
■ We may issue additional common shares or other equity securities without our shareholders’ approval, which
would dilute their ownership interests and may depress the market price of our common shares;
■ Because we are a Bermuda corporation, our shareholders may have less recourse against us or our directors than
shareholders of a U.S. company have against the directors of a U.S. company; and
■ Because our offices and most of our assets are outside the U.S., our shareholders may not be able to bring a suit
against us, or enforce a judgment obtained against us in the United States.
◦
Risks related to tax
■ As a Bermuda exempted company incorporated under Bermuda law with subsidiaries in the Marshall Islands and
other offshore jurisdictions, our operations may be subject to economic substance requirements;
■ A change in tax laws in any country in which we operate could adversely affect us;
■ We could be treated as or become a passive foreign investment company (“PFIC”), which could have adverse U.S.
federal income tax consequences to U.S. shareholders;
■ We may have to pay tax on certain U.S. source income, which would have a negative effect on our business and
reduce cash available for distribution; and
■ The recent enactment of a corporate income tax in Bermuda could adversely affect us.
Risks related to our FLNGs and our FLNG growth project
•
Our ability to meet our continuing obligations under the LOA entered into in connection with the FLNG Gimi.
In February 2019, we entered into the LOA with BP for the lease and operation of FLNG Gimi, for the first phase of the
GTA Project, situated off the coast of Mauritania and Senegal, for a period of 20 years. As of March 15, 2024, the FLNG
Gimi is awaiting connection to the feedgas pipeline and start of commissioning activities.
Given the GTA Project’s complexity and the interdependencies of certain activities required during project mobilization
and commissioning leading to commencement of commercial operations ("COD"), significant delays could result in
incremental costs to both parties to the LOA and delay the unlocking of FLNG Gimi Adjusted EBITDA backlog of
approximately $4.3 billion, of which we have a 70% ownership interest. If FLNG Gimi does not meet its anticipated
profitability or generate sufficient cash flow on time or at all, our cash flows and results of operations may be adversely
affected.
In the duration of the LOA, we are exposed to various risks, which encompass BP’s right to terminate the LOA due to
specified events of default, non-payment by BP due to disagreements or disputes, assumption of unanticipated liabilities,
losses, or costs, and potential financial repercussions in the event the FLNG Gimi fails to meet contracted capacity.
Additionally, there is a risk of incurring significant charges such as asset devaluation or restructuring charges. Any of these
circumstances or events could have a material adverse effect on our results of operations, cash flow and financial condition.
•
Continuing uncertainty on the recoverability of certain pre-commissioning contractual prepayments claim pursuant to
the LOA.
As described under note 18 of our audited consolidated financial statements included herein, a LOA contract interpretation
dispute regarding parts of pre-commissioning contractual cash flows currently exists between us and BP, regarding Project
Delay Payments (“PDPs”) due from BP to Gimi MS Corporation (“Gimi MS”). Gimi MS initiated arbitration proceedings
in August 2023. The resolution of this matter is expected to take several months or years, with no guarantee of a favorable
outcome for our claim. Pursuing such legal proceedings may incur significant time and legal expenses. In the event of a
favorable resolution, we may be entitled to recover all or a portion of our legal costs and fees incurred, from BP.
Conversely, an unfavorable resolution may result in the potential forfeiture of our claim in part or in full and we may be
required to reimburse all or a portion of BP’s legal costs and fees incurred which could have a material adverse impact on
our business, financial position, and results of operations. Additionally, these legal actions carry the risk of negative
publicity, potentially impacting our reputation and, consequently, our operational results. As of March 15, 2024, the
dispute remains unresolved.
3
•
Our ability to meet our continuing obligations under the LTA entered into in connection with the FLNG Hilli.
The FLNG Hilli is currently operating under the terms of the LTA by and between Perenco Cameroon S.A. (“Perenco”)
and Société Nationale des Hydrocarbures (“SNH”) (together the “Customer”) which ends in mid-July 2026.
During the duration of the LTA, we are exposed to various risks, including potential challenges in realizing the benefits of
the LTA. These risks encompass the Customer’s right to terminate the agreement due to specified events of default, non-
payment by the Customer due to financial constraints or disagreements, assumption of unanticipated liabilities, losses, or
costs, and potential financial repercussions in the event the FLNG Hilli fails to meet the annual contracted capacity.
Additionally, there is a risk of incurring significant charges such as asset devaluation or restructuring charges. Any of these
circumstances or events could have a material adverse effect on our results of operations, cash flow and financial condition.
•
Our ability to recontract the FLNG Hilli once her current contract ends.
We may be unable to redeploy the FLNG Hilli on another long-term contract at the end of the current LTA. Our inability to
redeploy the FLNG Hilli on a new long-term charter may result in increased downtime and decreased revenue, which could
adversely impact our financial performance and overall business outlook. Additionally, regulatory changes, competition, or
technological advancements, may further influence the vessel’s redeployment prospects. Accordingly, there can be no
assurance that the FLNG Hilli meets its anticipated profitability or generates sufficient cash flow to justify our investment.
•
Our operating revenue is dependent on a high customer concentration wherein a loss of any of our customers could
have an adverse effect on our earnings, cash flows and financial condition.
Our future revenue is dependent on a limited number of customers. The loss of a key customer or a substantial decline in
the amount of services requested by a key customer, or the inability of a customer to pay for our services, could have a
material adverse effect on our results of operations, cash flows and financial condition. We could lose a customer or the
benefits of a contract if:
•
•
•
•
•
the customer fails to make payments because of its financial inability, disagreements with us or otherwise;
we breach the relevant contract and the customer exercises certain rights to terminate the contract;
the customer terminates the contract because we fail to deliver the vessel or provide the service within a contracted
period of time, the vessel is lost or damaged beyond repair or incurs prolonged periods of off-hire, or we default under
the contract;
the customer terminates the contract due to prolonged FM affecting the customer, including damage to or destruction
of relevant facilities, war or geopolitical unrest preventing us from performing services for that customer; or
the customer becomes subject to sanction laws which directly or indirectly prohibits our ability to lawfully charter our
vessel to such customer.
If we lose a key customer or if a customer exercises its right to terminate the contract or charter, we may be unable to
acquire an adequate replacement which could have a material adverse effect on our results of operations, cash flows and
financial condition.
•
Our efforts to manage commodity and financial risks through derivative instruments could adversely affect our results
of operations and financial condition.
We use derivative instruments to manage commodity, currency and financial market risks. The extent of our derivative
position at any given time depends on our assessments of the markets for these commodities and related exposures. We
currently account for all derivatives at fair value, with immediate recognition of changes in the fair value in our earnings.
These transactions and other derivative transactions have resulted and may continue to result in substantial volatility in
reported results of operations, particularly in periods of significant commodity, currency or financial market variability, or
as a result of ineffectiveness of these contracts. Changes in the underlying assumptions or use of alternative valuation
methods could affect the reported fair value of these contracts. In addition, our liquidity may be adversely impacted by the
cash margin requirements of the commodities exchanges or the failure of a counterparty to perform in accordance with a
contract.
4
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Our ability to convert Mark II commercial leads into a long-term profitable contract.
The successful conversion of commercial leads into long-term profitable contracts for our new Mark II, one of our FLNG
designs, represents a critical aspect of our business growth strategy. However, this process is subject to various
uncertainties and challenges that may impact our ability to secure profitable contracts, attractive financing and achieve
sustainable operating cash inflows.
The inherent uncertainty in the energy market, including fluctuations in commodity prices and regulatory changes, may
impact the decision-making processes of potential customers. Economic downturns, geopolitical events, or shifts in energy
policies can introduce unpredictability and volatility, making it challenging to forecast and convert commercial leads into
profitable long-term contracts. Difficulties in converting opportunities to a binding commercial agreement with a
counterparty for the deployment of a Mark II design conversion could result in additional costs and could negatively
impact our future project prospects.
•
Our ability to complete a Mark II conversion could have a material adverse effect on our business, financial condition,
liquidity and future prospects.
The intricacies and scale of the FLNG conversion process pose risks, including unforeseen technical challenges or
complexities in the Mark II design, especially with the integration of new technologies or modifications to the original
design. Delays in the FLNG conversion schedules beyond agreed-upon timelines may impact our ability to meet
contractual obligations, resulting in potential financial penalties, strained customer relationships and reputational damage.
Such delays may be caused by various factors, including unforeseen technical issues, supply chain disruptions, adverse
weather conditions, or regulatory hurdles.
Moreover, the failure of shipyards to adhere to performance specifications could compromise the operational efficiency and
effectiveness of the converted FLNG units. This may lead to suboptimal performance, increased maintenance costs, and
potential liabilities if the delivered product fails to meet industry standards or regulatory requirements. Deviations from
agreed-upon prices with suppliers can result in unexpected financial burdens. Additionally, the global nature of the
shipbuilding industry exposes us to geopolitical and economic risks, wherein changes in trade policies, geopolitical
tensions, or economic downturns in key regions, may affect the availability of skilled labor, essential materials, and
financing, leading to increased project costs and delays.
In addition, changes in regulatory requirements, unexpected permitting delays or the need to comply with evolving
environmental, safety, and operational standards may require modifications to the project plan. In the event of non-
compliance by shipyards, our ability to enforce contractual terms and secure timely remedies may be subject to legal and
regulatory complexities, further exacerbating the adverse impact on our results of operations, cash flow and financial
condition.
•
Our ability to secure funding for our Mark II project.
The conversion of a FLNG, such as Mark II, takes a number of years and requires a substantial capital investment that is
dependent on sufficient funding and commercial interest, among other factors. The availability and cost of financing in the
capital markets can be influenced by various external factors, including economic conditions, interest rates, investor
sentiment, contingencies and uncertainties that are beyond our control. Unforeseen changes in these factors may lead to
fluctuations in the cost of debt or equity financing, potentially affecting the overall financial feasibility of the Mark II
project. Further, the complexity and scale of the Mark II may present challenges in structuring financing arrangements.
Lenders and investors may have stringent requirements related to project viability, risk allocation, and financial returns,
which may necessitate protracted negotiations and due diligence processes. We may be required to use cash from
operations, incur additional borrowings or raise capital through the sale of debt or additional equity securities to fund the
conversion. Our failure to obtain funds for future capital expenditures could impact our results of operations, cash flow,
financial condition and growth prospects.
5
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Our heavy reliance on a limited number of contractors and shipyards with relevant specialized experience, given the
sophisticated nature of FLNG conversions.
The conversion of our Mark II design will be the first of its kind. Due to its novelty and the highly technical process related
to FLNG conversions, we are reliant on a limited number of contractors and shipyards with relevant FLNG conversion
experience. A change of appointed contractors for any reason would likely result in higher costs and a significant delay to
any delivery schedules. Our future FLNG vessels may not able to meet certain performance requirements or perform as
intended and we may have to accept reduced rates, not be able to contract FLNG vessel or we may be required to recognize
an impairment expense in our financial statements in the future. Any of these possibilities would have a negative impact,
which could be significant, on our results of operations, cash flow and financial condition.
Risks related to the financing of our business
• We may not be able to obtain new financings, to meet our obligations as they fall due or to fund our growth or our
future capital expenditures, which could negatively impact our results of operations, financial condition and ability to
pay dividends.
In order to fund future projects, increased working capital levels or other capital expenditures, we may be required to use
cash from operations, incur additional borrowings or raise capital through the issuance of debt or additional equity
securities.
Our ability to do so may be limited by our financial condition at the time of such financing or offering, as well as by
adverse market conditions resulting from, among other things, general economic conditions and contingencies and
uncertainties that are beyond our control. Our failure to obtain funds for future capital expenditures could impact our
results of operations, financial condition and our ability to pay dividends. Furthermore, our ability to access capital, the
overall economic conditions and our ability to secure new customers on a timely basis could limit our ability to fund our
growth plans and capital expenditures. If we are successful in issuing equity in order to raise capital, the issuance of
additional equity securities would dilute existing shareholders’ equity interests and reduce any pro rata dividend payments
without a commensurate increase in cash allocated to dividends, if any. Even if we are successful in obtaining bank
financing, paying debt service would limit cash available for working capital and increasing our indebtedness could have a
material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
• We are exposed to volatility in SOFR and the derivative contracts we have entered into to hedge our exposures to
fluctuations in interest rates could result in charges against our results of operations, being higher than market interest
rates.
As of December 31, 2023, we had total outstanding debt of $1.2 billion, of which $0.8 billion was exposed to a floating
interest rate based on SOFR, which could affect the amount of interest payable on our debt. In order to manage our
exposure to interest rate fluctuations, we use interest rate swaps to effectively fix a part of our floating rate debt obligations.
As of December 31, 2023, we have interest rate swaps with a notional amount of $0.7 billion representing 88.5% of our
total floating rate debt. While we are economically hedged, we do not apply hedge accounting and therefore interest rate
swap mark-to-market valuations may adversely affect our results. Entering into swaps and derivative transactions is
inherently risky and presents various possibilities for incurring significant expenses. The derivative strategies that we
employ currently and in the future may not be successful or effective, and we could, as a result, incur substantial additional
interest costs or losses.
In the future, our financial condition could be materially adversely affected to the extent we do not hedge our exposure to
interest rate fluctuations under loans that have been advanced at a floating rate. Any hedging activities we engage in may
not effectively manage our interest rate exposure or have the desired impact on our financial condition or results of
operations.
6
• Most of our financing agreements are secured by our vessels and contain operating and financial restrictions and other
covenants that may restrict our business and financing activities.
Most of our obligations are secured by our vessels and guaranteed by our subsidiaries holding the interests in our vessels.
Our loan agreements impose, and future financial obligations may impose, operating and financial restrictions on us. These
restrictions may require the consent of our lenders, or may prevent or otherwise limit our ability to, among other things:
merge into or consolidate with any other entity; to sell or otherwise dispose of, all or substantially all of our assets; make or
pay equity distributions, repurchase our own shares; incur additional indebtedness; incur or make any capital expenditures;
materially amend, or terminate, any of our current vessel contracts or management agreements.
Our loan agreements and lease financing arrangements also require us to maintain specific financial ratios, including
minimum amounts of unrestricted cash, minimum ratios of current assets to current liabilities, excluding but not limited to
the current portion of long-term debt, VIE balances, minimum levels of stockholders’ equity and maximum loan amounts
to value. If we were to fail to maintain these levels and ratios without obtaining a waiver of covenant compliance or
modification to our covenants, we would be in default of our loans and lease financing agreements, which, unless waived
by our lenders, could provide our lenders with the right to require us to increase the minimum value held by us under our
equity and liquidity covenants, increase our interest payments, pay down our indebtedness to a level where we are in
compliance with our loan covenants, sell vessels in our fleet or reclassify our indebtedness as current liabilities and could
allow our lenders to accelerate our indebtedness and foreclose their liens on our vessels, which could result in the loss of
our vessels. If our indebtedness is accelerated, we may not be able to refinance our debt or obtain new financing, which
would impair our ability to continue to conduct our business.
Events beyond our control, including changes in the economic and business conditions in the industries in which we
operate, interest rate developments, changes in the funding costs of our banks, changes in vessel earnings and asset
valuations, outbreaks of epidemic and pandemic diseases and war or geopolitical unrest, may affect our ability to comply
with these financial covenants. We cannot provide any assurance that we will continue to meet these ratios or satisfy our
financial or other covenants or that our lenders will waive any failure to do so.
• We entered into certain guarantees for certain parties. If these parties are unable to meet the requirements or comply
with certain provisions contained in the agreements, this may have a material adverse effect on us.
We entered into agreements to provide stand-ready guarantees in connection with commercial bank indebtedness, claims,
damages or liabilities imposed by governmental authorities for certain parties, including but not limited to Golar Partners,
Hygo, Energos, CoolCo, Avenir and Macaw Energies and its investments. Failure by any of these parties to comply with
any provisions contained in the agreements, may lead to an event of default under these agreements. In such case, we
would need to satisfy the obligations or indemnify the losses of the respective party.
Additionally, if a default occurs under a loan agreement, the lenders could accelerate the outstanding borrowing and
declare all amounts outstanding due and payable. In this case, if such party is unable to obtain a waiver or an amendment to
the applicable provisions of the loan agreement, or do not have enough cash on hand to repay the outstanding borrowing,
the lenders may, among other things, foreclose their liens on the respective asset, or seek repayment of the loan from such
party or from us under the guarantee that we have provided.
The occurrence of any of the events described above would have a material adverse effect on our business, results of
operations and financial condition, reduce our ability or make us unable to pay dividends to our shareholders for so long as
such default is continuing, and may impair our ability to continue as a going concern.
•
The inability of certain parties to satisfy their indemnity obligations to us could have a material adverse effect on our
financial condition and results of operations.
Pursuant to the entry into agreements to provide stand-ready guarantees to certain parties, we are counter indemnified by
certain parties, including CoolCo, NFE and Energos for certain losses we may incur in connection with providing
guarantees and indemnities. These parties' abilities may be affected by events beyond either of our control, including
prevailing economic, financial, geopolitical and industry conditions. If they are unable to meet their indemnification
obligations, our results of operations, financial condition and ability to make cash distributions to our shareholders could be
materially adversely affected.
7
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If the Hilli LC is not extended, the results of operations and financial condition of Hilli Corp could suffer.
Pursuant to the terms of the LTA, a financial institution issued a performance guarantee on behalf of Hilli Corp
guaranteeing certain payments of Hilli Corp, as required under the LTA. The Hilli LC had an initial expiry date of
December 31, 2019, which automatically extended and will extend for successive one-year periods until the tenth
anniversary of the final acceptance of the FLNG Hilli under the LTA, unless the financial institution elects to not extend
the Hilli LC. The financial institution may elect to not extend the Hilli LC by giving notice at least 90 days prior to
December 31, in any subsequent year. If the Hilli LC (i) ceases to be in effect or (ii) the financial institution elects to not
extend it, unless replacement security for payment is provided within a certain time, then the LTA may be terminated and
Hilli Corp may be liable for a termination fee of up to $100 million. Accordingly, if the financial institution elects at some
point in the future to not extend the Hilli LC, Hilli Corp’s financial condition could be materially and adversely affected.
•
Servicing our debt agreements substantially limits our funds available for other purposes and our operational flexibility.
Our ability to service our indebtedness will depend upon, among other things, our future financial and operating
performance, which will be affected by prevailing economic conditions and financial, regulatory, war or geopolitical unrest
and other factors, some of which are beyond our control. If our cash inflows are not sufficient to service our indebtedness,
we will be forced to take actions, such as reducing or delaying our business activities, acquisitions, investments or capital
expenditures, selling assets, restructuring or refinancing our debt or seeking additional equity capital. We may not be able
to effect any of these remedies on satisfactory terms, or at all. In addition, a lack of liquidity in the debt and equity markets
could hinder our ability to refinance our debt or obtain additional financing on favorable terms in the future.
•
Our consolidated lessor VIE may enter into different financing arrangements, which could affect our results of
operations, cash flow and financial condition.
Following the sale and leaseback transaction we have entered into with a subsidiary of a Chinese financial institution that
was determined to be lessor VIE, where we are deemed to be the primary beneficiary, we are required by accounting
principles generally accepted in the United States of America (“U.S. GAAP”) to consolidate the lessor VIE into our
financial results. Although consolidated into our results, we have no control over the funding arrangements negotiated by
the lessor VIE such as interest rates, maturity and repayment profiles. The funding arrangements negotiated by the lessor
VIE could adversely affect our results of operations, cash flow and financial condition. For additional detail refer to note 5
“Variable Interest Entities” of our consolidated financial statements included herein.
•
Our cash and cash equivalents and restricted cash are dependent on a limited number of financial institutions, wherein
a collapse of any of these financial institutions could have an adverse effect on our cash flows and financial condition.
As of December 31, 2023, we have $679.2 million of cash and cash equivalents, of which are $481.7 million held in short-
term money market deposits carried with a limited number of financial institutions. The collapse of any financial institution
or the inability of a financial institution to obtain necessary funding when required, or a banking crisis, could have a
material adverse effect on our cash flows and financial condition.
Risks related to our operations
• We are subject to certain risks with respect to our contractual counterparties, and failure of such counterparties to meet
their obligations could cause us to suffer losses or otherwise adversely affect our business.
We entered into agreements for the provision of certain technical, crew, transitional corporate and administrative services
and have subcontracted the provision of certain corporate and administrative services to ship managers. Such agreements
expose us to subcontractor counterparty risks. The ability of each of our subcontractors to perform its obligations under a
contract with us will depend on a number of factors that are beyond our control and may include, among other things,
general economic conditions, the overall financial condition of our subcontractors, the condition of the maritime and
offshore industries and work stoppages or other labor disturbances. Should our subcontractors fail to honor their
obligations under agreements with us, we could sustain significant losses, which could have a material adverse effect on
our business, reputation, results of operations, cash flow and financial condition.
8
• We may experience increased labor costs, the unavailability of skilled workers or the failure to attract and retain
qualified key personnel, which may negatively impact the effectiveness of our management and our results of
operations.
We are dependent upon the available labor pool of skilled employees. We compete with other employers to attract and
retain qualified personnel with the technical skills and experience required to construct and operate our FLNGs and to
provide our customers with the highest quality service. A shortage in the labor pool of skilled workers, remote FLNG
locations, increasing cost of living or other general inflationary pressures, changes in applicable laws and regulations or
labor disputes could make it more difficult for us to attract and retain qualified personnel and could require an increase in
the salaries, wages and benefits packages that we offer, thereby increasing our operating costs. Any increase in our
operating costs could materially and adversely affect our business, contracts, results of operations, cash flow and financial
condition.
Our success depends, to a significant extent, upon the skills and efforts of our senior executives and certain key employees.
While we believe that we have an experienced team, the loss or unavailability of one or more of our senior executives and/
or our key employees for any extended period of time could have an adverse effect on our business and results of
operations.
•
A cyber-attack could materially impact our reputation, operations or financial performance.
We rely on information and operational technology systems and networks in our operations and the administration of our
business. The energy industry has become increasingly dependent on digital technologies to conduct day-to-day operations,
and the use of mobile communication devices has rapidly increased. Industrial control systems such as supervisory control
and data acquisition (“SCADA”) systems now control large-scale processes that can include multiple sites across long
distances. In addition, cybersecurity attacks are also becoming more sophisticated and include, but are not limited to,
ransomware, credential stuffing, spear phishing, social engineering, use of deepfakes (i.e., highly realistic synthetic media
generated by artificial intelligence) and other attempts to gain unauthorized access to data for purposes of extortion or other
malfeasance. Our technologies, systems, networks and business partners may become the target of cybersecurity attacks or
security breaches.
We have experienced attempted cybersecurity attacks, but have not suffered any material adverse impacts to our business
and operations as a result of such unsuccessful attempts. We have implemented security measures that are designed to
detect and protect against cyberattacks. No security measure is infallible. Despite these measures and any additional
measures, we may implement or adopt in the future, our facilities and systems, and those of our third-party service
providers, have been and are vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors,
scams, burglary, misdirected wire transfers including security breaches caused by human errors, and other adverse events.
Our efforts to improve security and protect data may also identify previously undiscovered instances of security breaches
or bad actors with present access to our systems.
Cyber-attacks have increased in number and sophistication in recent years. Our operations could be targeted by individuals
or groups seeking to sabotage, compromise or disrupt our information or operational technology systems and networks, to
steal or corrupt data, or otherwise disrupt our operations. A successful cyber-attack could materially disrupt our operations,
including the safety of our operations, or lead to unauthorized release of information or alteration of information on our
systems. Any such attack or other breaches of our information technology and operational technology systems could have a
material adverse effect on our business, results of operations, cash flow and financial condition, and may result in the loss
of sensitive, confidential information or other assets, as well as litigation, including individual claims or class actions,
regulatory enforcement actions, violation of privacy or securities laws and regulations, and remediation costs.
9
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Our operations face several industry risks and events which could cause damage or loss of a vessel, loss of life or
environmental consequences that could harm our reputation and ongoing business operations.
Our vessels are exposed to a range of risks, including marine disasters, epidemic and pandemic diseases, piracy,
environmental accidents, adverse weather conditions, mechanical failures, and geopolitical events like war and terrorism.
Recent attacks in the Red Sea highlight potential consequences, including injury, property loss, and environmental damage.
These events have the potential to disrupt cargo delivery, services, routine maintenance, inspections, and equipment
management, leading to loss of hire, contract termination, governmental fines, and business restrictions. Additionally, our
vessels could be requisitioned during national emergencies, exposing us to higher insurance premiums, potential coverage
inadequacy, and uncertainties in claims settlements. Operating in regions designated as "war risk" zones could also increase
insurance costs. Uninsured repair costs and the unpredictability of vessel repair cost could pose substantial financial
challenges. Environmental incidents, including those from sandstorms, could lead to cleanup liabilities, penalties, and
negative media coverage. All of these factors have the potential to materially impact our business, results of operations,
cash flows, weaken our financial condition and negatively affect our ability to pay dividends.
•
Technical operational risk, human operational errors and wear and tear of equipment may impact uptime and
associated impact on financial performance of our FLNGs.
FLNGs are complex floating operation platforms dependent on multiple systems to work in parallel to obtain efficient
operations. The various equipment onboard has different operational procedures and maintenance cycles. A breakdown of
critical component(s) may adversely impact the overall performance of our FLNG operations, which may lead to economic
impacts. Human operational errors, out of cycle maintenance of equipment, failure to routinely conduct maintenance, wear
and tear and external impacts may negatively impact our operations and results of operations.
• We are subject to the economic, political, social and other conditions in the jurisdictions in which we operate.
Our main operations located in Cameroon, Senegal, Mauritania and Brazil are subject to various challenges arising from
economic, political, social and other conditions and developments in these jurisdictions. Some of these countries have
experienced political, security, and social economic instability in recent years and may experience instability in the future,
including changes, sometimes frequent or marked, in energy policies or the personnel administering them, expropriation of
property, cancellation or modification of contract rights, changes in laws and policies governing operations of foreign-
based companies, unilateral renegotiation of contracts by governmental entities, redefinition of international boundaries or
boundary disputes, foreign exchange restrictions or controls, currency fluctuations, royalty and tax increases and other risks
arising out of governmental sovereignty over the areas in which our operations are and will be conducted, as well as risks
of loss due to acts of social unrest, terrorism, corruption and bribery. The governments in certain of these jurisdictions
differ widely with respect to structure, constitution, political, economic and social stability and some countries lack mature
legal and regulatory systems. As our operations depend on governmental approval and regulatory decisions, we may be
adversely affected by changes in the political structure or government representatives in each of the countries in which we
operate. In addition, these jurisdictions, particularly emerging countries, are subject to risk of contagion from the economic,
political and social developments in other emerging countries and markets.
Furthermore, some of the regions in which we operate have been subject to significant levels of terrorist activity, social and
political unrest, particularly in the shipping and maritime industries. In addition to acts of terrorism, vessels trading in these
and other regions have also been subject, in limited instances, to piracy. In addition, the ongoing political instability in
Ukraine and Middle East may impact our business. Tariffs, trade embargoes and other economic sanctions by the U.S. or
other countries against countries in the Middle East, Southeast Asia, Africa or elsewhere as a result of terrorist attacks,
hostilities or otherwise may limit trading activities with those countries. This could have a material adverse effect on our
business, results of operations, financial condition and our ability to pay cash distributions to our shareholders.
10
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Failure to comply with the FCPA, the UK Bribery Act and other anti-bribery legislation in other jurisdictions could
result in fines, criminal penalties, and contract terminations.
We may operate in several countries throughout the world, including countries known to have a reputation for corruption.
We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of
business conduct and ethics which is consistent and in full compliance with the FCPA and the UK Bribery Act. We are
subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and
agents may take actions determined to be in violation of such anti-corruption laws, including the FCPA and the UK Bribery
Act. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations
in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition,
actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating,
and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior
management.
To effectively compete in some foreign jurisdictions, we utilize local agents and/or establish entities with local operators or
strategic partners. All these activities may involve interaction by our agents with government officials. Even though some
of our agents or partners may not themselves be subject to the FCPA, the UK Bribery Act, or other anti-bribery laws to
which we may be subjected to, if our agents or partners make improper payments to government officials or other persons
in connection with engagements or partnerships with us, we could be investigated and potentially found liable for violation
of such anti-bribery laws and could incur civil and criminal penalties and other sanctions, which could have a material
adverse effect on our business and results of operations.
•
Vessel values may fluctuate substantially and, if these values are lower at a time when we are attempting to dispose of
vessels or a decrease in their estimated future cash flows during our recoverability assessment, we may incur a loss
which will have a material adverse effect on our results of operations.
Vessel values can fluctuate substantially over time due to several different factors, including:
•
•
•
•
•
•
prevailing economic and market conditions in the natural gas and energy markets;
a substantial or extended decline in demand for LNG;
increases in the supply of vessel capacity without a commensurate increase in demand;
the type, size and age of a vessel;
competition from more technologically advanced vessels; and
the cost of new buildings or retrofitting or modifying existing vessels, as a result of technological advances in vessel
design or equipment, changes in applicable environmental or other regulations or standards, customer requirements or
otherwise.
As our vessels age, the expenses associated with maintaining and operating them are expected to increase, which could
have an adverse effect on our business and operations.
The carrying values of our vessels may not represent their fair market value at any point in time because the market prices
of secondhand vessels tend to fluctuate with changes in charter rates, the cost of new build vessels and supply/demand for
secondhand vessels. Our vessels are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. Any impairment charges recognized in our consolidated financial statements
could negatively affect our business, results of operations, financial condition or the trading price of our common shares
and publicly listed debt.
• We will have to make additional contributions to our pension scheme because it is underfunded.
We have two defined benefit pension plans for certain of our current and former marine employees. Members do not
contribute to the pension scheme plans and these pension schemes are closed to new entrants. As of December 31, 2023,
one of the plans is underfunded by $25.2 million. The underfunded pension liability could change depending on market
conditions, interest rate volatility and other key actuarial assumptions. We may need to increase our contributions in order
to meet the scheme’s liabilities as they fall due, or, to reduce the deficit. Such contributions could have a material and
adverse effect on our cash flows and financial condition.
11
• We are exposed to U.S. Dollar, Euro, Norwegian Krone, British Pound, Brazilian Real and other foreign currency
fluctuations and devaluations that could harm our results of operations.
Our principal currency for our operations and financing is the U.S. Dollar. We generate most of our revenues in the U.S.
Dollar. Apart from the U.S. Dollar, we incur operating and administrative expenses in multiple currencies. Due to a portion
of our expenses being incurred in currencies other than the U.S. Dollar, our expenses may, from time to time, increase
relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. Dollar and but not
limited to the Euro, the Norwegian Krone (“NOK”), the British Pound (“GBP”) and the Brazilian Real (“BRL”), which
could affect our earnings. We may use financial derivatives to hedge some of our currency exposures. Our use of financial
derivatives involves certain risks, including the risk that losses on a hedged position could exceed the nominal amount
invested in the instrument and the risk that the counterparty to the derivative transaction may be unable or unwilling to
satisfy its contractual obligations, which could have an adverse effect on our results and cash flows.
• We are subject to the risks related to Macaw Energies' business which may not achieve anticipated profitability as
expected or at all.
As of March 15, 2024, we have invested $18.2 million in Macaw Energies, our wholly owned subsidiary, focused on
decarbonizing natural gas production through the monetization of flared gas. Macaw Energies has acquired ownership
interests in MGAS Comercializadora de Gás Natural Ltda. (“MGAS”) and Logística e Distribuição de Gás S.A.
(“LOGAS”). The value of our equity method investments are subject to a variety of risks, including, among others, the
risks related to Macaw Energies’ business, such as the risks inherent in the compression of natural gas, risks associated to
the effectiveness of Macaw Energies’ technology (flare to gas mobile kit or F2X), inability of Macaw Energies to identify
new customers and enter into profitable contracts, inability of Macaw Energies to obtain sufficient financing for any new
project it identifies, and other industry, regulatory, economic and political risks similar in nature to the risks faced by us.
•
Our equity method investments may not result in sufficient profitability to justify our investment, and could lead to
future impairment.
As of December 31, 2023, we held investments in Avenir, Aqualung Carbon Capture AS (“Aqualung”), Egyptian
Company for Gas Services S.A.E. (“ECGS”), MGAS and LOGAS. The value of our investments and the income generated
from our investments are subject to a variety of risks, including, among others, the inability of our investments to identify
and enter into appropriate projects, inability of our investments to obtain sufficient financing for any project it identifies,
failure of our investments’ current projects, and other industry, regulatory, economic and political risks impacting our
investments’ operations. These may result in future impairment of our equity method investments which may have a
material adverse effect on our results of operations in the period that the impairment charges may be recognized.
Risks related to our industry
•
Our results of operations and financial condition depend on demand for natural gas, LNG, FLNGs and LNG carriers.
Our results of operations and financial condition depend on continued global and regional demand for LNG, FLNGs and
LNG carriers, which could be negatively affected by several factors, including but not limited to geopolitical unrest or war,
such as the conflicts in Ukraine and the Israel-Gaza region, fluctuations in natural gas, crude oil and petroleum product
prices, changes in the cost and availability of natural gas relative LNG, global oversupply or insufficiency of natural gas
liquefaction or receiving capacity.
Other potential risks include technological advancements in land-based regasification and liquefaction systems,
developments in alternative floating liquefaction technologies, increase in low-cost natural gas production, expansions of
pipeline systems, adverse economic or political conditions in LNG-consuming regions, regulatory changes, incidents
involving LNG carriers or facilities, tax or regulatory burdens affecting LNG production, a rise in the number of available
FLNGs and LNG carriers, interest rate increases, financing challenges for FLNG projects, and obstacles in obtaining
governmental approvals or community acceptance. Any decline in demand for LNG, liquefaction, or transportation, or
constraints on LNG production capacity, could have a material adverse effect on prevailing tolling fees, charter rates or the
market value of our vessels, which could have a material adverse effect on our results of operations and financial condition.
12
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Our operations are subject to extensive and changing laws, regulations, reporting requirements and social attitudes
towards fossil fuel, may have an adverse effect on our business.
Our operations are affected by extensive and changing laws, regulations, reporting requirements and stakeholders’ social
attitudes that could create greater reporting obligations and compliance requirements, including those related to
environmental protection, handling, use, disposal, and generation of hazardous substances, occupational health and safety,
and other matters. We or our customers may be required to obtain permits, licenses, or other authorizations to operate under
such laws, which could be costly and time-consuming. Additionally, compliance with these laws, regulations, treaties,
conventions, and other requirements, may increase our costs, limit our operations or access to new opportunities or have an
adverse effect on our business. Failure to comply can result in administrative and civil penalties, criminal sanctions or the
suspension or termination of our operations, including, in certain instances, seizure or detention of our vessels.
•
ESG and sustainability considerations may adversely impact our operations and markets.
There is an increasing focus from regulators and stakeholders related to ESG matters. The regulations requirements and
stakeholder expectations continue to evolve and criteria used to evaluate ESG practices and metrics may change rapidly at
any time, which could result in increased expectations and may cause us to undertake costly initiatives to satisfy any new
requirements. Non-compliance with these emerging regulations or a failure to address stakeholder and societal expectations
may result in potential cost increases, litigation, fines, penalties, production and sales restrictions, brand or reputational
damage, loss of customers, failure to retain and attract talent, lower valuation and higher investor activism activities.
Further, adverse effects upon the oil and gas industry relating to climate change, including growing public concern about
the environmental impact of climate change, may also influence demand for our services and could have a significant
adverse financial and operational impact on our business that we cannot predict with certainty at this time. For example,
197 countries including Cameroon, Mauritania, Senegal, and the United States, have signed the United Nations-sponsored
“Paris Agreement,” agreeing to limit their greenhouse gas (“GHG”) emissions through non-binding, individually
determined reduction goals every five years after 2020. Further, in 2023 countries gathered at the 28th Conference of the
Parties on the UN Framework Convention on Climate Change (“COP28”), where they entered into an agreement to
transition away from fossil fuels in energy systems and increase renewable energy capacity, though no timeline for doing
so was set. While non-binding, the agreements coming out of COP28 could result in increased pressure among financial
institutions and various stakeholders to reduce or otherwise impose more stringent limitations on funding for and increase
potential opposition to the production and use of fossil fuels.
While we may create and publish voluntary disclosures regarding ESG matters from time to time, many of the statements
in those voluntary disclosures will be based on hypothetical expectations and assumptions that may or may not be
representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated
therewith. Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to
misinterpretation given the long timelines involved and the lack of an established single approach to identifying,
measuring, and reporting on many ESG matters. Additionally, while we may also announce various voluntary ESG targets
in the near future, such targets are aspirational and we may not be able to meet such targets in the manner or on a timeline
as initially contemplated.
In addition, the European Union’s CSRD that became effective in January 2023 significantly expands mandatory
sustainability reporting in accordance with European Sustainability Reporting Standards (“ESRS”), for U.S. companies
with operations in the EU. While CSRD rules are prescriptive for the types of data to be reported, the standards to quantify
and qualify such data are still evolving and uncertain, and may impose increased costs on us related to complying with our
reporting obligations and increase risks of non-compliance with ESRS and the CSRD. We are closely monitoring the rules
and regulations related to CSRD and anticipate to fall under the CSRD's scope from 2025, with the initial reporting
expected in 2026. Additionally, the Commission released its final rule on climate-related disclosures on March 6, 2024,
requiring the disclosure of certain climate-related risks and financial impacts, as well as GHG emissions. Large accelerated
filers such as us, will be required to incorporate the applicable climate-related disclosures into their filings beginning in
fiscal year 2025, with additional requirements relating to the disclosure of Scope 1 and 2 GHG emissions, if material, and
attestation reports for certain large accelerated filers subsequently phasing in. While we are still assessing our obligations
under the rule, complying with such obligations may result in increased costs.
13
Risks related to our common shares
•
The declaration and payment of dividends or repurchases of our own shares are at the discretion of our board of
directors.
The declaration and payment of dividends to holders of our common shares or the repurchase of shares from holders of our
common shares will be at the discretion of our board of directors in accordance with applicable law. In determining
whether to declare and pay a dividend, or to repurchase our shares, our board of directors will take into account various
factors, including actual results of operations, liquidity and financial condition, net cash provided by operating activities,
restrictions imposed by applicable law and our debt agreements, our taxable income, our operating expenses, the share
price, and other factors our board of directors deem relevant. There can be no assurance that we will resume the payment of
dividends in amounts or on a basis consistent with prior distributions, if at all, or approve new share repurchase programs,
or pursue share repurchases, even if such a program has been approved. Because we are a holding company and have no
direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our
subsidiaries and our ability to receive distributions from our subsidiaries may be limited by the financing agreements to
which they are subject.
•
Our common share price may be highly volatile and future sales of our common shares could cause the market price of
our common shares to decline and could lead to a loss of all or part of a shareholder’s investment.
The market price of our common shares has fluctuated widely since they began trading on the NASDAQ Global Select
Market (“Nasdaq”). We cannot assure that an active and liquid public market for our common shares will continue.
The market price of our common shares may experience extreme volatility in response to many factors, including factors
that may be unrelated to our operating performance or prospects such as actual or anticipated fluctuations in our quarterly
or annual results and those of other public companies in our industry, the suspension of our dividend payments, mergers
and strategic alliances within our industry, market conditions in the natural gas and LNG industry, developments in our
FLNG investments, shortfalls in our results of operations from levels forecast by securities analysts, announcements
concerning us or our competitors, business interruptions, the general state of the securities market, and other factors, many
of which are beyond our control.
Additionally, sales of a substantial number of our common shares in the public market, or the perception that these sales
could occur, may depress the market price for our common shares. These sales could also impair our ability to raise
additional capital through the sale of our equity securities in the future. Therefore, there can be no guarantee that our share
price will remain at current prices, and we cannot assure our shareholders that they will be able to sell any of our common
shares that they may have purchased at a price greater than or equal to the original purchase price.
• We may issue additional common shares or other equity securities without our shareholders’ approval, which would
dilute their ownership interests and may depress the market price of our common shares.
We may issue additional common shares or other equity securities in the future in connection with, among other things,
mergers and strategic alliances, vessel conversions, future vessel acquisitions, repayment of outstanding indebtedness or
our equity incentive plan, in each case without shareholder approval in several circumstances.
Our issuance of additional common shares or other equity securities could have the following effects:
•
•
•
•
our existing shareholders’ proportionate ownership interest in us may decrease;
the amount of cash available for dividends payable on our common shares may decrease;
the relative voting strength of each previously outstanding common share may be diminished; and
the market price of our common shares may decline.
14
•
Because we are a Bermuda exempted company, our shareholders may have less recourse against us or our directors
than shareholders of a U.S. company have against the directors of a U.S. company.
Because we are a Bermuda exempted company, the rights of holders of our common shares will be governed by Bermuda
law and our memorandum of association and bye-laws (our “Memorandum of Association and Bye-laws”). The rights of
shareholders under Bermuda law may differ from the rights of shareholders in other jurisdictions, including with respect to,
among other things, rights related to interested directors, amalgamations, mergers and acquisitions, takeovers, the discharge
and indemnification of directors and shareholder lawsuits.
Among these differences is a Bermuda law provision that permits a company to exempt a director from liability for any
negligence, default, or breach of a fiduciary duty except for liability resulting directly from that director’s fraud or
dishonesty. Our bye-laws provide that no director or officer shall be liable to us or our shareholders unless the director’s or
officer’s liability results from that person’s fraud or dishonesty. Our bye-laws also require us to indemnify a director or
officer against any losses incurred by that director or officer resulting from their negligence or breach of duty, except where
such losses are the result of fraud or dishonesty. Accordingly, we carry directors’ and officers’ insurance to protect against
such a risk.
In addition, under Bermuda law, the directors of a Bermuda company owe their duties to that company and not to the
shareholders. Bermuda law does not, generally, permit shareholders of a Bermuda company to bring an action for a
wrongdoing against the company or its directors, but rather the company itself is generally the proper plaintiff in an action
against the directors for a breach of their fiduciary duties. Moreover, class actions and derivative actions are generally not
available to shareholders under Bermuda law. These provisions of Bermuda law and our bye-laws, as well as other
provisions not discussed here, may differ from the law of jurisdictions with which shareholders may be more familiar and
may substantially limit or prohibit a shareholder’s ability to bring suit against our directors or in the name of the company.
The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of
a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of
the company or illegal, or would result in the violation of the company’s memorandum of association or bye-laws.
Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against
minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s
shareholders than that which actually approved it.
It’s also worth noting that, under Bermuda law, our directors and officers are required to disclose to our board any material
interests they have in any material contract entered into by our company or any of its subsidiaries with third parties. Our
directors and officers are also required to disclose their material interests in any corporation or other entity which is party to
a material contract with our company or any of its subsidiaries. A director who has disclosed his or her interests in
accordance with Bermuda law may participate in any meeting of our board and may vote on the approval of a material
contract, notwithstanding that he or she has a material interest.
•
Because our offices and most of our assets are outside the U.S., our shareholders may not be able to bring a suit against
us, or enforce a judgment obtained against us in the United States.
We, and most of our subsidiaries, are incorporated in jurisdictions outside the U.S. and substantially all of our assets and
those of our subsidiaries are located outside the U.S. In addition, most of our directors and officers are non-residents of the
U.S., and all or a substantial portion of the assets of these non-residents are located outside the U.S. As a result, it may be
difficult or impossible for U.S. investors to serve process within the U.S. upon us, our subsidiaries, or our directors and
officers, or to enforce a judgment against us for civil liabilities in U.S. courts. In addition, you should not assume that
courts in the countries in which we or our subsidiaries are incorporated or where our or our subsidiaries’ assets are located
would enforce judgments of U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability
provisions of applicable U.S. federal and state securities laws, or would enforce, in original actions, liabilities against us or
our subsidiaries based on those laws.
15
Risks related to tax
•
As a Bermuda exempted company incorporated under Bermuda law with subsidiaries in the Marshall Islands and other
offshore jurisdictions, our operations may be subject to economic substance requirements.
On December 5, 2017, following an assessment of the tax policies of various countries by the Code of Conduct Group for
Business Taxation of the European Union, the Council of the European Union (the “Council”) approved and published
Council conclusions containing a list of “non-cooperative jurisdictions” for tax purposes. The Council periodically reviews
and updates the list of “non-cooperative jurisdictions”. On March 12, 2019, the Council adopted a revised list of non-
cooperative jurisdictions (the “2019 Conclusions”). In the 2019 Conclusions, the European Union (“E.U.”) placed
Bermuda and the Republic of the Marshall Islands, among others, on its list of non-cooperative jurisdictions for tax
purposes for failing to implement certain commitments previously made to the E.U. by the agreed deadline. It was
announced by the Council on May 17, 2019 and on October 10, 2019 that Bermuda and the Marshall Islands, respectively,
had been removed from the list of non-cooperative jurisdictions, but the Marshall Islands was reinstated to the list of “non-
cooperative jurisdictions” for tax purposes on February 14, 2023 owing to concerns that this jurisdiction, which has a zero
or only nominal rate of corporate income tax, is attracting profits without real economic activity (in particular, the Marshall
Islands were found to be lacking in the enforcement of economic substance requirements). On October 17, 2023, the
Marshall Islands was removed from the list of non-cooperative jurisdictions because it had made significant progress in
enforcement of economic substance requirements. The E.U. member states have agreed upon a set of measures, which they
can choose to apply against the listed countries, including increased monitoring and audits, controlled foreign company
rules, non-deductibility of costs incurred in a listed jurisdiction, withholding taxes, special documentation requirements and
anti-abuse provisions. The European Commission has stated it will continue to support member states’ efforts to develop a
more coordinated approach to sanctions for the listed countries. E.U. legislation prohibits E.U. funds from being channeled
or transited through entities in non-cooperative jurisdictions.
Both Bermuda and the Marshall Islands have enacted economic substance laws and regulations with which we may be
obligated to comply. For example, on December 17, 2018, the House of Assembly of Bermuda passed the Economic
Substance Act 2018 of Bermuda (the “Economic Substance Act”), which became operative on December 31, 2018, along
with the Economic Substance Regulations 2018 of Bermuda. The Economic Substance Act requires each registered entity
to maintain a substantial economic presence in Bermuda and provides that a registered entity that carries on a relevant
activity must comply with economic substance requirements set out in the legislation. Regulations were also adopted in the
Marshall Islands, through Economic Substance Regulations 2018 which came into force in January 2019, and with
Guidance Notes being published in October 2019, requiring certain entities that carry out activities to comply with an
economic substance test and satisfy certain reporting obligations, beginning with the financial period which ended in 2020.
If we fail to comply with our obligations under this legislation, as it may be amended from time to time, or any similar or
supplemental law applicable to us in these or any other jurisdictions, we could be subject to financial penalties and
spontaneous disclosure of information to foreign tax officials, or could be removed from the register of companies, in
related jurisdictions. Any of the foregoing could be disruptive to our business and could have a material adverse effect on
our business, results of operations and financial condition.
•
A change in tax laws in any country in which we operate could adversely affect us.
Tax laws, treaties and regulations are highly complex and subject to interpretation. Consequently, we and our subsidiaries
are subject to changing laws, treaties and regulations in and between the countries in which we operate. Our tax expense is
based on our interpretation of the tax laws in effect at the time the expense was incurred. A change in tax laws, treaties or
regulations, or in the interpretation thereof, in any country in which we or any of our subsidiaries operates, or in which we
or any of our subsidiaries is organized, could result in us incurring a materially higher tax expense or having a higher
effective tax rate on our earnings. Any such changes in the applicable tax laws, treaties and regulations could adversely
affect our business, results of operations and financial condition.
16
Further, the Organization for Economic Co-Operation and Development has adopted a set of international tax model rules
known as the “Pillar Two” framework, a central component of which is the imposition of a global minimum corporate tax
rate of 15%. Certain countries in which we or any of our subsidiaries operates, or in which we or any of our subsidiaries is
organized, have enacted legislation implementing, and other countries are in the process of introducing legislation to
implement, the Pillar Two minimum tax directive. In general, the Pillar Two minimum tax directive applies to entities that
are members of a multinational group that has annual revenue of €750 million (approximately $828 million as of December
31, 2023) or more in the consolidated financial statements of their ultimate parent in at least two of the four fiscal years
immediately preceding the fiscal year in which the test is applied.
Although we cannot predict with any certainty when we will reach the applicable revenue threshold for the application of
the Pillar Two rules (or the corresponding legislation enacted in any particular country) to us, we do not expect to reach
such threshold in the current year. To the extent we reach the Pillar Two applicable revenue threshold in the future, the
Pillar Two rules could increase tax compliance complexity and uncertainty and result in additional administrative costs and
income tax liabilities in those taxing jurisdictions that have implemented the Pillar Two minimum tax directive, including
Bermuda.
• We could be treated as or become a PFIC, which could have adverse U.S. federal income tax consequences to U.S.
shareholders.
A foreign corporation will be treated as a PFIC for U.S. federal income tax purposes if either (i) at least 75% of its gross
income during the taxable year consists of “passive income” or (ii) at least 50% of the average value of the corporation’s
assets during such taxable year produce or are held for the production of “passive income.” For purposes of these tests,
“passive income” includes dividends, interest, capital gains and rents derived other than in the active conduct of a rental
business. For purposes of these tests, income derived from the performance of services does not constitute “passive
income.” U.S. shareholders of a PFIC are subject to an adverse U.S. federal income tax regime with respect to the
distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in
the PFIC.
To date, we and our subsidiaries have derived most of our income from the LTA of FLNG Hilli, as well as time and voyage
charters for our legacy shipping operations. We believe this income should be treated as services income, and not as
“passive income” for PFIC purposes. While there is substantial legal authority supporting our conclusion, including
pronouncements by the United States Internal Revenue Service (“U.S. IRS”) concerning the characterization of income
derived from time charters as services income, there is also authority that characterizes such time charter income as rental
income rather than services income for other tax purposes. The U.S. IRS or a court could disagree with our position.
Because PFIC status depends upon the composition of a company’s income and assets and the market value of its assets
from time to time, and because there is no controlling authority for determining whether certain types of our income
constitute passive income for PFIC purposes, there can be no assurance that we will not be considered a PFIC for the
current or any future taxable year.
Based on the foregoing, we believe that we were not a PFIC with respect to any prior taxable year. If we were a PFIC for
any taxable year, our U.S. shareholders would face adverse U.S. tax consequences and certain information reporting
requirements regardless of whether we remain a PFIC in subsequent years. In addition, although we intend to conduct our
affairs in a manner to avoid being classified as a PFIC, we cannot assure that the nature of our assets, income, and
operations will not change, or that we can avoid being treated as a PFIC for any taxable year. Furthermore, the PFIC rules
may change, which could result in us being treated as a PFIC in the future as a result of such change in law.
Under the PFIC rules, unless those shareholders make a certain U.S. federal income tax election (which election could
itself have adverse consequences for such shareholders), such shareholders would be liable to pay U.S. federal income tax
at the then-prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from
the disposition of our common shares, as if the excess distribution or gain had been recognized ratably over the
shareholder’s holding period of our common shares. Please see the section of this annual report entitled “Taxation” under
“Item 10. Additional Information - E. Taxation” for a more comprehensive discussion of the U.S. federal income tax
consequences if we were to be treated as a PFIC.
17
• We may have to pay tax on certain U.S. source income, which would have a negative effect on our business and reduce
cash available for distribution.
Under the U.S. Internal Revenue Code of 1986, as amended (the “Code”), 50% of the gross shipping income of a vessel
owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or
ends, but that does not both begin and end, in the U.S. (“U.S. Source International Transportation Income”) may be subject
to a 4% U.S. federal income tax imposed without allowance for deduction, unless that corporation qualifies for exemption
from tax under Section 883 of the Code (the “Section 883 Exemption”).
We expect that we and each of our subsidiaries generating transportation income will qualify for the Section 883
Exemption. However, there are factual circumstances beyond our control that could cause us not to qualify for the Section
883 Exemption and thereby become subject to U.S. federal income tax on our U.S. source income. Our qualifying for the
Section 883 Exemption is not free from doubt, and we can provide no assurances that the Section 883 Exemption will
apply to us or our subsidiaries.
In general, if we and/or our subsidiaries are not eligible for the Section 883 Exemption for any taxable year, we or our
subsidiaries could be subject to an effective 4% U.S. federal income tax on our U.S. Source International Transportation
Income in such taxable year. The imposition of this tax would have a negative effect on our business and reduce the cash
available for distribution to our shareholders. Please see “Item 10. Additional Information - E. Taxation” for a more
comprehensive discussion of the Section 883 Exemption.
•
The recent enactment of a corporate income tax in Bermuda could adversely affect us.
Prior to 2023, there was no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate
duty or inheritance tax payable by us or by our shareholders in respect of our shares. However, on December 27, 2023,
Bermuda enacted the Corporate Income Tax Act (the “CIT Act”) under which, for taxable years beginning on or after
January 1, 2025, Bermuda will impose a 15% corporate income tax on Bermuda organized entities and businesses that are
constituent parts of multinational groups with annual revenue of at least €750 million (approximately $828 million as of
December 31, 2023) for two out of the last four fiscal years. While we had previously obtained an assurance from the
Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 (the “EUTP Act”) that, in the
event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any
capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March
31, 2035, be applicable to us or to any of our operations or to our shares or other obligations, the CIT Act specifically
provides that it applies notwithstanding any assurance given pursuant to the EUTP Act. Based on a number of operational,
economic and regulatory assumptions with respect to the current year, we do not expect to have consolidated revenue
sufficient for us to fall within scope of the CIT Act in 2025. To the extent our revenue is sufficient for us to be within the
CIT Act thresholds in the future, the resulting tax liability could adversely affect our business, results of operations and
financial condition.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Overview
Our operations have evolved from LNG shipping, floating regasification and combined cycle gas fired power plant to focus on
floating liquefaction operations. We design, convert, own and operate marine infrastructure for the liquefaction of natural gas
and the regasification, storage and offloading of LNG. We believe that natural gas has a critical role to play in providing cleaner
energy for many years to come. Our pioneering infrastructure solutions provide safe, competitive and sustainable ways of
liquefying, transporting and turning gas into energy across the world. Our mission is to be recognized as an organization with
an outstanding reputation for safe, reliable and cost-effective operations; to employ and develop talented people who can see the
impact of what they do; to develop a portfolio of new FLNG infrastructure opportunities and convert the best opportunities into
world class projects; and to be a great business partner, where combining skills and resources make a big difference.
18
Timeline of our business from 2016 onwards:
Over the course of 2021, 2022 and 2023, we divested our investments in Golar Partners, Hygo and our legacy LNG carrier and
FSRU asset portfolio, delivering on our objectives to simplify and focus our business, crystallize underlying value and de-lever
our balance sheet:
•
•
•
•
•
Golar Partners and Hygo: In 2021, we completed the disposals of our investments in Golar Partners and Hygo to NFE
for net consideration of $876.3 million and a gain on disposal of $574.9 million;
CoolCo and Golar Tundra: In 2022, we completed the disposals of most of our LNG carriers (namely the Golar Seal,
Golar Crystal, Golar Bear, Golar Frost, Golar Glacier, Golar Snow, Golar Kelvin and Golar Ice) and our FSRU, the
Golar Tundra, for net consideration of $697.8 million and a gain on disposal of $113.2 million;
NFE listed equity securities: In 2022, we sold 13.3 million of our Class A NFE common shares (“NFE Shares”) at a
price ranging from $40.80 to $58.29 per share for aggregate consideration of $625.6 million. In 2023, we sold 1.2
million of our NFE Shares at a price ranging from $36.90 to $40.38 per share for aggregate consideration of
$45.6 million. In 2023, we also completed the reacquisition of NFE’s common units in Golar Hilli LLC (“Hilli LLC”)
in exchange for our remaining 4.1 million NFE Shares and $100.0 million of cash as well as retrospective distribution
rights to January 1, 2023 attributed to these common units resulting in a loss on disposal of $251.2 million;
CoolCo shares: In 2022, we sold 8.0 million of our CoolCo shares for NOK 130/$12.16 per share for net consideration
of $97.9 million. In 2023, we sold our remaining 4.5 million CoolCo shares for NOK 130/$12.60 per share for net
consideration of $56.1 million and a gain on disposal of $0.8 million; and
Gandria: In 2023, we completed the disposal of our LNG carrier, Gandria, for net consideration of $15.2 million and a
loss on disposal of $0.5 million.
The proceeds received from these divestments provided significant balance sheet flexibility with focus on maximizing
shareholder returns through development of attractive new FLNG growth opportunities, we expect the first of which to involve
conversion of the LNG carrier Fuji LNG into our first Mark II.
19
We are listed on Nasdaq under the ticker “GLNG”. We are incorporated under the name Golar LNG Limited as an exempted
company under the Bermuda Companies Act of 1981 in the Islands of Bermuda on May 10, 2001, and our registered office is at
2nd Floor, S.E. Pearman Building, 9 Par-la-Ville Road, Hamilton HM 11, Bermuda. Our telephone number at that address is
+(1) 441 295 4705. Our principal administrative office is located at 6th Floor, The Zig Zag, 70 Victoria Street, London, SW1E
6SQ, United Kingdom and our telephone number at that address is +44 207 063 7900. The Commission maintains an internet
site that contains reports, proxy and information statements, and other information that we file electronically with the
Commission and this can be obtained from the Commission’s website at (http://www.sec.gov) or from the “SEC filings” tab in
the “Investor Relations” section of our website (www.golarlng.com). Information contained on our website does not constitute
part of this annual report.
B. Business Overview
Our strategy is to provide market leading FLNG operations and focus our balance sheet flexibility to maximize shareholder
returns through accretive FLNG projects. We offer gas resource holders a proven, quick and low-cost delivering solution to
monetize stranded gas reserves. Our industry leading FLNG operational track record and FLNG growth prospects allow gas
resource holders, developers and customers a low-cost, low-risk, quick-delivering solution for natural gas liquefaction.
FLNG projects are a solution for stranded gas reserves (such as lean gas sourced from offshore fields) for which geographical,
technical and economic limitations restrict the ability to convert these gas reserves into LNG. Our standardized FLNG units can
be redeployed to new opportunities after producing a field and offer a viable economic alternative to the traditional giant land-
based projects. Our liquefaction solution and quick execution model place liquefaction technology onboard an existing LNG
carrier into a fully commissioned FLNG. We are currently the only company able to deliver FLNG as a service to gas resource
owners.
The FLNG industry is in the early stages of development, and we do not currently face significant competition from other
providers of FLNG services. There are currently eight FLNGs on the water, including our two that provide liquefaction as a
service (FLNG Hilli and FLNG Gimi), five FLNGs being used to liquefy the resource holder’s own gas and one being used to
liquefy gas to service its downstream portfolio. We anticipate that other companies will enter the FLNG industry at some point
in the future, resulting in greater competition.
As of March 15, 2024, our fleet is comprised of two LNG carriers (the Golar Arctic, which is currently operational, and the Fuji
LNG, which is a conversion candidate) and two FLNGs (FLNG Hilli and the FLNG Gimi).
We operate in three distinct reportable segments: FLNG, Corporate and other and Shipping. Refer to “Item 5. Operating and
Financial Review and Prospects” for further discussion on the respective performance of our reportable segments.
As of March 15, 2024, an overview of our assets and key investments is as follows:
20
Vessel Name
Year of
Delivery from
Shipyard
Capacity
(Cubic
Meters)
Flag
Type
Ownership
Counterparty
Current
Contract
Expiration
FLNG Hilli
2017
125,000
Marshall
Islands
FLNG
Moss
94.6% of the common
units
89.1% of each of the
Series A and Series B
units
Perenco/SNH
July 2026
FLNG Gimi
2023
125,000
Marshall
Islands
FLNG
Moss
70%
BP
20 years from
COD
Fuji LNG
2004
148,000
Malta
Moss
100%
Conversion
candidate
Not applicable
Golar Arctic
2003
140,000
Marshall
Islands
LNG
carrier
Membrane
100%
Spot and short-
term market
Not applicable
FLNG Hilli
The FLNG Hilli conversion was completed in the shipyard in 2017, and commenced operations following her successful
commissioning in July 2018. Pursuant to the LTA, FLNG Hilli's contracted liquefaction capacity is 1.2 million tonnes per
annum (“mtpa”). In 2021, we entered into the third amendment to the LTA (“LTA Amendment 3”) with the Customer, which
included a 0.2 mtpa capacity increase for the 2022 contract year, and an option to use additional capacity of up to 0.4 mtpa for
the 2023 contract year through to the end of the LTA term (of which the Customer opted to use 0.2 mtpa), resulting in an
increase in the utilization of FLNG Hilli to 1.4 million tonnes per annum from January 2022 to the end of the LTA in July 2026.
As of March 15, 2024, FLNG Hilli has offloaded a total of 109 LNG cargoes and produced around 7.6 million tonnes of LNG
since the start of operations.
FLNG Gimi
In 2019, Gimi MS Corporation (“Gimi MS”) and our subsidiary Golar MS Operator S.A.R.L entered into the LOA (which was
subsequently amended and restated in 2021) in connection with the employment of the FLNG Gimi as part of the first phase of
BP’s GTA Project situated off the coast of Mauritania and Senegal. FLNG Gimi is designed to produce approximately 2.7 mtpa,
with the total gas resources in the field estimated to be around 15 trillion cubic feet.
The LOA provides for the construction and conversion of the Gimi to a FLNG, transit, mooring and connection to BP’s project
infrastructure, commissioning with BP’s upstream facilities including its FPSO, completing specified acceptance tests, followed
by COD. Following COD, we will operate and maintain FLNG Gimi and make her capacity exclusively available for the
liquefaction of natural gas from the GTA Project and offloading of LNG produced for a period of twenty years. The total FLNG
Gimi conversion cost including financing costs is approximately $1.7 billion, of which $700.0 million is funded by the Gimi
debt facility.
In November 2023, FLNG Gimi sailed away from Singapore’s Seatrium shipyard and arrived at the GTA field offshore
Mauritania and Senegal on January 10, 2024 and was subsequently escorted into her 20-year GTA hub location by BP. The
FLNG Gimi is awaiting connection to the feed gas pipeline and start of commissioning activities. First gas is expected in Q3
2024, subject to final completion of upstream activities and installation of the FPSO, as advised by BP. The commissioning
period is expected to be approximately six months, with anticipated COD thereafter. Pre-COD, we expect contractual cash
flows to be deferred on the balance sheet. COD triggers the start of the 20-year LOA term that unlocks the equivalent of around
$3 billion of Adjusted EBITDA backlog to Golar and recognition of the contractual day rate comprised of capital and operating
elements.
21
Pre-commissioning contractual cash flows under the LOA commenced in March 2023 and resulted in a payment of liquidated
damages to BP. Following FLNG Gimi’s arrival at the GTA hub offshore Mauritania and Senegal on January 10, 2024, we are
of the view that under the terms of the LOA, from this date pre-commissioning contractual liquidated damages due to BP
should cease. A LOA contract interpretation disputes regarding this and certain other contractual prepayments exist and we
have initiated the dispute resolution process as prescribed by the LOA in respect of these. As of March 15, 2024, the dispute
remains unresolved, and we are in continued discussions with BP to identify alternative contractual arrangements to replace
parts of the existing pre-COD contractual arrangements, including parts of the disputed contract mechanisms. There is no
guarantee that we can reach alignment around a potential alternative contractual and commercial arrangement.
Future FLNG Projects
We actively work to develop FLNG projects around the globe. Our FLNG projects under development broadly fall into one of
three commercial categories: (i) tolling, (ii) gas sale and purchase (“GSA”) and (iii) integrated projects. Tolling projects are our
core business today, with both FLNG Hilli and FLNG Gimi under long term charter agreements where we are a FLNG service
provider. In the case of FLNG Hilli, a key part of our unique value proposition to potential tolling is to trade fixed toll for
exposure to the price of an underlying commodity, such as LNG or oil reference indices. GSA projects would typically not
require the deployment of capital directly into an upstream oil and gas development but increases our commodity exposure, as
we would be a purchaser of natural gas and a seller of LNG. Integrated projects combine upstream and FLNG infrastructure for
joint delivery of a future FLNG project. Development of any major FLNG project involves multiple stakeholders, including but
not limited to, resource owners, national and international energy companies, governments, contractors, technology providers,
regulators, and various international organizations and the speed of development of any future FLNG project is not always
directly within our control.
We have developed three FLNG designs, as follows:
Mark I
The FLNG Hilli and FLNG Gimi are both Mark I FLNGs. Mark I has a nameplate capacity of up to 2.7 mtpa and is based on
the conversion of a Moss-type LNG carrier. Sponsons that create the necessary deck space to house the liquefaction and gas
processing topside equipment must first be built and added to either side of the LNG carrier before the topside equipment can
be installed. In normal circumstances, conversion, delivery and commissioning of the FLNG takes around four years. To date,
we have been successful in executing our Mark I program together with our contractors, Seatrium (formerly Keppel Shipyard)
and Black & Veatch, we delivered the FLNG Hilli and completed the conversion of FLNG Gimi.
Mark II
This FLNG design has a nameplate capacity of up to 3.5 mtpa and is also based on the conversion of a Moss-type LNG carrier.
The Mark II design involves the construction of a new mid-ship section containing the liquefaction equipment that can be
inserted between the two sections of the carrier that has been ‘cut in half’. The higher maximum nameplate capacity is possible
because the mid-ship addition also allows for a more efficient configuration of the liquefaction equipment. This modularized
approach to the conversion reduces the time required for conversion, delivery and commissioning of the Mark II design
compared to our other two FLNG designs. This approach also increases the number of shipyards and fabricators that are
capable of executing the conversion. This competition between contractors can reduce the construction cost per ton of capacity
delivered, increase the number of yard slots available and helps us secure more attractive payment terms, financing solutions
and other benefits. The Fuji LNG has been earmarked as the donor vessel for our first Mark II design FLNG. In 2022, our board
of directors approved up to $406.0 million of capital expenditure, inclusive of the donor vessel for a future Mark II conversion.
As of March 15, 2024, we have spent $252.3 million of capital expenditures which includes engineering services, multiple long
lead items and the acquisition price of the Fuji LNG carrier.
As of March 15, 2024, we have executed a framework agreement with a potential customer for a long-term opportunity that
could utilize either Mark II or FLNG Hilli at the end of her current charter. We are also progressing discussions for additional
FLNG charter opportunities with 12 to 20 year contract durations, towards mutually acceptable terms with gas resource owners
and other FLNG project stakeholders.
22
Mark III
Targeting large field developments and representing a competitive alternative to land-based LNG projects, this FLNG design
has a larger nameplate capacity of up to 5.0 mtpa, more storage than the Mark I or Mark II designs, and is a newbuild hull that
does not involve the conversion of an existing Moss-type LNG carrier. We expect construction, delivery and commissioning of
a Mark III FLNG to take around four years.
Our key investments
Our key investments include our interests in Avenir and Macaw Energies, which are discussed further below.
Avenir
Avenir is a joint investment, in which we hold a 23.5% interest, with Stolt-Nielsen Ltd (an entity affiliated with our director
Niels Stolt-Nielsen) and Höegh LNG Holdings Limited, for the pursuit of opportunities in small-scale LNG, including the
delivery of LNG to areas of stranded gas demand and the development of LNG bunkering services and supply to the
transportation sector. Avenir currently has five small-scale LNG carriers and an LNG terminal and distribution facility in the
Italian port of Oristano, Sardinia.
Macaw Energies
Macaw Energies, our wholly owned subsidiary, is focused on environmental innovation with its land-based small-scale pilot
flare to LNG (or “F2X”) technology. This pioneering solution which is in a pilot testing phase, captures flare gas, a prevalent
byproduct of oil and gas operations, and converts it into LIQUIDFLARE®, offering a sustainable, low-carbon alternative to
traditional fuels. The F2X technology adopts circular economy principles by repurposing waste into a valuable energy resource,
significantly cutting GHG emissions.
Substantial progress has been made with the design, manufacturing, and assembly of the first F2X unit at Macaw Energies’
Houston, Texas facility. This technology is uniquely engineered to be cost-effective, scalable, and adaptable to various flare gas
compositions. Its scalability allows for customization to specific site needs, from capturing as low as 0.5 million standard cubic
feet per day (“mmscfd”) of flare gas to handling over 30 mmscfd flare volumes by stacking units for larger operations.
A third-party GHG assessment conducted by Suez Consulting validates F2X technology’s potential to significantly reduce the
carbon footprint of oil and gas operations. The assessment demonstrates that integrating F2X can lead to a 55% reduction in
CO2 emissions, preventing the release of roughly 21,000 tonnes of CO2 annually from a single unit. During 2024, Macaw
Energies plans to deploy the F2X solution in the state of Texas in the USA and initiate a global scale-up to amplify its
decarbonization impact, with a vision extending to leveraging F2X for methane venting, stranded gases and biogases,
enhancing efficiency, and promoting broader adoption across the industry.
We have also acquired ownership interests in Brazilian gas trading and gas transportation infrastructure companies, as an
operational platform for small-scale LNG market growth in South America.
As of March 15, 2024, we have spent $18.2 million of capital expenditures in relation to Macaw Energies which includes
engineering services and long lead items.
Seasonality
Historically, LNG trade, and therefore commodity prices and charter rates, increased in the winter months and eased in the
summer months, as demand for LNG for heating in the Northern Hemisphere increased in colder weather and declined in
warmer weather. There is a higher seasonal demand during the summer months due to energy requirements for air conditioning
in some markets or reduced availability of hydro power in others and a pronounced higher seasonal demand during the winter
months for heating in other markets. Due to these seasonal fluctuations, results of operations for individual quarterly periods
may not be indicative of the results that may be realized on an annual basis.
23
Vessel Maintenance
Safety is our top operational priority. Our vessels are operated in a manner intended to protect the health and safety of our
employees, the general public and the environment. We carry out inspections of our vessels on a regular basis which result in a
report containing recommendations for improvements to the overall condition of the vessel, maintenance, safety and crew
welfare. Based in part on these evaluations, we create and implement a program of continual maintenance and improvement for
our vessels and their systems.
We also actively work to manage the risks inherent in our business and are committed to preventing incidents that may
compromise safety, such as fires, environmental spills or any harm to people. Additionally, we are committed to minimizing
emissions and waste and have established key performance indicators to facilitate regular monitoring of operational
performance, including lost time injury frequency monitoring, total recordable case frequency reporting, carbon dioxide, sulfur
oxide (“SOx”), nitrogen oxide, methane and particulate matter emissions, total waste disposed of, spills, and crew retention
rates, amongst others. We set targets to drive continuous improvement, and regularly review performance indicators to
determine if remedial action is necessary to reach our targets.
Our operations utilize a thorough risk management program that includes, among other things, computer-aided risk analysis
tools, maintenance and assessment programs, a seafarers’ competence training program, seafarers’ workshops and membership
to emergency response organizations. Golar Management AS renewed its ISO 9001 certification for a quality management
system, ISO 14001 certification for an environmental management system and ISO 45001 certification for an occupational
health and safety management system and is certified in accordance with the IMO’s International Safety Management (“ISM”),
on a fully integrated basis. The ISO 27001 certification for Golar Management AS’s IT Department, was also renewed.
All our vessels are currently “in class”. The FLNG Hilli and FLNG Gimi are certified by Det Norske Veritas, the Golar Arctic
is certified by the American Bureau of Shipping and the Fuji LNG is certified by Class NK. These class certificates are renewed
every five years.
The commercial and technical management of our LNG carriers and our contractual vessel management obligations have been
outsourced to third-party ship managers. Outsourcing this non-core aspect of our operations affords operational and cost
efficiency and provides appropriate access to supporting administrative functions.
Risk of Loss and Insurance
The operation of any vessel, including FLNGs and LNG carriers has inherent risks. These risks include mechanical failure,
personal injury, collision, property loss, vessel or cargo loss or damage and business interruption due to political circumstances
in foreign countries and/or war risk situations or hostilities or pandemics. In addition, there is always an inherent possibility of
marine disaster, including explosion, spills and other environmental mishaps, and the liabilities arising from owning and
operating vessels in international trade.
We have obtained:
•
•
property damage (also known as hull and machinery) insurance on all of our vessels to protect us against marine and
war risks, which include the risks of damage to our vessels, salvage or towing costs, and also insure against actual or
constructive total loss of any of our vessels. However, our insurance policies contain deductible amounts for which we
will be responsible in the event of a claim. We have also obtained additional total loss coverage for each vessel. This
provides us additional coverage in the event of the total loss of a vessel;
business interruption insurance to protect us against loss of income in the event one of our vessels cannot be employed
due to property damage that is covered under the terms of the insurance. Under our business interruption policies, our
insurer will pay us the daily rate agreed in respect of each vessel for each day, in excess of a certain number of
deductible days, for the time that the vessel is out of service as a result of eligible damage. The maximum coverage
varies from 120 days to 360 days, depending on the vessel. The number of deductible days varies from 30 days to 90
days, depending on the vessel; and
24
•
protection and indemnity insurance, which covers our third-party legal liabilities in connection with our vessel
activities, is provided by mutual protection and indemnity associations (“P&I clubs”). This includes third-party
liability and other expenses related to the injury or death of crew members, passengers and other third-party persons,
loss or damage to cargo, claims arising from collisions with other vessels or from contact with jetties or wharves and
other damage to other third-party property, including pollution arising from oil or other substances, and other related
costs, including wreck removal. Subject to the capping discussed below, our coverage, except for pollution, is
unlimited.
The current protection and indemnity insurance coverage for pollution is $1.0 billion per vessel per incident. The
twelve P&I clubs that comprise the International Group of Protection and Indemnity Clubs (the “International Group”)
insure approximately 90% of the global commercial tonnage and have entered into a pooling agreement to reinsure
each association’s liabilities. Each P&I club has capped its exposure in this pooling agreement so that the maximum
claim covered by the pool and its reinsurance would be approximately $8.9 billion per accident or occurrence. We are
a member of Gard and Skuld P&I clubs. As a member of these P&I clubs, we are subject to a call for additional
premiums based on the clubs’ claims record, as well as the claims record of all other members of the P&I clubs
comprising the International Group.
We have also obtained ship manager’s liability insurance to protect us against contractual liabilities with one of our customers.
We believe that our current insurance coverage is adequate to protect us against the accident-related risks involved in the
conduct of our business and that we maintain appropriate levels of environmental damage and pollution insurance coverage
consistent with standard industry practice. However, not all risks can be insured, and there can be no guarantee that any specific
claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable premiums.
Environmental and Other Regulations
General
Our operations are subject to various international treaties and conventions and to the applicable local national and subnational
laws and regulations of the countries in which our vessels operate or are registered. Such laws and regulations cover a variety of
topics, including but not limited to air, oil and water pollution, waste and hazardous material management, protection of natural
resources, biodiversity conservation and protection of worker health and safety, which may require us to obtain governmental
permits and authorizations before we may conduct certain activities. Failure to comply with these laws or to obtain the
necessary business and technical licenses could result in sanctions including suspension and/or freezing of our operations and
responsibility for all damages arising from any violation.
Governments may also periodically revise their environmental laws and regulations or adopt new ones, and the effects of new
or revised laws and regulations on our operations cannot be predicted. Although we believe that we are substantially in
compliance with applicable environmental laws and regulations and have all permits, licenses and certificates required for our
vessels, future non-compliance or failure to maintain necessary permits or approvals could require us to incur substantial costs
or temporarily suspend the operation of one or more of our vessels. There can be no assurance that additional significant costs
and liabilities will not be incurred to comply with such current and future laws and regulations, or that such laws and
regulations will not have a material effect on our operations. Similar or more stringent laws may also apply to our customers,
including oil and gas exploration and production companies, which may impact demand for our services.
•
Environmental regulations in Cameroon
Our operation in Cameroon is governed by the Ministry of Environment, Nature Protection and Sustainable Development,
which, among other things, administers the National Environmental Management Plan, requires environmental impact
assessments for any development which may endanger the environment, and regulates pollution to the air, water, and other
biological resources, including maritime activities. Cameroon is a signatory to international agreements regarding climate
change and greenhouse gases including the Paris Agreement and the UN Framework Convention on Climate Change
(“UNFCCC”).
25
•
Environmental regulations in Mauritania and Senegal
Our operation in Mauritania and Senegal is governed by various government bodies, primarily the Ministry of Environment
and Sustainable Development in Mauritania and Senegal and the Department of Environment and Classified
Establishments in Senegal. Mauritania and Senegal have also entered into several international conventions, protocols and
bilateral agreements which establish environmental quality standards for waste management, including discharge of
chemicals to the marine environment. Mauritania and Senegal are also signatories to the Paris Agreement and the
UNFCCC.
Separately, the United Nations Economic Commission for Europe, in cooperation with the United Nations Economic
Commission for Africa, is undertaking a review of Mauritania under its Environmental Performance Program. The results
of this review and any actions taken in response to its findings cannot be predicted at this time.
•
Environmental regulations in Brazil
Our operations in Brazil are governed by various environmental laws and regulations, including the Brazilian Institute for
the Environment and Renewable Natural Resources, the National Environmental Council, and state environmental
agencies. These agencies regulate environmental licensing for activities that could cause significant environmental impact,
water use permitting, and quality standards for air, water, and soil. Brazil is also a signatory to the Paris Agreement and the
UNFCCC.
•
U.S. and International Maritime Regulations of LNG carriers
Our activities in the shipping industry are governed by international regulations set forth by the International Maritime
Organization (“IMO”). Compliance with key regulations such as the International Safety Management Code, International
Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC Code”), and amendments to the
International Convention for the Safety of Life at Sea and the International Ship and Port Facility Security Code is
imperative. Additionally, the IMO’s Marine Pollution standards, comprising six annexes including its amendments, impose
environmental regulations on aspects like limits on sulfur and nitrogen oxide emissions, oil spills, harmful substances,
sewage, and garbage management. While new emission control measures may arise, our vessels are powered by means
other than heavy fuel oil and are not anticipated to incur significant operational costs. However, the evolving nature of
IMO regulations poses uncertainties, and non-compliance may result in increased liability, penalties, insurance coverage
reductions, or port access issues.
In U.S. waters, we are subject to various federal, state, and local laws and regulations relating to the protection of the
environment, including the Oil Pollution Act, Comprehensive Environmental Response, Compensation, and Liability Act,
the Clean Water Act, and the Clean Air Act. In some cases, these laws and regulations require governmental permits and
authorizations before conducting certain activities. These environmental laws and regulations may impose substantial
penalties for noncompliance and substantial liabilities for pollution. Failure to comply with these laws and regulations may
result in substantial civil and criminal fines and penalties.
Sustainability reporting
We have published our annual Environmental, Social and Governance (“ESG”) Report on our website commencing in 2020.
However, the European Union’s CSRD, implemented in January 2023, significantly expands mandatory sustainability reporting
for U.S. companies with operations in the EU. We expect to fall under the CSRD’s scope commencing in 2025, with initial
reporting expected in 2026, subject to criteria, received advice, and certain assumptions about future events. The Commission
released its final rule on climate-related disclosures on March 6, 2024, requiring the disclosure of certain climate-related risks
and financial impacts, as well as GHG emissions. Large accelerated filers will be required to incorporate the applicable climate-
related disclosures into their filings beginning in fiscal year 2025, with additional requirements relating to the disclosure of
Scope 1 and 2 GHG emissions, if material, and attestation reports for certain large accelerated filers subsequently phasing in.
C. Organizational Structure
For a list of our significant subsidiaries, see Exhibit 8.1 to this annual report and note 4 “Subsidiaries” of our consolidated
financial statements included herein. All of our subsidiaries are, directly or indirectly, wholly-owned by us except for Hilli
LLC, Hilli Corp and Gimi MS.
26
D. Property, Plant and Equipment
For information on our fleet, please see the section of “Item 4 - B. Business Overview”.
We do not own any interest in real estate. As of December 31, 2023, we lease the following office spaces: 10,700 square feet in
London, England; 27,100 square feet in Oslo, Norway; 2,500 square feet in Hamilton, Bermuda; 2,100 square feet in Douala,
Cameroon; and 415 square feet in Nouakchott, Mauritania.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations should be read in conjunction with the sections of
this Annual Report entitled “Item 4. Information on the Company” and our consolidated financial statements included
herein. Our financial statements have been prepared in accordance with U.S. GAAP. This discussion includes forward-looking
statements based on assumptions about our future business. You should also review the section of this Annual Report entitled
“Cautionary Statement Regarding Forward-Looking Statements” and “Item 3. Key Information - D. Risk Factors” for a
discussion of important factors that could cause our actual results to differ materially from the results described in or implied by
certain forward-looking statements.
Significant Developments since January 1, 2024
Financing
•
Dividends
In February 2024, we declared a dividend of $0.25 per share in respect of the three months ended December 31, 2023 to
shareholders of record on March 12, 2024, which was paid on March 20, 2024.
FLNG business development
•
Delivery of Fuji LNG
In March 2024, we completed the acquisition of the Fuji LNG, a donor vessel for a prospective Mark II project, for a total
consideration of $77.5 million.
•
Gimi LOA Dispute
As of the date of this report, we are in continued discussions with BP to identify alternative contractual arrangements to replace
parts of the existing pre-COD contractual arrangements, including parts of the disputed contract mechanisms. There is no
guarantee that we can reach alignment around a potential alternative contractual and commercial arrangement.
Factors Affecting Our Future Results of Operations and Financial Condition
Our historical results of operations may not be indicative of our future results of operations which may be principally affected
for the following reasons:
•
Timely completion of the FLNG Gimi commissioning and acceptance. The commissioning of a FLNG requires highly
specialized contractors and is subject to risk of delay or other factors outside our control such as labor shortages, supply
chain disruptions or timing of various project infrastructure delivery to site. Further, we are required to meet certain
obligations under the GTA Project, including the delivery schedules and performance specifications. In the event the
contractors, the customer or us are unable to perform under the terms of the respective construction agreements or the
LOA, it may adversely impact our results of operations, our future cash flows owing to delays in unlocking our Adjusted
EBITDA backlog, breach certain bank covenants which will obligate us to repay the outstanding debt principal and
associated interest and penalties and harm our reputation as a FLNG company.
27
•
•
•
•
•
•
•
Resolution of the on-going Gimi LOA contract interpretation dispute and continued discussions to amend certain
contractual arrangements. The resolution of the on-going LOA contract interpretation dispute and our continuing
discussions with BP regarding existing contract amendments is subject to our reaching alignment around a potential
alternative contractual and commercial amendment. In the event that we are unable to reach a mutual resolution, we may
incur significant costs (including legal costs and fees) and we may not be entitled to receive amounts of pre-COD
contractual cash flows that we believe we are entitled to receive, which could adversely affect our results of operation,
financial condition and cash flows.
Utilization of FLNG Hilli and her future redeployment. In the event FLNG Hilli is unable to meet her contracted capacity
in a given year or if we fail to secure a new contract once her current contract ends in July 2026, our earnings and cash
flows will be adversely affected.
Conversion and deployment of Mark II. We have entered into agreements for engineering services and materials and
purchased a LNG carrier for a future conversion to our Mark II design without a commercial contract or project in place.
Should the future deployment opportunities require additional bespoke specifications, we may incur significant unplanned
project costs which could adversely affect our cash flows and the timeliness of our ability to realize the full potential of this
asset and maximize returns of our investment.
Our results are affected by fluctuations in the fair value of our derivative instruments. The change in fair value of our
derivative instruments, which includes oil and gas derivatives, commodity swaps and interest rate swaps, are included in
our net income. These changes may fluctuate significantly as interest rates, foreign exchange rates and the price of
commodities fluctuate.
Risk of breach of certain debt covenants. Our loan agreements and lease financing arrangements require us to maintain
specific financial levels and ratios, including minimum amounts of available cash, minimum ratios of current assets to
current liabilities (excluding current portion of long-term debt), minimum levels of stockholders’ equity and maximum
loan amounts to value. If certain covenants are breached, we may be required to make further principal repayments ahead
of our loan maturity, which would reduce our available cash.
Our long-lived assets' net book value may be impaired. Our vessels, including asset under development, are reviewed for
impairment whenever events or changes in circumstances, may indicate that the carrying amount may not be recoverable.
In assessing the recoverability of our long-lived assets’ carrying amounts, we make assumptions regarding estimated
undiscounted future cash flows, the vessels’ economic useful life and estimates in respect of residual or scrap value. In the
case of asset under development, we make assumptions regarding future returns from the project. If the market value of
our vessels declines or the forecast returns of our asset under development deteriorates, we may be required to record an
impairment charge in our financial statements, which could adversely affect our results of operations and financial
condition.
The ongoing conflicts between Russia and Ukraine and Israel and Hamas and recent attacks on vessels in the Red Sea
could have material adverse effects on our business, results of operations, or financial condition. The ongoing conflict
between Russia and Ukraine and Israel and Hamas and recent attacks on vessels in the Red Sea, in addition to the sanctions
imposed by the U.S. and several European and world leaders, may adversely impact our business, given Russia's and
Qatar’s roles as a major global exporters of crude oil and natural gas. Our business could be harmed by trade tariffs, trade
embargoes or other economic sanctions. While much uncertainty remains regarding the global impact of the ongoing
conflicts, it is possible that the hostilities could adversely affect our business, financial condition, results of operation and
cash flows. Furthermore, it is possible that third parties with whom we have charter contracts or business arrangements
may be impacted by these events, which could adversely affect our operations and financial condition.
Please see the section of this Annual Report entitled “Item 3. Key Information - D. Risk Factors” for a discussion of certain
risks inherent in our business.
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Important Financial and Operational Terms
We use a variety of financial and operational terms when analyzing our performance. These include but are not limited to the
following:
Liquefaction services revenue. For the FLNG Hilli LTA, we consider the provision of liquefaction services capacity as a single
performance obligation recognized evenly over time. We consider our services (the receipt of customer’s gas, treatment and
temporary storage on board our FLNG and delivery of LNG to waiting carriers) to be a series of distinct services that are
substantially the same and have the same pattern of transfer to our customer. We recognize revenue when obligations under the
terms of our contract are satisfied. We have applied the practical expedient to recognize liquefaction services revenue in
proportion to the amount we have the right to invoice. Overproduction and underutilization arrangements in the LTA are
variable consideration, estimated using the expected value method and recognized using the output method to the extent it is
probable that a significant reversal will not occur.
FLNG tariff, net. FLNG tariff, net is a non-U.S. GAAP financial measure and is calculated by taking the liquefaction services
revenue adjusted for the amortization of deferred commissioning period revenue and Day 1 gains on deferred revenues, the
unwinding of liquidated damages, accrued underutilization, accrued overproduction revenue and the realized gains on oil and
gas derivative instruments. FLNG tariff, net reflects the cash earnings of FLNG Hilli in a given period which consists of the
base tolling fees, oil linked fees, gas linked fees, billed overproduction revenue and underutilization adjustment invoiced to the
customer. Management believes that FLNG tariff, net increases the comparability of our FLNG performance from period to
period and against the performance of other operational FLNGs. FLNG tariff, net should not be considered as an alternative to
net income or any other measure of our financial performance calculated in accordance with U.S. GAAP. See the section of this
Item 5 entitled “A. Operating Results” included herein for a reconciliation of FLNG tariff, net to total operating income, the
most comparable U.S. GAAP financial measure.
Adjusted EBITDA. Adjusted EBITDA is a non-U.S. GAAP financial measure and is calculated by taking net income/(loss)
before net income/(loss) from discontinued operations, net (losses)/income from equity method investments, income taxes,
other financial items net, net (losses)/gains on derivative instruments, interest expense, net, interest income, other non-operating
income/(losses), realized and unrealized mark-to-market (losses)/gains on our investment in listed equity securities, unrealized
movements on the oil and gas derivative instruments, impairment of long-lived assets and depreciation and amortization.
Adjusted EBITDA is a financial measure used by management and investors to assess our total financial and operating
performance. Management believes that Adjusted EBITDA assists management and investors by increasing the comparability
of our total performance from period to period against the performance of other companies. Adjusted EBITDA should not be
considered as an alternative to net income or any other measure of our financial performance calculated in accordance with U.S.
GAAP. See the section of this Item 5 entitled “A. Operating Results” included herein for a reconciliation of Adjusted EBITDA
to net income, the most comparable U.S. GAAP financial measure.
Adjusted EBITDA backlog. Adjusted EBITDA backlog is a non-U.S. GAAP financial measure and represents the share of
contracted fee income for executed contracts less forecast operating expenses for these contracts. Adjusted EBITDA backlog
should not be considered as an alternative to net income or any other measure of our financial performance calculated in
accordance with U.S. GAAP.
29
A. Operating Results
Reconciliations of the 2023 and 2022 consolidated net (loss)/income to Adjusted EBITDA are as follows:
(in thousands of $)
Net (loss)/income
Income tax expense/(benefit)
(Loss)/income before income taxes
Depreciation and amortization
Impairment of long-term assets
Unrealized loss/(gain) on oil and gas derivative instruments, net
Realized and unrealized mark-to-market losses/(gains) on our investment in listed
equity securities
Other non-operating income, net
Interest income
Interest expense, net
Losses/(gains) on derivative instruments, net
Other financial items, net
Net loss/(income) from equity method investments (1)
Net (income)/loss from discontinued operations (2)
Adjusted EBITDA
December 31,
2023
(2,850)
1,870
(980)
50,294
5,021
284,658
62,308
(9,823)
(46,061)
—
7,227
900
2,520
(293)
355,771
2022
939,057
(438)
938,619
51,712
76,155
(288,977)
(400,966)
(11,916)
(12,225)
19,286
(71,497)
5,380
(19,041)
76,450
362,980
(1) Please refer to the individual reportable segments below for discussions on net (loss)/income from equity method investments.
(2) See note 6 “Segment information” and note 14 “Assets and liabilities held for sale and discontinued operations” of the consolidated
financial statements included herein for additional information on our segments and discontinued operations.
Discussed below are the financial statement line items of our consolidated results of operations for the years ended December
31, 2023 and 2022 that are not covered by the segmental analysis presented later in this section:
Depreciation and amortization: Depreciation and amortization decreased by $1.4 million in 2023 compared to 2022. This is
primarily due to a decrease in depreciation charge in Golar Arctic for the year ended December 31, 2023 compared to 2022 as a
result of a $76.2 million impairment charge on Golar Arctic in May 2022.
Impairment of long-lived assets: The impairment charge of $5.0 million in 2023 is associated with our LNG carrier, Gandria.
In May 2023, we entered into the Gandria SPA with Last Voyage, DMCC for the sale and recycling of the Gandria, which
completed in November 2023, for net consideration of $15.2 million. The transaction triggered an immediate impairment test as
the carrying value of the vessel was higher than the fair value less costs to sell, consequently, an impairment charge was
recognized at the measurement date.
The impairment charge of $76.2 million in 2022 is associated with our LNG carrier, the Golar Arctic. In May 2022, we entered
into agreements with Snam for the future sale of the Golar Arctic following her conversion into a FSRU (“Arctic SPA”) subject
to receipt of notice to proceed which triggered an impairment test and resulted in an impairment of the vessel at the
measurement date.
Unrealized (loss)/gain on the oil and gas derivative instruments, net:
(in thousands of $)
Unrealized (loss)/gain on FLNG Hilli’s gas derivative instrument
Unrealized (loss)/gain on FLNG Hilli’s oil derivative instrument
Unrealized mark-to-market adjustment for commodity swap derivatives
Unrealized (loss)/gain on oil and gas derivative instruments, net
December 31,
2023
(142,521)
(76,847)
(65,290)
(284,658)
2022
121,959
55,315
111,703
288,977
30
•
•
•
Unrealized (loss)/gain on FLNG Hilli’s gas derivative instrument: In July 2022, the Customer exercised the option to
increase the annual capacity utilization of FLNG Hilli by 0.2 mtpa for the period from January 2023 to the end of the term
of the LTA in July 2026, which together with the 0.2 mtpa annual capacity increase for the 2022 contract year (both
pursuant to the LTA Amendment 3 entered into in July 2021), brought the total annual base capacity to 1.4 mtpa from
January 2022 to the end of the LTA in July 2026. The unrealized (loss)/gain reflects the mark-to-market (“MTM”)
movements related to the changes in the fair value of the FLNG Hilli’s gas derivative instrument embedded in the LTA
which we estimated using the discounted future cash flows of the additional payments due to us for the 0.2 mtpa
incremental LNG capacity over the remaining term of the LTA which is linked to the Dutch Title Transfer Facility (“TTF”)
gas prices and forecast Euro/USD exchange rates. The increase of $264.5 million unrealized loss in 2023 compared to an
unrealized gain in 2022, was primarily driven by the volatility in the future TTF linked gas price curves over the LTA’s
remaining term.
Unrealized (loss)/gain on FLNG Hilli’s oil derivative instrument: This reflects the MTM movements related to the changes
in the fair value of the FLNG Hilli’s oil derivative instrument embedded in the LTA which we estimated using the
discounted future cash flows of the additional payments due to us as a result of Brent linked crude oil prices moving above
a contractual oil price floor over the remaining term of the LTA. The increase of $132.2 million unrealized loss in 2023
compared to an unrealized gain in 2022, was largely driven by the volatility in the future Brent linked crude oil price curves
over the LTA’s remaining term.
Unrealized MTM adjustment for commodity swap derivatives: We entered into commodity swaps to hedge our exposure to
the TTF linked earnings (100% of which are attributable to us). The increase of $177.0 million unrealized MTM loss in
2023 compared to an unrealized gain in 2022, was due to additional commodity swaps entered into in the first quarter of
2023 which exposed us to the volatility of TTF linked gas price curves. We have economically hedged our exposure by
swapping variable cash receipts that are linked to the TTF index for anticipated future production volumes with fixed
payments from our TTF swap counterparties of which the resultant adjustments are presented in “Realized MTM
adjustment on commodity swap derivatives,” in the consolidated statements of operations.
Realized and unrealized (losses)/gains on our investment in listed equity securities: This reflects the MTM movements related
to changes in the fair value of the NFE Shares.
In 2023 and 2022, we sold 1.2 million and 13.3 million of our NFE shares at a price range between $36.90 and $40.38 per share
and $40.80 and $58.29 per share for an aggregate consideration of $45.6 million and $625.6 million, which resulted in realized
MTM losses of $62.3 million and realized MTM gains of $50.1 million, respectively. Further in 2023, we used our remaining
4.1 million NFE shares as partial payment for the reacquisition of NFE’s 1,230 common units in Hilli LLC. There was no
comparable transaction in 2022.
In 2022, we recognized $350.9 million unrealized MTM gains due to a significant increase in the NFE share prices to $42.42
per share at December 31, 2022, compared to $24.14 per share for 2021.
Other non-operating income, net:
(in thousands of $)
Dividend income from our investment in listed equity securities
UK tax lease liability
Other non-operating income, net
December 31,
2023
9,823
—
9,823
2022
4,768
7,148
11,916
•
•
Dividend income from our investment in listed equity securities: This reflects the dividend income received in relation to
our NFE Shares prior to disposal. The increase of $5.1 million in dividend income in 2023 compared to 2022, was mainly
due to higher dividend per share of $3.00 on 5.3 million NFE shares held within 2023, compared to $0.10 per share on 18.6
million NFE shares held within 2022.
U.K. tax lease liability: In 2022, we settled our liability of $66.4 million to the HMRC in full, inclusive of fees, released
the remaining liability recognized of $5.3 million and recognized a foreign exchange movement of $1.8 million. There was
no comparable income in 2023.
31
Interest income: The increase of $33.8 million interest income in 2023 compared to 2022, was primarily due to an extended
duration the cash was maintained in short-term money-market deposits and a higher interest rate, partially offset by a reduced
short-term money-market deposit balance in 2023 compared to 2022. As of December 31, 2023 and 2022, the cash held in
short-term money-market deposits amounted to $481.7 million and $634.2 million, respectively.
Interest expense, net: The decrease in net interest expense of $19.3 million in 2023 compared to 2022, was primarily due to:
•
•
•
•
$10.3 million net decrease in interest expense following $140.7 million and $20.4 million repurchases of our
$300.0 million senior unsecured bonds (“Unsecured Bonds”) in 2022 and 2023, respectively, partially offset by the re-
issuance of $61.1 million in 2023;
$9.2 million increase in capitalized interest expense on our borrowing cost in relation to our qualifying investment in our
asset under development, the Gimi;
$3.3 million net decrease in interest expense, including amortization of deferred finance charges driven by the redemption
of our convertible senior unsecured notes in February 2022 and the repayments of the Corporate Revolving Credit Facility
(the “Corporate RCF”) in November 2022; and
$2.9 million increase in interest expense due to higher reference rates on the debt facility of our consolidated VIE.
(Losses)/gains on derivative instruments, net:
(in thousands of $)
Net income/(expense) on undesignated IRS (“IRS”) derivatives
Unrealized MTM adjustment for interest rate swap derivatives
(Losses)/gains on derivative instruments, net
December 31,
2023
8,356
(15,583)
(7,227)
2022
(772)
72,269
71,497
•
•
Net interest income/(expense) on undesignated IRS derivatives: This reflects the net interest exposure in relation to our IRS
derivatives. The increase of $9.1 million net interest income in 2023 compared to 2022, was driven largely by the
movements in reference rates.
Unrealized MTM adjustment for IRS derivatives: This reflects the MTM movements related to the changes in the fair value
of our IRS derivatives. As of December 31, 2023 and 2022, we have an IRS portfolio with a notional amount of $709.4
million and $740.0 million respectively, none of which are designated as hedges for accounting purposes. The increase of
$87.9 million unrealized MTM loss in 2023 compared to an unrealized gain in 2022, was driven by the decrease in long-
term swap rates, notional values of our swap portfolio, partially offset by fair value adjustments reflecting our
creditworthiness and that of our counterparties.
Other financial items, net:
(in thousands of $)
Amortization of debt guarantees
Financing arrangement fees and other related costs
Foreign exchange (loss)/gain on operations
Other
Other financials items, net
December 31,
2023
2,019
(1,667)
(941)
(311)
(900)
2022
2,657
(9,340)
1,598
(295)
(5,380)
•
•
Amortization of debt guarantees: This relates to fees earned from debt guarantees provided to existing and former related
parties. The decrease of $0.6 million amortization of debt guarantees in 2023 compared to 2022, was driven by a decrease
in various debt guarantees provided.
Financing arrangement fees and other related costs: The decrease in financing arrangement fees and other related costs of
$7.7 million in 2023 compared to 2022, was due to:
•
$4.9 million write-off of deferred finance charges and expenses in relation to our undrawn corporate bilateral facility
which expired in June 2022;
32
•
•
•
$2.0 million reduction in the loss on extinguishment is attributed to a lower volume of Unsecured Bonds repurchased
in 2023 of $20.4 million compared to $140.7 million of Unsecured Bonds in 2022;
$1.4 million commitment fee in relation to the undrawn portion of the Corporate RCF which was cancelled in
November 2022; and
partially offset by $0.6 million loss on re-issuance of $61.1 million Unsecured Bonds in 2023.
•
Foreign exchange gain/(loss) on operations: The increase of $2.5 million loss in 2023 compared to 2022, was driven by
unfavorable foreign exchange movements of the GBP and Singapore Dollar against the U.S. Dollar.
Net (losses)/income from equity method investments: This represents our share of earnings from our equity accounted
investments in Aqualung, Avenir, CoolCo, ECGS, MGAS and LOGAS. The increase of $21.6 million net loss in 2023
compared to 2022, was mainly due to $22.3 million decrease in our share in the net earnings from CoolCo in 2023 of $1.5
million compared to $23.8 million in 2022, partially offset by $0.4 million increase in gain on disposal of our CoolCo shares in
2023 of 4.5 million compared to 8.0 million of our CoolCo shares in 2022.
Net income/(loss) from discontinued operations: This relates to the CoolCo Disposal and the TundraCo Disposal:
(in thousands of $)
The CoolCo Disposal
Income/(loss) from discontinued operations
Gain/(loss) on disposal
Net income/(loss) from discontinued operations
December 31,
2023
266
27
293
2022
(194,500)
(10,060)
(204,560)
Net income/(loss) from discontinued operations: The net income of $0.3 million in 2023 was in relation to our vessel operations
in Malaysia which was sold to CoolCo in May 2023. The net loss of $204.6 million in 2022 was in relation to the disposals of
nine of our wholly owned subsidiaries and the commercial and technical management entities to CoolCo in June 2022.
(in thousands of $)
The TundraCo Disposal
Income from discontinued operations
Gain on disposal
Net income from discontinued operations
December 31,
2023
—
—
—
2022
4,880
123,230
128,110
Net income from discontinued operations: The net income of $128.1 million in 2022 was due to the completion of the
TundraCo Disposal in May 2022. There was no comparable transaction in 2023.
33
The following details our operating results and the resultant Adjusted EBITDA for our reportable segments for the years ended
December 31, 2023 and 2022.
FLNG segment
This relates to activities of the FLNG Hilli and our other FLNG projects.
(in thousands of $)
Total operating revenues
Realized gain on oil and gas derivative instruments, net
Vessel operating expenses
Voyage, charterhire and commission expenses
Administrative (expenses)/income
Project development expenses
Other operating income/(losses)
Adjusted EBITDA
Other Financial Data:
Total operating revenues
Vessel management fees and other revenues
Liquefaction services revenue
Amortization of deferred commissioning period revenue, amortization of Day 1
gains, accrued overproduction revenue(1), underutilization adjustment and other
Realized gain on oil and gas derivative instruments, net
FLNG tariff, net
December 31,
2023
245,418
199,907
(65,748)
(583)
(417)
(4,151)
15,542
389,968
245,418
—
245,418
(36,228)
199,907
409,097
2022
214,825
232,020
(58,583)
(600)
22
(5,335)
(15,417)
366,932
214,825
(855)
213,970
(6,077)
232,020
439,913
(1) Accrued overproduction revenue relates to revenue accrued for production in excess of the FLNG Hilli’s annual contracted base capacity
pursuant to LTA Amendments 2 and 4 (as defined herein).
Total operating revenues:
(in thousands of $)
Base tolling fee
Amortization of deferred commissioning period revenue
Amortization of Day 1 gains
Overproduction/(underutilization)
Incremental base tolling fee
Other
Total operating revenues
December 31,
2023
204,501
4,120
12,541
20,129
5,000
(873)
245,418
2022
204,501
4,120
22,608
(20,089)
5,000
(1,315)
214,825
•
•
Base tolling fee: Under the terms of the LTA, we invoice and recognize base tolling fees up to the contracted annual base
capacity so long as actual production is 95% of the contracted base capacity, provided that there are no services
unavailability considered our fault in a given contract year.
Amortization of Day 1 gains: This relates to the amortization of the FLNG Hilli’s deferred Day 1 gains on the oil and gas
derivative instruments embedded in the LTA. In July 2021, we entered into LTA Amendment 3 which increased the annual
capacity utilization of FLNG Hilli by 0.2 mtpa of LNG for the contract year 2022. This resulted in the recognition of TTF
linked Day 1 gain of $28.3 million, amortized over one year, given the Customer had not exercised the option to maintain
the increased annual contracted volume of 1.4 million tonnes from January 2023 until July 2026 (the “2023+ expansion
capacity”). In July 2022, the Customer exercised the 2023+ expansion capacity resulting to the extension to the initial
amortization profile of the TTF linked Day 1 gain until July 2026.
34
•
Overproduction/underutilization: In March 2021, we entered into the second amendment to the LTA (“LTA Amendment
2”) which changed the contract term from one linked to fixed capacity of 500.0 billion cubic feet to one of a fixed term,
terminating on July 18, 2026. This amendment also permits billing adjustments for amounts over or under the annual
contracted capacity in a given contract year (“overproduction” or “underutilization”, respectively), commencing from
contract year 2019. Amounts for overproduction were invoiced at the end of a given contract year, while amounts for
underutilization (which is capped per contract year) will be a reduction against our final invoice to the Customer at the end
of the LTA in July 2026. Pursuant to LTA Amendment 2, we have accrued overproduction revenue in relation to excess
production over contracted annual contracted capacity during contract year 2023.
In 2022, due to a combination of upstream technical issues and maintenance works, we recognized underutilization of
$35.8 million, which is bifurcated on our consolidated statement of operations presentation, as reductions to the
“Liquefaction services revenue” and “Other operating income” financial statement line items, amounting to $20.1 million
and $15.7 million, respectively. In April 2023, we entered into the fourth amendment to the LTA (“LTA Amendment 4”)
where we agreed with the Customer to increase contract year 2023 annual contracted capacity by 0.04 million tonnes (from
1.4 million tonnes to 1.44 million tonnes) resulting from the inclusion of contract year 2022 underutilization into contract
year 2023 annual LNG production. The increased contract year 2023 annual LNG production was fully met and we have
subsequently unwound the contract year 2022 underutilization liability of $35.8 million, bifurcated between “Liquefaction
services revenue” and “Other operating income” line items in the consolidated statements of operations, amounting to
$20.1 million and $15.7 million, respectively.
Realized gain on oil and gas derivative instrument, net:
(in thousands of $)
Realized MTM adjustment on commodity swap derivatives
Realized gain on FLNG Hilli’s oil derivative instrument
Realized gain on FLNG Hilli’s gas derivative instrument
Realized gain on oil and gas derivative instruments, net
December 31,
2023
87,555
73,120
39,232
199,907
2022
(18,605)
110,696
139,929
232,020
•
•
•
Realized MTM adjustment for commodity swap derivatives: We entered into commodity swaps to hedge our exposure to a
portion of FLNG Hilli’s tolling fee that is linked to the TTF index pursuant to the LTA Amendment 2 (100% of which
were attributable to us). The increase of $106.2 million in 2023 compared to 2022, was driven by the additional commodity
swaps entered into in the first quarter of 2023 which economically hedged our exposure by swapping variable cash receipts
that are linked to the TTF index for anticipated future production volumes with fixed payments from our TTF swap
counterparties.
Realized gain on FLNG Hilli’s gas derivative instrument: This reflects the tolling fee in excess of the contractual floor rate,
linked to TTF and the Euro/USD foreign exchange movements. The decrease of $100.7 million in 2023 compared to 2022,
was driven by the decreased TTF prices based on one-month look-back average price of €47.7 for 2023 compared to
€132.0 for 2022, partially offset by favorable foreign exchange movements of the Euro against the U.S. Dollar of an
average 1.078 in 2023 compared to 1.056 in 2022.
Realized gain on FLNG Hilli’s oil derivative instrument: This reflects the billings above the FLNG Hilli’s base tolling fee
when the Brent linked crude oil price is greater than $60 per barrel. The decrease of $37.6 million in 2023 compared to
2022, was driven by the decreased three-month look-back average oil price of $83.42/barrel for 2023 compared to $99.76/
barrel for 2022.
FLNG tariff, net: The decrease of $30.8 million in FLNG tariff, net in 2023 compared to 2022, was primarily due to the
decrease in realized gains on oil and gas derivative instruments, net.
Vessel operating expenses: The increase of $7.2 million in vessel operating expenses in 2023 compared to 2022, was primarily
due to an increase in repairs, spares, stores and consumables incurred during the 2023 planned extended maintenance window.
Project development expenses: This comprised of non-capitalizable project-related expenses such as legal, professional and
consultancy costs for FLNG projects in the exploratory stages. The decrease of $1.2 million in project development expenses in
2023 compared to 2022, was driven by new business development costs incurred to assess and pursue various FLNG growth
opportunities in 2022.
35
Corporate and other segment
This relates to our activities including administrative and ship operation and maintenance services. We have offices in
Bermuda, London, Douala and Oslo that provide FLNG commercial, operational and technical support, crew management
services and supervision, corporate secretarial, accounting, treasury, HR and legal services.
(in thousands of $)
Total operating revenues
Vessel operating expenses
Voyage, charterhire and commission expenses
Administrative expenses
Project development expenses
Other operating income
Adjusted EBITDA
December 31,
2023
35,086
(19,248)
(19)
(33,031)
(34,909)
7,817
(44,304)
2022
43,230
(6,578)
(34)
(38,224)
(2,637)
-
(4,243)
Total operating revenues: The decrease of $8.1 million in total operating revenues in 2023 compared to 2022, was primarily
due to:
•
•
•
$15.2 million decrease in vessel management and administrative service fees, mainly charged to our former equity
method investments, Golar Partners, Hygo and CoolCo;
$0.6 million decrease in revenue from the development agreement entered into in 2022 to provide drydocking, site
commissioning and hook-up services for the Golar Tundra, which completed in 2023 (the “Development
Agreement”); and
$8.2 million increase in vessel management fees for the Golar Tundra, which commenced in November 2022.
Vessel operating expenses: The vessel operating expenses relate to the cost to operate and maintain the FSRU LNG Croatia
and the Golar Tundra. The increase of $12.7 million in vessel operating expenses in 2023 compared to 2022, was primarily due
to:
•
•
•
$6.0 million increase due to the commencement of the Operation and Maintenance Agreement for the Golar Tundra
with Snam from May 2023 (the “O&M Agreement”). There were no comparable expenses for the same period in
2022;
$3.5 million increase in 2023 for the Golar Tundra during her drydocking, site commissioning and hook-up services in
relation to the Development Agreement; and
$2.8 million increase mainly due to repairs and maintenance works for the LNG Croatia during 2023.
Administrative expenses: The decrease of $5.2 million in administrative expenses in 2023 compared to 2022, was primarily
due to:
•
•
$7.9 million reduction in professional and consultancy fees as a result of the disposals in 2022; and
partially offset by a $2.7 million increase in share options and restricted stock units expenses following additional
stock awards in 2023.
Project development expenses: The increase in project development expenses of $32.3 million in 2023 compared to 2022 was
primarily due to:
•
•
•
$22.5 million increase in professional fees and cost of materials in 2023 to complete the drydocking, site
commissioning and hook-up services for the Golar Tundra in relation to the Development Agreement;
$7.8 million of professional fees incurred in relation to the Arctic SPA which was terminated in June 2023 when
Snam’s option to exercise the notice to proceed lapsed; and
$2.0 million increase in professional and consultancy fees for other business development opportunities.
Other operating income: In 2022, we received the first advance payment of $7.8 million pursuant to the Arctic SPA. In June
2023, the option to exercise the notice to proceed lapsed, consequently, we retained and recognized the non-refundable first
advance payment as income. There was no comparable income in 2022.
36
Shipping segment
This comprises of the operations of LNG transportation. We have historically operated and subsequently chartered out LNG
carriers on fixed terms to customers.
(in thousands of $)
Total operating revenues
Vessel operating expenses
Voyage, charterhire and commission expenses, net
Administrative (expenses)/income
Project development expenses
Adjusted EBITDA
December 31,
2023
17,925
(6,153)
(1,581)
(14)
(70)
10,107
2022
9,685
(7,641)
(1,810)
102
(45)
291
Total operating revenues: The increase of $8.2 million in total operating revenues in 2023 compared to 2022 was primarily due
to higher daily charterhire rates and 22% higher utilization of the Golar Arctic in 2023.
Vessel operating expenses: The decrease in vessel operating expenses of $1.4 million in 2023 compared to 2022 was primarily
due to the war risk insurance rebate receipt in March 2023.
Please refer to Golar LNG Limited’s Annual Report on Form 20-F for the fiscal year ended December 31, 2022 filed with the
Commission on March 31, 2023, Item 5 Operating and Financial Review and Prospects - A. Operating Results, for the
management discussion and analysis of the operating results for 2022 compared to 2021.
B. Liquidity and Capital Resources
Liquidity and Cash Requirements
We operate in a capital intensive industry, and we have historically financed the purchase of our vessels, conversion projects
and other capital expenditures through a combination of borrowings from debt transactions, leasing arrangements with financial
institutions, cash generated from operations, sales of vessels and investments and equity capital. Our liquidity requirements
relate to servicing our debt, funding our conversion projects, funding investment in the development of our project portfolio,
funding working capital requirements, payment of dividends and share repurchases and maintaining cash reserves to satisfy
certain of our borrowing covenants (including cash collateral requirements in respect of certain of our derivatives and as
security for the provision of letters of credit) and to offset fluctuations in operating cash flows.
Our funding and treasury activities are conducted in accordance with our established corporate policies to maximize investment
returns while maintaining appropriate liquidity for our working capital requirements. Cash and cash equivalents are held
primarily in U.S. Dollars with some balances held in GBP, NOK, Singapore Dollars, Euros, BRL and Central African Francs
(“XAF”). We have used derivative instruments for interest rate, foreign currency and commodity risk management purposes.
Our short-term liquidity requirements are primarily for the servicing of our debt, payment of dividends, working capital,
potential investments, contracted FLNG conversion projects (FLNG Gimi for the LOA) and Mark II project related
commitments. We believe that our existing cash and cash equivalents and short-term bank deposits, together with cash flow
from operations, will be sufficient to support our liquidity and capital requirements for at least the next 12 months.
As of December 31, 2023, we had cash and cash equivalents (including short-term deposits) of $771.5 million, of which $92.2
million is restricted cash. Included within restricted cash is $61.0 million in respect of the issuance of the Hilli LLC by a
financial institution in relation to the FLNG Hilli, $18.1 million cash belonging to the lessor VIE, $12.1 million in respect of the
LNG Hrvatska O&M Agreement and $1.1 million relating to office leases. Refer to note 15 “Restricted Cash and Short-term
Deposits” of our consolidated financial statements included herein for additional details.
Since December 31, 2023, significant transactions impacting our cash flows include:
Receipts of:
•
$20.0 million proceeds from First FLNG Holdings’ subscription of equity interest in Gimi MS Corporation (“Gimi
MS”); and
37
•
$19.9 million of scheduled receipts in relation to net settlement of our commodity swap arrangements.
Payments of:
•
•
•
•
•
•
•
$62.0 million relating to the final payment to acquire the Fuji LNG for Mark II conversion;
$36.3 million of additions to the asset under development, the FLNG Gimi;
$35.0 million by Gimi MS of pre-commissioning contractual cash flows in relation to the Gimi LOA;
$26.0 million relating to the quarterly dividend;
$14.5 million of capital expenditure on the Mark II, comprised of engineering services and long lead items;
$14.2 million relating to share repurchased under the share buyback program; and
$10.0 million of scheduled loan and interest repayments, including net settlement of our interest rate swaps.
Medium to Long-term Liquidity and Cash Requirements
Our medium and long-term liquidity requirements are primarily for funding future investments and our conversion projects and
repayment of long-term debt balances. Sources of funding for our medium and long-term liquidity requirements include new
loans, refinancing of existing debt arrangements, and public and private debt or equity offerings.
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated.
(in thousands of $)
Net cash provided by continuing operations
Net cash provided by/(used in) discontinued operations
Net cash (used in)/provided by investing activities
Net cash provided by discontinued investing activities
Net cash used in financing activities
Net cash used in discontinued financing activities
Net movement in cash and cash equivalents, restricted cash and short-term deposits within
assets held for sale
Net (decrease)/increase in cash and cash equivalents, restricted cash,
short-term deposits and cash within assets held for sale
December 31,
2023
134,606
2022
279,054
276
(60,673)
(131,709)
—
498,423
569,298
(244,953)
(533,363)
—
(158,280)
369
80,500
(241,411)
674,959
Cash and cash equivalents, restricted cash and short-term deposits at the beginning of the
period
1,012,881
337,922
Cash and cash equivalents, restricted cash and short-term deposits at the end of the period
771,470
1,012,881
Continuing and discontinued operations
The decrease in net cash provided by continuing operations of $144.4 million for the year ended December 31, 2023 compared
to 2022 was mainly due to the decreasing oil and gas prices, drydocking expenditure incurred for the Golar Arctic during 2023
and expenditures on our Mark II FLNG project which include engineering costs and long lead items. This is partially offset by
the increase in interest income from our short-term money-market deposits for year ended December 31, 2023.
The increase in the net cash provided by discontinued operations of $60.9 million for the year ended December 31, 2023
compared to net cash used in 2022 was due to the completion of the CoolCo Disposal and TundraCo Disposal between March
and June 2022.
38
Investing activities
Net cash flows used in investing activities for the year ended December 31, 2023 of $131.7 million and net cash flows provided
by investing activities for the year ended December 31, 2022 of $498.4 million, is mainly comprised of:
2023:
•
•
•
•
•
•
•
•
•
•
2022:
•
•
•
•
•
•
$308.0 million of additions in relation to the FLNG Gimi’s FLNG conversion;
$80.0 million proceeds from First FLNG Holdings’ subscription of 30% additional equity interest in Gimi MS;
$56.1 million net proceeds from the sale of 4.5 million CoolCo shares;
$45.6 million net proceeds from the sale of 1.2 million NFE Shares;
$15.5 million deposit paid for Fuji LNG, a donor vessel in relation to our Mark II project;
$15.2 million of net proceeds from the sale of Gandria;
$9.8 million net dividends received from our NFE Shares, prior to disposal;
$9.7 million of equity contribution to our investments in MGAS and LOGAS;
$3.6 million revolving shareholder loan advanced to our related parties; and
$1.6 million of additions to leasehold improvements.
$625.8 million net proceeds from the sale of our 13.3 million NFE shares;
$267.4 million of additions in relation to the FLNG Gimi’s conversion;
$97.8 million net proceeds from the sale of our 8.0 million CoolCo shares;
$39.3 million proceeds from First FLNG Holdings’ subscription of 30% additional equity interest in Gimi MS;
$5.3 million of dividends received from our NFE Shares; and
$2.4 million of equity contribution to our investment in Aqualung.
Net cash provided by discontinued investing activities of $569.3 million for the year ended December 31, 2022 relates to net
proceeds from the completion of the CoolCo Disposal and TundraCo Disposal. There was no comparable payment for the year
ended December 31, 2023.
Financing activities
Net cash flows used in financing activities for the years ended December 31, 2023 and 2022 were $245.0 million and $533.4
million, respectively and is mainly comprised of:
2023:
•
•
•
•
•
•
•
•
2022:
•
•
•
•
•
•
•
•
•
•
$105.5 million of scheduled debt repayments which includes $98.2 million of repayments made by our lessor VIE;
$102.9 million total dividends paid, which comprised $79.5 million to the stockholders of Golar and $23.5 million to
the equity holders of Hilli LLC;
$100.0 million paid to reacquire 1,230 common units of Hilli LLC from NFE;
$95.0 million collective drawdown from the Gimi facility;
$61.7 million paid to repurchase our own shares under our share repurchase program;
$61.0 million proceeds from re-issuance of Unsecured Bonds in November 2023 and December 2023;
$20.4 million partial repurchases of our Unsecured Bonds in March 2023 and April 2023; and
$10.5 million financing costs paid predominantly in relation to amendment fees for FLNG Hilli’s sale and leaseback
facility, the Unsecured Bonds and the Gimi facility.
$315.6 million redemption of the outstanding face value of our 2017 Convertible Bonds in February 2022;
$140.7 million partial redemption of our Unsecured Bonds at par in December 2022;
$132.6 million of scheduled debt repayments which includes $123.5 million of repayments made by our lessor VIE;
$131.0 million repayment of our Corporate RCF in May 2022;
$131.0 million drawdown from our Corporate RCF in February 2022;
$125.0 million collective drawdowns from the $700 million Gimi facility;
$55.2 million dividend payment to the equity holders of Hilli LLC;
$25.5 million paid to repurchase our own shares under our share repurchase program;
$20.6 million borrowings made by our lessor VIE; and
$9.6 million financing costs paid predominantly in relation to fees on the Gimi facility, our undrawn corporate bilateral
facility which expired in June 2022 and our Corporate RCF facility which was canceled in November 2022.
39
Net cash used in discontinued financing activities of $158.3 million for the year ended December 31, 2022 relates to $158.0
million of scheduled debt repayments and $0.3 million financing cost paid predominately in relation to the Golar Tundra
facility. There was no comparable payment for the year ended December 31, 2023.
Please refer to Golar LNG Limited’s Annual Report on Form 20-F for the fiscal year ended December 31, 2022 filed on March
31, 2023, Item 5 Operating and Financial Review and Prospects - B. Liquidity and Capital Resources - Cash Flows, for the
management discussion and analysis of the operating results for 2022 compared to 2021.
Borrowing Activities
As of December 31, 2023, we were in compliance with all our covenants under our various loan agreements. See note 21
“Debt” in our consolidated financial statements included herein for additional information.
Derivatives
We use financial instruments to reduce the risk associated with fluctuations in interest rates, commodity prices and foreign
currency exchange rates. See note 27 “Financial Instruments” in our consolidated financial statements included herein for
additional information.
Capital Commitments
Our capital commitments predominately relate to the FLNG Gimi, moored at the GTA field offshore Mauritania and Senegal,
ready for connection and our Mark II, further described in note 18, “Asset Under Development” and note 29, “Commitments
and Contingencies”, respectively of our consolidated financial statements included herein for additional information.
Contractual Obligations
following
The
2023:
(in millions of $)
Financing
table sets
forth our contractual obligations
for
the periods
indicated as at December 31,
Total
Obligation
Due in
2024
Due in
2025 –
2026
Due in
2027 –
2028
Due
Thereafter
Gross Golar long-term and short-term debt (1)
844.5
43.8
316.5
116.7
367.5
Capital lease obligations between Golar and the lessor VIE
396.1
300.0
Interest commitments on long-term debt and other interest
rate swaps (2)
184.4
17.9
Capital expenditure commitments (4)
FLNG Gimi (3)
Mark II FLNG
Total
292.2
211.2
1,928.4
278.1
183.7
823.5
96.1
78.3
14.1
27.5
—
—
56.0
32.2
—
—
—
—
532.5
172.7
399.7
(1) The obligations under long-term and short-term debt above are presented gross of deferred finance charges and exclude accrued interest.
Refer to note 21 of our audited consolidated financial statements included herein for additional information.
(2) Our interest commitment on our long-term debt is calculated based on assumed SOFR rates of between 3.24% to 5.37% and takes into
account our various margin rates and interest rate swaps associated with each financing arrangement.
(3) Pursuant to the LOA, we expect certain delays in advance of COD to result in contractual prepayments between the parties. Given the
complexity and interdependencies of the activities required during the project mobilization and commissioning leading to COD, it is
difficult for us to reasonably estimate eventual net payments/receipts. Refer to note 18 of our audited consolidated financial statements
included herein for additional information.
40
(4) This excludes our outstanding committed funding to Macaw Energies amounting to $9.0 million for the design, manufacturing, and
assembly of its F2X technology.
C. Research and Development, Patents and Licenses
Not applicable.
D. Trend Information
Other than as described elsewhere in this Annual Report on Form 20-F, we are not aware of any trends, uncertainties, demands,
commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing
operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to
be indicative of future operation results or financial condition.
See the sections of this Item 5 entitled “Factors Affecting Our Future Results of Operations and Financial Condition” and “A.
Operating Results” included herein for additional information.
E. Critical Accounting Estimates
The preparation of our financial statements in accordance with U.S. GAAP requires us to make estimates, judgments and
assumptions affecting the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and
liabilities in our consolidated financial statements. Our accounting policies are summarized in note 2 to our consolidated
financial statements included herein. The following are estimates that we believe involve a significant level of estimation
uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of our
operations.
Impairment of long-lived assets
Description: We continually monitor events or changes in circumstances that could indicate that the carrying amounts of the
long-lived assets may not be fully recoverable. When we identify an impairment indicator, we assess recoverability by
comparing the carrying value of our long-lived assets to its projected undiscounted cash flows. If our projected undiscounted
net cash flows are lower than the long-lived assets’ carrying value, we recognize an impairment loss measured for the
difference.
As of December 31, 2023, the Golar Arctic's (see note 19 “Vessels and Equipment, net” of our consolidated financial
statements included herein) carrying value was higher than its estimated market value (based on third party average ship broker
valuations). As a result, we concluded that an impairment trigger existed and performed a recoverability assessment. However,
no impairment loss was recognized as the projected undiscounted net cash flows was significantly higher than the carrying
value.
Judgments and estimates: We make estimates, judgments and assumptions in our continuous identification of impairment
indicators and our estimate of future undiscounted cash flows used in our recoverability assessment. Our estimates of market
value assume that our long-lived assets are all in good, seaworthy condition without need for repair and, if inspected, would be
certified in class without notations of any kind and able to meet the requirements of their current contracts. These market values
received from third-party ship brokers are based on the inherent value of the current contract, which is commonly used and
accepted by our lenders for determining compliance with the relevant covenants in our credit facilities. These values can be
highly volatile, such that our estimates may not be indicative of the current or future market value of our long-lived assets or
prices that we could achieve if we were to sell. In addition, the determination of estimated market values may involve
considerable judgment given the illiquidity of the second hand market for these types of long-lived assets.
For FLNG Hilli, significant judgment was applied in assessing whether the ship brokers’ valuation methodologies and
assumptions were appropriate given the uncertainty with respect to the utilization of FLNG Hilli after expiry of its current
contract in mid-July 2026, as a new contract has not yet been agreed.
41
Effect if actual results differ from assumptions: Although we believe the underlying assumptions supporting our impairment
assessment are supporting this assessment are reasonable and appropriate at the time they were made, if the estimate of the
effect of a condition, situation or set of circumstances that existed at the date of the financial statement vary significantly from
our forecasts, management may be required to perform step two of the impairment analysis that could expose us to material
impairment charges in the future. While we intend to hold and operate our long-lived assets, our estimates of its market values
may not be indicative of the current or future market value or prices that we could achieve, if we were to sell them and a
material loss might be recognized upon the sale of our long-lived assets.
Impairment of asset under development
Description: We continually monitor events or changes in circumstances that could indicate that the carrying value of FLNG
Gimi, our asset under development, may not be fully recoverable. We calculate forecasted returns on the undiscounted cash
flows for the project from initial construction and through commercial operations with the customer. This uses estimated
forecasted returns which are highly subjective and dependent on future events. If there is a significant change in the expected
return, this could constitute an impairment indicator. When we identify an impairment indicator, we perform a recoverability
assessment by comparing the carrying value of FLNG Gimi to projected undiscounted cash flows. If the projected cash flow is
less than the FLNG Gimi’s carrying value, we recognize an impairment loss.
Judgments and estimates: Significant judgment was applied in determining the estimated forecasted returns which includes the
duration of the commissioning profile, pre-commissioning contractual cash flows, estimated commercial operation date, future
production, capital and operational costs.
Effect if actual results differ from assumptions: Although we believe the underlying assumptions supporting our impairment
assessment are appropriate at the time they were made, if the estimate of the effect of a condition, situation or set of
circumstances that existed at the date of the financial statement vary significantly from our forecasts, management may be
required to perform step two of the impairment analysis that could expose us to material impairment charges in the future.
Recently Issued Accounting Standards
See Item 18. Financial Statements: note 3 “Recently Issued Accounting Standards”.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Directors
The following provides information about each of our directors as of the date of this annual report.
Name
Tor Olav Trøim
Daniel Rabun
Thorleif Egeli
Carl Steen
Niels Stolt-Nielsen
Lori Wheeler Naess
Georgina Sousa
Age
Position
61
69
60
73
59
53
73
Chairman of our Board and Director
Director, Audit Committee member, Compensation Committee member and
Nomination Committee member
Director and Audit Committee member
Director, Compensation Committee Chairperson and Nomination Committee
member
Director and Compensation Committee member
Director and Audit Committee Chairperson
Director
42
Tor Olav Trøim has served as a director since September 2011 and was appointed as the Chairman of the Board in September
2017. Mr. Trøim is founder and sole shareholder of Magni Partners (Bermuda) Limited (“Magni Partners”). He is the senior
partner (and an employee) of Magni Partners’ subsidiary, Magni Partners Limited, in the UK. Mr. Trøim is a beneficiary of the
Drew Trust, and the sole shareholder of Drew Holdings Limited. Mr. Trøim has over 30 years of experience in energy related
industries in various positions. Before founding Magni Partners in 2014, Mr. Trøim was a Director of Sea Tankers Management
Co. Ltd. from 1995 until September 2014. During this period, he was also Chief Executive Officer ("CEO") at Seadrill
Limited, Frontline Ltd., Ship Finance International Limited and Golar LNG Partners LP. He was CEO of DNO AS from 1992
to 1995 and an Equity Portfolio Manager with Storebrand ASA from 1987 to 1990. Mr. Trøim graduated with a Master of
Science (“MSc”) degree in naval architecture from the University of Trondheim, Norway in 1985. Mr. Trøim is a Norwegian
citizen and a resident of the UK. Other directorships and management positions include Magni Partners (Founding Partner),
Borr Drilling Limited (Chairman), Stolt-Nielsen Limited (Director) and Magni Sports AS (Director).
Daniel Rabun has served as a director since February 2015 and was appointed Chairman in September 2015. Mr. Rabun
resigned as Chairman in September 2017 and was appointed a non-executive director on that date. He also serves on our Audit
Committee, Compensation Committee and Nomination Committee. He joined Ensco plc in March 2006 as President and as a
member of its Board of Directors. Mr. Rabun was appointed to serve as Ensco plc’s CEO from January 2007 and was elected
Chairman of the Board of Directors in May 2007. Mr. Rabun retired from Ensco plc as President and CEO in May 2014 and as
Chairman in May 2015. Prior to joining Ensco plc, Mr. Rabun was a partner at the international law firm of Baker & McKenzie
LLP where he had practiced law since 1986. In May 2015, Mr. Rabun became a non-executive director and currently serves as
a member of the Audit Committee and the Corporate Responsibility, Governance and Nominations Committee of APA
Corporation (formerly Apache Corp.) and also serves as a director and a member of the Compensation Committee of Borr
Drilling Limited since April 2023. In May 2018, Mr. Rabun became Chairman of the Board, a member of the Management
Development and Compensation Committee and Chairman of the Governance and Nominations Committee of ChampionX
Corporation. He has been a U.S. Certified Public Accountant since 1976 and a member of the Texas Bar since 1983. Mr. Rabun
holds a Bachelor of Business Administration Degree in Accounting from the University of Houston and a Juris Doctor Degree
from Southern Methodist University.
Thorleif Egeli was appointed as a director and as member of the Audit Committee in September 2018 and February 2023,
respectively. Until May 2018, Mr. Egeli was Vice President of Schlumberger Production Management – North America
managing the non-operating Exploration & Production assets for Schlumberger in the US, Canada and Argentina. Prior to this
he held a number of senior positions within Schlumberger having begun his career with Schlumberger in 1990 as a field
engineer. Between October 2009 and April 2013, Mr. Egeli held a number of positions within Archer including President Latin
America, Corporate Marketing and Chief Operating Officer ("COO"); before re-joining Schlumberger in 2013. Appointed in
June 2018, Mr. Egeli also serves on the Board of Directors of Stimline, an international well intervention and completion
company headquartered in Kristiansand, Norway. Mr. Egeli holds MSc in Mechanical Engineering and an MBA from
Rotterdam School of Management, Holland.
Carl Steen was appointed as a director in January 2015. Mr. Steen was also appointed as the Compensation Committee
Chairperson and currently serves on our Nomination Committee. Mr. Steen stepped down from our Audit Committee in
February 2023. From August 2012 until the completion of GMLP merger with NFE, Mr. Steen served as a director of GMLP.
Mr. Steen graduated in 1975 from ETH Zurich Switzerland with MSc in Industrial and Management Engineering. After
working for a number of high-profile companies, Mr. Steen joined Nordea Bank from January 2001 to February 2011 as head
of the bank’s Shipping, Oil Services & International Division. Mr. Steen holds directorship positions in various Norwegian and
international companies including Himalaya Shipping Ltd, Wilhelmsen Holding ASA and Belships ASA.
Niels G. Stolt-Nielsen joined the board in September 2015. He is also a Chairman and director of Stolt-Nielsen, which includes
world-leading business in global bulk-liquid and chemical logistics, an innovative business in land-based aquaculture and a
number of LNG joint ventures and investments. Mr. Stolt-Nielsen is the Chairman of Avenir LNG. He brings with him
extensive shipping, logistical and strategic leadership experience.
Lori Wheeler Naess was appointed as a director and Audit Committee Chairperson in February 2016. Ms. Naess also serves on
the Board, Corporate Governance Committee, Nominating Committee and Audit Committee of Opera Limited, a U.S.-listed
company. Ms. Naess was a director at PricewaterhouseCoopers in Oslo and was a Project Leader for the Capital Markets
Group. Between 2010 and 2012, she was a Senior Advisor for the Financial Supervisory Authority in Norway and prior to this
she was also with PricewaterhouseCoopers in roles in the U.S., Norway and Germany. Ms. Naess is a U.S. Certified Public
Accountant (inactive).
43
Georgina Sousa was appointed as a director in September 2019. She also served as company secretary from May 2019 until
March 2022. She currently serves as a director of Himalaya Shipping Ltd. Ms. Sousa was employed by Golar Management
(Bermuda) Limited (GMBL) as Managing Director from January 2019 until her retirement in March 2022. She previously
served as a director and company secretary of Borr Drilling Limited and 2020 Bulkers Ltd from February 2019 to February
2022. Prior to joining GMBL, Ms. Sousa was employed by Frontline Ltd. as Head of Corporate Administration from February
2007 until December 2018. She previously served as a director of Frontline Ltd., North Atlantic Drilling Ltd., Sevan Drilling,
Northern Drilling Ltd., Flex LNG LTD and Seadrill. Ms. Sousa served as secretary for all the above-mentioned companies at
various times during the period between 2005 and 2018. Until January 2007, Ms. Sousa was Vice-President Corporate Services
of Consolidated Services Limited, a Bermuda Management Company, having joined the firm in 1993 as Manager of Corporate
Administration. From 1976 to 1982 Ms. Sousa was employed by the Bermuda law firm of Appleby, Spurling & Kempe as
secretary and from 1982 to 1993, she was employed by the Bermuda law firm of Cox & Wilkinson as senior company
secretary. Ms. Sousa is a UK citizen and resides in Bermuda.
Board diversity
The table below provides certain information regarding the diversity of our board of directors as of the date of this annual
report.
Board Diversity Matrix
Country of Principal Executive Office:
Foreign Private Issuer
Disclosure Prohibited under Home Country Law
Total Number of Directors
Bermuda
Yes
No
7
Part I: Gender Identity
Directors
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
LGBTQ+
Did Not Disclose Demographic Background
Executive Officers
Female
Male
Non-Binary
Did Not
Disclose
Gender
2
5
—
—
—
—
—
The following provides information about each of our executive officers as of the date of this annual report:
Name
Age
Position
Karl Fredrik Staubo
Eduardo Maranhão
Ragnar Nes
Erik Svendsen
37
40
56
52
Chief Executive Officer – Golar Management AS
Chief Financial Officer – Golar Management Ltd
Chief Operating Officer – Golar Management AS
Chief Technical Officer – Golar Management AS
Karl Fredrik Staubo was appointed as our CEO in May 2021. Prior to this role he acted as our Chief Financial Officer ("CFO")
from September 2020 and as CEO of Golar Partners from May 2020 until the closing of the GMLP Merger. Mr. Staubo has
over 14 years of experience advising and investing in shipping, energy and infrastructure companies. Mr. Staubo worked in the
Corporate Finance division of Clarkson’s Platou Securities, including as Head of Shipping, from June 2010 until September
2018. Subsequent to his time at Clarkson’s, Mr. Staubo has worked as a partner at Magni Partners Ltd since October 2018.
During his time with Magni Partners Ltd, Mr. Staubo worked as an advisor to the Golar group. He has an MA in Business
Studies and Economics from the University of Edinburgh.
44
Eduardo Maranhão was appointed as our CFO in May 2021. Prior to assuming this position, Mr. Maranhão served as CFO of
Hygo. Mr. Maranhão has also served as CFO of Cool Company Ltd, as both CEO and director of CELSE - Centrais Eletricas de
Sergipe S.A., and as a partner at Magni Partners Ltd. Mr. Maranhão has vast experience in international energy projects and
infrastructure financing having worked at different financial institutions including Lakeshore Partners, Banco Santander, Crédit
Agricole CIB, Banco Votorantim and Citibank. Mr. Maranhão holds a Bachelor of Business Administration from Universidade
de Pernambuco in Brazil and has completed a Management Acceleration Programme from INSEAD in France.
Ragnar Nes joined Golar in November 2017 and was appointed the COO of Golar Management AS in April 2022 after having
served as the Head of FLNG since March 2018. Prior to joining Golar, Mr. Nes served as the operational manager and asset
manager for the FPSOs in Fred Olsen, Yinson and BW Offshore for 10 years. Prior to joining offshore oil and gas, Mr. Nes
held various positions in ship management for Odfjell and Wilh.Wilhelmsen. Mr. Nes has also worked with Det Norske Veritas
and started his career at sea as electrician onboard submarines in the Royal Norwegian Navy. Mr. Nes has an MSc degree in
Electrical Engineering from the NTNU Technical University in Trondheim, Norway.
Erik Svendsen joined Golar in May 2020 and was appointed CTO in June 2022. Mr. Svendsen started his career with the
shipping company Bergesen and was part of the team that spun off the FPSO company BW Offshore from the shipping group.
He served as Engineering Manager, Project Manager, EVP Projects and COO with BW Offshore before taking the position as
Managing Director of turret & mooring specialist APL. When APL was acquired by NOV, Mr. Svendsen continued serving as
the Managing Director of APL while building up a Floating Production Business unit within NOV. He served for 5 years as
President for Floating Production Solution in NOV. Mr. Svendsen has an MSc degree from the NTNU Technical University in
Trondheim, Norway.
B. Compensation
For the year ended December 31, 2023, we paid our directors and executive officers aggregate cash compensation (including
bonus) of $4.5 million and an aggregate amount of $0.1 million for pension and retirement benefits. During the year ended
December 31, 2023, we awarded our executive officers 36,700 restricted stock units and granted 400,000 share options, which
vest in equal increments over three years from respective award date or grant date. We also awarded our directors 55,300 fully
vested stock awards during the year ended December 31, 2023. For a description of our share based payment plan please refer
to the section of this item entitled “E. Share Ownership - Share Based Payment Plan” below.
We recognized $3.8 million share based compensation expense issued to certain of our directors and executive officers. See
note 26 “Share Capital and Share Based Compensation” of our consolidated financial statements included herein.
C. Board Practices
Our directors do not have service contracts with us and do not receive any benefits upon termination of their directorships. Our
board of directors established an Audit Committee in July 2005, which is responsible for overseeing the quality and integrity of
our external financial reporting, appointment, compensation and oversight of our external auditors and oversees our
management assessment of internal controls and procedures, as more fully set forth in its written charter, which has been
adopted by the board. Our Audit Committee consists of three independent directors, Lori Wheeler Naess, Daniel Rabun and
Thorleif Egeli. In addition, the board of directors also has a Compensation Committee and a Nomination Committee, details of
which are further described in “Item 16G. Corporate Governance”.
Our board of directors is elected annually at the annual general meeting. Officers are appointed from time to time by our board
of directors and hold office until a successor is elected.
As a foreign private issuer, we are exempt from certain Nasdaq requirements that are applicable to U.S. listed
companies. Please see the section of this Annual Report entitled “Item 16G. Corporate Governance” for a discussion of how our
corporate governance practices differ from those required of U.S. companies listed on the Nasdaq.
D. Employees
As of December 31, 2023, we employed approximately 200 employees and consultants situated in Bermuda, Cameroon,
Croatia, UK and Norway, as well as in the shipyard where the FLNG Gimi completed its conversion before it sailed to its
operational location offshore Mauritania and Senegal. As of December 31, 2023, we also employed approximately 270
seafaring employees for the vessels that we own.
45
E. Share Ownership
The table below shows the number and percentage of our issued and outstanding common shares beneficially owned by our
directors and officers as of March 15, 2024. Also shown are their interests in our various share based payment schemes. The
subscription price for the share options granted under the scheme will normally be reduced by the amount of all dividends
declared by us in the period from the grant date until the date the option is exercised.
Director or Officer
Beneficial Ownership in
Common Shares
Share Options
Restricted Stock Units
Number of
options
Exercise
price
Expiry date
Number of
RSUs
(unvested)
Tor Olav Trøim
Daniel Rabun
Thorleif Egeli
Carl Steen
Number of
shares
3,782,913
%
3.62%
*
*
*
*
*
*
Niels Stolt-Nielsen
2,762,132
2.64%
Lori Wheeler Naess
Georgina Sousa
Karl Fredrik Staubo
Eduardo Maranhão
*
*
*
*
*
*
*
*
—
—
—
—
—
—
—
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
500,000
200,000
$10.22
$20.95
2026
2027
250,000
100,000
$10.22
$20.95
2026
2027
Ragnar Nes
—
—
50,000
$20.95
2027
Erik Svendsen
*
*
50,000
$20.95
2027
Vesting
Date
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2024
2025
2026
2027
2024
2025
2026
2027
2024
2025
2026
2027
2024
2025
2026
2027
N/A
N/A
N/A
N/A
N/A
N/A
N/A
6,201
19,786
14,567
8,800
3,973
11,470
8,123
4,324
—
1,972
1,973
1,008
830
3,712
3,010
1,310
* Less than 1%.
(1) Included within this balance are 3,750,000 common shares which are owned by Drew Holdings Limited, a company controlled by Tor
Olav Trøim.
(2) Included within this balance are 2,672,695 common shares which are owned by Stolt-Nielsen Ltd, a company controlled by Niels Stolt-
Nielsen.
46
Our directors and executive officers have the same voting rights as all other holders of our common shares.
Share Based Payment Plan
Our Long Term Incentive Plan (the “LTIP”) was adopted by our board of directors, effective as of October 24, 2017. The
purpose of the LTIP is primarily to provide a means through which we may attract, retain and motivate qualified persons as
employees, directors and consultants. The LTIP provides for the grant of options and other awards as determined by the board
of directors in its sole discretion.
As of March 15, 2024, 0.4 million of our authorized and unissued common shares were reserved for issuance as grants under
our LTIP. For further detail on share options and restricted stock units please see note 26 “Share Capital and Share Based
Compensation” of our consolidated financial statements included herein.
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major shareholders
The following table presents certain information as of March 15, 2024 regarding the beneficial ownership of our common
shares with respect to shareholders that, to the best of our knowledge, beneficially own more than 5% of our issued and
outstanding common shares:
Owner
Rubric Capital Management LP (1)
Cobas Asset Management (2)
Common Shares
Number
6,506,757
5,416,625
Percent(3)
6.22%
5.18%
(1) Information derived from Schedule 13G/A of Rubric Capital Management LP filed with the Commission on February 12, 2024.
(2) Information derived from Schedule 13G/A of Cobas Asset Management filed with the Commission on February 5, 2024.
(3) Based on a total of 104,566,897 issued and outstanding common shares as of March 15, 2024.
Our major shareholders have the same voting rights as all of our other common shareholders. To our knowledge, no corporation
or foreign government owns more than 50% of our issued and outstanding common shares. In 2023, Orbis Investment
Management Limited reduced its shareholding by 2.5% to approximately 4.9%. We are not aware of any arrangements, the
operation of which may, at a subsequent date, result in a change of control.
As of March 15, 2024, we had fifty-three common shareholders of record located in the United States. One of those
shareholders was CEDE & CO., a nominee of The Depository Trust Company, which held in aggregate 104,566,897 common
shares, representing 99.99% of our outstanding common shares. We believe that the shares held by CEDE & CO. include
common shares beneficially owned by both holders in the United Sates and non-U.S. beneficial owners.
B. Related party transactions
There are no provisions in our Memorandum of Association or Bye-Laws regarding related party transactions. The Bermuda
Companies Act of 1981 provides that a company, or one of its subsidiaries, may enter into a contract with an officer of the
company, or an entity in which an officer has a material interest, if the officer notifies the directors of his or her interest in the
contract or proposed contract.
The related party transactions that we were party to between January 1, 2023 and December 31, 2023 are described in note 28
“Related Party Transactions” of our consolidated financial statements included herein.
C. Interests of Experts and Counsel
Not applicable.
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ITEM 8. FINANCIAL INFORMATION
A. Consolidated Financial Statements and Other Financial Information
See “Item 18. Financial Statements”
Legal proceedings and claims
We may, from time to time, be involved in various legal proceedings, claims, lawsuits and complaints that arise in the ordinary
course of business. We will recognize a contingent liability in our consolidated financial statements if the contingency has
occurred at the date of the financial statements, where we believe that the likelihood of a loss was probable and the amounts can
be reasonably estimated. If we determine that the reasonable estimate of the loss is a range and there is no best estimate within
the range, we will provide the lower amount within the range. A contingent gain is only recognized when the amount is
considered realized or realizable. Legal costs are expensed as incurred.
Gimi LOA pre-commissioning contractual cash flows
As of December 31, 2023, pursuant to the LOA, from May 2023, Gimi MS is due PDPs from BP. A LOA contract
interpretation dispute regarding certain of these contractual prepayments exists. In August 2023, Gimi MS initiated arbitration
proceedings in respect of the PDPs contractual dispute. The resolution of this matter will take several months or years and no
assurance can be given that our claim will be successful. As of December 31, 2023, the dispute remains unresolved. We have
therefore considered the contractual PDPs receivable from BP as a contingent gain and have not recognized such amount as an
asset. See note 18 “Asset Under Development” of our consolidated financial statements included herein for further details.
Dividend distribution policy
Our long-term objective is to pay a regular dividend in support of our main objective to provide significant returns to
shareholders. The level of our dividends will be guided by current earnings, market prospects, capital expenditure requirements
and investment opportunities.
Any future dividends declared will be at the discretion of our board of directors and will depend upon our financial condition,
earnings and other factors, such as any restrictions in our financing arrangements. Our ability to declare dividends is also
regulated by Bermuda law, which prohibits us from paying dividends if, at the time of distribution, we will not be able to pay
our liabilities as they fall due or the value of our assets is less than the sum of our liabilities, issued share capital and share
premium.
In addition, since we are a holding company with no material assets other than the shares of our subsidiaries and equity method
investments through which we conduct our operations, our ability to pay dividends will depend on our subsidiaries and equity
method investments distributing to us their earnings and cash flows. Some of our loan agreements limit or prohibit our ability to
make distributions without the consent of our lenders.
After the reinstatement of our quarterly dividend in 2023 of $0.25 per share, our board of directors declared quarterly dividends
in May 2023, August 2023, and November 2023 in the aggregate amount of $79.4 million.
B. Significant Changes
Significant changes since the date of our consolidated financial statements are discussed on Item 5. “Operating and Financial
Review and Prospects” and further disclosed in note 30 “Subsequent Events” of our consolidated financial statements included
herein.
ITEM 9. THE OFFER AND LISTING
A. Offer and listing details
Not applicable.
C. Markets
48
Our common shares have traded on the Nasdaq since December 12, 2002, under the symbol “GLNG”. In March 2022, we listed
our Unsecured Bonds on the Oslo Børs, trading under the International Securities Identification Number NO0011123432.
ITEM 10. ADDITIONAL INFORMATION
This section summarizes our share capital and the material provisions of our Memorandum of Association and Bye-Laws,
including rights of holders of our common shares. The description is only a summary and does not describe everything that our
Memorandum of Association and Bye-laws contain. Our Memorandum of Association and the Bye-Laws have previously been
filed as Exhibits 1.1 and 1.2, respectively, to our Registration Statement on Form 20-F (File No. 000-50113), filed with the
Commission on November 27, 2002, and are hereby incorporated by reference into this Annual Report.
At our 2013 Annual General Meeting, our shareholders voted to amend our Bye-laws to ensure conformity with revisions to the
Bermuda Companies Act of 1981, as amended. We adopted these amended Bye-laws of the Company on September 20, 2013,
and they were filed as Exhibit 3.1 to our report on Form 6-K filed with the Commission on July 1, 2014, and are hereby
incorporated by reference into this Annual Report.
At our 2020 Annual General Meeting, our shareholders voted to further amend our Bye-laws to change the quorum necessary
for the transaction of the company business. We adopted these amended Bye-laws of the Company on September 24, 2020, and
they were filed as Exhibit 1.1 to our report on Form 6-K filed with the Commission on November 30, 2020, and are hereby
incorporated by reference into this Annual Report.
A. Share capital
Not applicable.
B. Memorandum of Association and Bye-laws
The object of our business, as stated in Section 6 of our Memorandum of Association, is to engage in any lawful act or activity
for which companies may be organized under the Companies Act, 1981 of Bermuda, or the “Companies Act”, other than to
issue insurance or re-insurance, to act as a technical advisor to any other enterprise or business or to carry on the business of a
mutual fund. Our Memorandum of Association and Bye-laws do not impose any limitations on the ownership rights of our
shareholders.
Shareholder Meetings. Under our Bye-laws, annual shareholder meetings will be held in accordance with the Companies Act at
a time and place selected by our board of directors in Bermuda or any such other location, but not in the United Kingdom or in
a Combating the Financing of Terrorism Jurisdiction. The quorum at any annual or general meeting is at least two shareholders,
either present in person or represented by proxy and entitled to vote (whatever the number of shares held by them). Special
meetings may be called at the discretion of the board of directors and at the request of shareholders holding at least one-tenth of
all outstanding shares entitled to vote at a meeting. Annual shareholder meetings and special meetings must be called by not
less than seven days’ prior written notice specifying the place, day and time of the meeting. The board of directors may fix any
date as the record date for determining those shareholders eligible to receive notice of and to vote at the meeting.
The Companies Act provides that a company must have a general meeting of its shareholders in each calendar year. The
Companies Act does not impose any general requirements regarding the number of voting shares which must be present or
represented at a general meeting in order for the business transacted at the general meeting to be valid. The Companies Act
generally leaves the quorum for shareholder meetings to the company to determine in its Bye-laws. The Companies Act
specifically imposes special quorum requirements where the shareholders are being asked to approve the modification of rights
attaching to a particular class of shares (33.33%) or an amalgamation or merger transaction (33.33%) unless in either case the
Bye-laws provide otherwise. The Company’s Bye-laws do not provide for a quorum requirement other than at least two
members being present in person or by proxy and entitled to vote (whatever the number of shares held by them).
There are no limitations on the right of non-Bermudians or non-residents of Bermuda to hold or vote our common shares.
49
The key powers of our shareholders include the power to alter the terms of the Company’s Memorandum of Association and to
approve and thereby make effective any alterations to the Company’s Bye-laws made by the directors. Dissenting shareholders
holding 20% of the Company’s shares may apply to the Court to annul or vary an alteration to the Company’s Memorandum of
Association. A majority vote against an alteration to the Company’s Bye-laws made by the directors will prevent the alteration
from becoming effective. Other key powers are to approve the alteration of the Company’s capital including a reduction in
share capital, to approve the removal of a director, to resolve that the Company be wound up or discontinued from Bermuda to
another jurisdiction or to enter into an amalgamation or winding-up. Under the Companies Act, all of the foregoing corporate
actions require approval by an ordinary resolution (a simple majority of votes cast), except in the case of an amalgamation or
merger transaction, which requires approval by 75% of the votes cast unless the Bye-Laws provide otherwise. The Company’s
Bye-laws only require an ordinary resolution to approve an amalgamation. In addition, the Company’s Bye-laws confer express
power on the board to reduce its issued share capital selectively with the authority of an ordinary resolution.
The Companies Act provides shareholders holding 10% of the Company’s voting shares the ability to request that the board of
directors shall convene a meeting of shareholders to consider any business which the shareholders wish to be discussed by the
shareholders including (as noted below) the removal of any director. However, the shareholders are not permitted to pass any
resolutions relating to the management of the Company’s business affairs unless there is a pre-existing provision in the
Company’s Bye-laws which confers such rights on the shareholders. Subject to compliance with the time limits prescribed by
the Companies Act, shareholders holding 20% of the voting shares (or alternatively, 100 shareholders) may also require the
directors to circulate a written statement not exceeding 1,000 words relating to any resolution or other matter proposed to be put
before, or dealt with at, the annual general meeting of the Company.
Majority shareholders do not generally owe any duties to other shareholders to refrain from exercising all of the votes attached
to their shares. There are no deadlines in the Companies Act relating to the time when votes must be exercised.
The Companies Act provides that a company shall not be bound to take notice of any trust or other interest in its shares. There
is a presumption that all the rights attaching to shares are held by, and are exercisable by, the registered holder, by virtue of
being registered as a member of the company. The company’s relationship is with the registered holder of its shares. If the
registered holder of the shares holds the shares for someone else (the beneficial owner) then if the beneficial owner is entitled to
the shares, the beneficial owner may give instructions to the registered holder on how to vote the shares. The Companies Act
provides that the registered holder may appoint more than one proxy to attend a shareholder meeting, and consequently, where
rights to shares are held in a chain, the registered holder may appoint the beneficial owner as the registered holder’s proxy.
Directors. The Companies Act provides that the directors shall be elected or appointed by the shareholders. A director may be
elected by a simple majority vote of shareholders, at a meeting where more than two shareholders are present in person or by
proxy and entitled to vote (whatever the number of shares held by them). There are no provisions for cumulative voting in the
Companies Act or the Bye-laws, and the Company’s Bye-laws do not contain any super-majority voting requirements. The
appointment and removal of directors is covered by Bye-laws 86, 87 and 88.
There are procedures for the removal of one or more of the directors by the shareholders before the expiration of his term of
office. Shareholders holding 10% or more of the voting shares of the Company may require the board of directors to convene a
shareholder meeting to consider a resolution for the removal of a director. At least 14 days’ written notice of a resolution to
remove a director must be given to the director affected, and that director must be permitted to speak at the shareholder meeting
at which the resolution for his removal is considered by the shareholders.
The Companies Act stipulates that an undischarged bankruptcy of a director (in any country) shall prohibit that director from
acting as a director, directly or indirectly, and taking part in or being concerned with the management of a company, except
with leave of the court. The Company’s Bye-Law 89 is more restrictive in that it stipulates that the office of a director shall be
vacated upon the happening of any of the following events (in addition to the director’s resignation or removal from office by
the shareholders):
•
•
•
•
If he becomes of unsound mind or a patient for any purpose of any statute or applicable law relating to mental health and
the Board resolves that he shall be removed from office;
If he becomes bankrupt or compounds with his creditors;
If he is prohibited by law from being a director; or
If he ceases to be a director by virtue of the Companies Act.
50
Under the Company’s Bye-laws, the minimum number of directors comprising the board of directors at any time shall be two.
The board of directors currently consists of seven directors. The quorum necessary for the transaction of business of the board
may be fixed by the board and shall constitute a majority of the board, provided that a majority of directors present are neither
resident or physically located in the United Kingdom or in a Combating the Financing of Terrorism Jurisdiction. The minimum
and maximum number of directors comprising the board of directors from time to time shall be determined by way of an
ordinary resolution of the shareholders of the Company. The shareholders may, at the annual general meeting by ordinary
resolution, determine that one or more vacancies in the board of directors be deemed casual vacancies. The board of directors,
so long as a quorum remains in office, shall have the power to fill such casual vacancies. Each director will hold office until the
next annual general meeting or until his successor is appointed or elected. The shareholders may call a Special General Meeting
for the purpose of removing a director, provided notice is served upon the concerned director 14 days prior to the meeting and
he is entitled to be heard. Any vacancy created by such a removal may be filled at the meeting by the election of another person
by the shareholders or in the absence of such election, by the board of directors.
Subject to the provisions of the Companies Act, a director of a company may, notwithstanding his office, be a party to or be
otherwise interested in any transaction or arrangement with that company, and may act as director, officer, or employee of any
party to a transaction in which the company is interested. Under our Bye-Law 92, provided an interested director declares the
nature of his or her interest immediately or thereafter at a meeting of the board of directors, or by writing to the directors as
required by the Companies Act, a director shall not by reason of his office be held accountable for any benefit derived from any
outside office or employment. The vote of an interested director, provided he or she has complied with the provisions of the
Companies Act and our Bye-Laws with regard to disclosure of his or her interest, shall be counted for purposes of determining
the existence of a quorum.
The Company’s Bye-law 94 provides the board of directors with the authority to exercise all of the powers of the Company to
borrow money and to mortgage or charge all or any part of our property and assets as collateral security for any debt, liability or
obligation. The Company’s directors are not required to retire because of their age, and the directors are not required to be
holders of the Company’s common shares. Directors serve for a one-year term, and shall serve until re-elected or until their
successors are appointed at the next annual general meeting. The Company’s Bye-laws provide that no director, alternate
director, officer or member of a committee, if any, resident representative, or his heirs, executors or administrators, whom we
refer to collectively as an indemnitee, is liable for the acts, receipts, neglects or defaults of any other such person or any person
involved in our formation, or for any loss or expense incurred by us through the insufficiency or deficiency of title to any
property acquired by us, or for the insufficiency or deficiency of any security in or upon which any of our monies shall be
invested, or for any loss or damage arising from the bankruptcy, insolvency, or tortuous act of any person with whom any
monies, securities, or effects shall be deposited, or for any loss occasioned by any error of judgment, omission, default, or
oversight on his part, or for any other loss, damage or misfortune whatever which shall happen in relation to the execution of
his duties, or supposed duties, to us or otherwise in relation thereto. Each indemnitee will be indemnified and held harmless out
of our funds to the fullest extent permitted by Bermuda law against all liabilities, loss, damage or expense (including but not
limited to liabilities under contract, tort and statute or any applicable foreign law or regulation and all reasonable legal and other
costs and expenses properly payable) incurred or suffered by him as such director, alternate director, officer, committee
member or resident representative (or in his reasonable belief that he is acting as any of the above). In addition, each indemnitee
shall be indemnified against all liabilities incurred in defending any proceedings, whether civil or criminal, in which judgment
is given in such indemnitee’s favor, or in which he is acquitted or in connection with any application under the Companies Act
in which relief from liability is granted to him by the court. The Company is authorized to purchase insurance to cover any
liability it may incur under the indemnification provisions of its Bye-laws. The indemnity provisions are covered by Bye-laws
138 through 146.
Dividends. Holders of common shares are entitled to receive dividend and distribution payments, pro rata based on the number
of common shares held, when, as and if declared by the board of directors, in its sole discretion. Any future dividends declared
will be at the discretion of the board of directors and will depend upon our financial condition, earnings and other factors.
As a Bermuda exempted company, we are subject to Bermuda law relating to the payment of dividends. We may not pay any
dividends if, at the time the dividend is declared or at the time the dividend is paid, there are reasonable grounds for believing
that, after giving effect to that payment;
•
•
we will not be able to pay our liabilities as they fall due; or
the realizable value of our assets is less than our liabilities.
51
In addition, since we are a holding company with no material assets, and conduct our operations through subsidiaries and our
affiliates, our ability to pay any dividends to shareholders will depend on our subsidiaries’ and affiliates distributing their
earnings and cash flow to us.
Share repurchases and preemptive rights. Subject to certain balance sheet restrictions, the Companies Act permits a company
to purchase its own shares if it is able to do so without becoming cash flow insolvent as a result. The restrictions are that the par
value of the share must be charged against the company’s issued share capital account or a company fund which is available
for dividend or distribution or be paid for out of the proceeds of a fresh issue of shares. Any premium paid on the repurchase of
shares must be charged to the company’s current share premium account or charged to a company fund which is available for
dividend or distribution. The Companies Act does not impose any requirement that the directors shall make a general offer to
all shareholders to purchase their shares pro rata to their respective shareholdings. The Company’s Bye-Laws do not contain
any specific rules regarding the procedures to be followed by the Company when purchasing its own shares, and consequently
the primary source of the Company’s obligations to shareholders when the Company tenders for its shares will be the rules of
the listing exchanges on which the Company’s shares are listed. The Company’s power to purchase its own shares is covered by
Bye-laws 9, 10 and 11.
The Companies Act does not confer any rights of pre-emption on shareholders when a company issues further shares, and no
such rights of pre-emption are implied as a matter of common law. The Company’s Bye-Laws do not confer any rights of pre-
emption. Bye-Law 8 specifically provides that the issuance of more shares ranking pari passu with the shares in issue shall not
constitute a variation of class rights, unless the rights attached to shares in issue state that the issuance of further shares shall
constitute a variation of class rights. Bye-Law 12 confers on the directors the right to dispose of any number of unissued shares
forming part of the authorized share capital of the Company without any requirement for shareholder approval. The Company’s
power to issue shares is covered by Bye-laws 12, 13, 14, and 15.
Liquidation. In the event of our liquidation, dissolution or winding-up, the holders of common shares are entitled to share in our
assets, if any, remaining after the payment of all of our debts and liabilities, subject to any liquidation preference on any
outstanding preference shares.
C. Material contracts
The following is a list of each material contract, other than material contracts entered into in the ordinary course of business, to
which we or any of our subsidiaries is a party, for the two years immediately preceding the date of this Annual Report.
1. Bermuda Tax Assurance, dated May 23, 2011.
2. Memorandum of Agreement, dated September 9, 2015, by and between Golar Hilli Corporation and Fortune Lianjiang
Shipping S.A.
3. Bareboat charter by and between Golar Hilli Corp. and Fortune Lianjiang Shipping S.A., dated September 9, 2015.
4. Additional Clauses to the Bareboat Charter Party dated September 9, 2015 between Golar Hilli Corp. and Fortune
Lianjiang Shipping S.A.
5. Common Terms Agreements, by and between Golar Hilli Corp. and Fortune Lianjiang Shipping S.A., dated September 9,
2015.
6. Amendment Agreement to Common Terms dated 5 July 2023, by and between Golar Hilli Corp. and Fortune Lianjiang
Shipping S.A.
7. Supplemental Agreement to Amendment to Common Terms dated September 18, 2023, by and between Golar Hilli Corp.
8.
and Fortune Lianjiang Shipping S.A.
Indenture, dated February 17, 2017, between Golar LNG Limited and Deutsche Bank Trust Company Americas as a Bond
Trustee.
9. Purchase and Sale Agreement, dated August 15, 2017, by and among Golar LNG Limited, KS Investments Pte. Ltd., Black
& Veatch International Company and Golar Partners Operating LLC.
10. 2017 Long-Term Incentive Plan.
11. Liquefaction Tolling Agreement, dated November 29, 2017, between Société Nationale des Hydrocarbures, Perenco
Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU.
12. First Amendment to Liquefaction Tolling Agreement, dated November 15, 2019, between Société Nationale des
Hydrocarbures, Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU.
13. Second Amendment to Liquefaction Tolling Agreement, dated March 23, 2021, between Société Nationale des
Hydrocarbures, Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU.
14. Third Amendment to Liquefaction Tolling Agreement, dated July 22, 2021, between Société Nationale des Hydrocarbures,
Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU.
52
15. Fourth Amendment to Liquefaction Tolling Agreement dated April 20, 2023, by and between Société Nationale des
Hydrocarbures, Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU.
16. Amendment Agreement, dated March 23, 2018, relating to the Purchase and Sale Agreement by and between Golar LNG
Partners LP, Golar LNG Limited, KS Investments Pte. Ltd. and Black & Veatch International Company.
17. Amended and Restated Limited Liability Company Agreement of Golar Hilli LLC, dated July 12, 2018.
18. Amended and Restated Limited Liability Company Agreement of Golar Hilli LLC, dated as of April 15, 2021, by and
among Golar LNG Limited, Golar Partners Operating LLC, KSI Investments Pte. Ltd. and Black & Veatch International
Corporation.
19. Golar LNG Partners LP Guarantee Agreement, dated as of July 12, 2018.
20. Lease and Operate Agreement, dated February 26, 2019, by and between Gimi MS Corporation and BP Mauritania
Investments Limited.
21. Amended and Restated Deed relating to the Lease and Operate Agreement dated February 26, 2019, by and between Gimi
MS Corporation, Golar MS Operator S.A.R.L., BP Mauritania Investments Limited, Golar LNG Limited, Keppel Offshore
& Marine Limited, BP Exploration Operating Company Limited, Kosmos Energy Limited and BP Senegal Investments
Limited, dated September 3, 2021.
22. $700 million facility agreement dated October 24, 2019, by and between Gimi MS Corporation, ABN Amro Bank N.V.,
Clifford Capital Pte. Ltd., ING Bank N.V. and Natixis.
23. First supplemental agreement to $700 million facility dated January 19, 2021, by and among Gimi MS Corporation, Golar
LNG Limited, Gimi Holding Company Limited and ING Bank N.V.
24. Second supplemental agreement to $700 million facility agreement dated March 02, 2021, by and between Gimi MS
Corporation, ABN Amro Bank N.V., Clifford Capital Pte. Ltd., ING Bank N.V. and Natixis.
25. Third supplemental agreement to $700 million facility agreement dated February 17, 2023, by and between Gimi MS
Corporation, ABN Amro Bank N.V., Clifford Capital Pte. Ltd., ING Bank N.V. and Natixis.
26. Amendment to $700 million facility agreement dated July 7, 2023, by and between Gimi MS Corporation, ABN Amro
Bank N.V., Clifford Capital Pte. Ltd., ING Bank N.V. and Natixis.
27. Omnibus Agreement, dated as of April 15, 2021, by and among Golar LNG Limited, certain direct and indirect subsidiaries
of Golar LNG Limited and New Fortress Energy, Inc.
28. Omnibus Agreement (Hygo), dated as of April 15, 2021, by and among Golar LNG Limited, certain direct and indirect
subsidiaries of Golar LNG Limited party thereto and New Fortress Energy Inc.
29. Shareholders’ Agreement, dated as of April 15, 2021, by and among New Fortress Energy Inc., Golar LNG Limited and
Stonepeak Infrastructure Fund II Cayman (G) Ltd.
30. $300 million unsecured Norwegian Bond dated March 11, 2022, by and between Golar LNG Limited, DNB Bank ASA,
Danske Bank A/S, Pareto Securities AS and Nordea Bank Abp.
31. Amendment to $300 million unsecured Norwegian Bond dated May 25, 2023, by and between Golar LNG Limited and
Nordic Trustee AS.
32. Share purchase agreement dated January 26, 2022 by and between Cool Company Ltd and Golar LNG Limited.
33. Amendment agreement to share purchase agreement dated February 25, 2022 by and between Cool Company Ltd and
Golar LNG Limited.
34. Share purchase agreement dated June 30, 2022 by and between Golar Management (Bermuda) Limited and Cool Company
Ltd.
35. Administrative services agreement dated June 30, 2022 by and between Golar Management Ltd and Cool Company
Management Ltd.
36. Share purchase agreement dated May 31, 2022 by and between Golar LNG Limited and Asset Company 11 S.R.L.
For a further discussion of these contracts and the related transactions, please refer to “Item 4. Information on the Company-A.
History and Development of the Company,” “Item 4. Information on the Company-B. Business Overview,” “Item 5. Operating
and Financial Review and Prospects A. Operating Results,” “Item 5. Operating and Financial Review and Prospects-B.
Liquidity and Capital Resources,” “Item 6. Directors, Senior Management and Employees E. Share Ownership,” “Item 7. Major
Shareholders and Related Party Transactions-B. Related Party Transactions” and “Item 10. Additional Information--E.
Taxation.” Other than as discussed in this Annual Report, we have no material contracts, other than contracts entered into in the
ordinary course of business, to which we or any of our subsidiaries are a party.
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D. Exchange Controls
The Bermuda Monetary Authority, or the “BMA”, must give permission for all issuances and transfers of securities of a
Bermuda exempted company, unless the proposed transaction is exempted by the BMA’s written general permissions, pursuant
to the provision of the Exchange Control Act 1972 and related regulations. We have received a general permission from the
BMA to issue any unissued common shares, and for the free transferability of the common shares as long as our common shares
are listed on approved stock exchanges such as Nasdaq. Our common shares may therefore be freely transferred among persons
who are residents or non-residents of Bermuda.
Although we are incorporated in Bermuda, we are classified as non-resident of Bermuda for exchange control purposes by the
BMA. Other than transferring Bermuda Dollars out of Bermuda, there are no restrictions on our ability to transfer funds into or
out of Bermuda to pay dividends to U.S. residents who are holders of our common shares or other non-resident holders of our
common shares in currency other than Bermuda Dollars.
E. Taxation
Material U.S. Federal Income Tax Considerations
The following is a discussion of the material U.S. federal income tax considerations relevant to the U.S. federal income taxation
of certain of our operating income and a U.S. Holder, as defined below, of our common shares. This discussion does not purport
to deal with the tax consequences of owning our common shares applicable to all categories of investors, some of which (such
as banks, financial institutions, regulated investment companies, real estate investment trusts, tax-exempt or governmental
organizations, tax-qualified retirement plans, insurance companies, persons holding our common shares as part of a straddle,
appreciated financial position, synthetic security, hedger, conversion transaction or other integrated investment or risk reduction
transaction, traders in securities that use the mark-to-market method of accounting for U.S. federal income tax purposes,
persons liable for alternative minimum tax, entities or arrangements treated as partnerships or pass-through entities for U.S.
federal income tax purposes or holder of interests therein, dealers in securities or currencies, U.S. Holders whose functional
currency is not the U.S. dollar, persons deemed to sell our common shares under the constructive sale provisions of the Code,
persons that acquired our common shares through the exercise of employee stock options or otherwise as compensation or
through a tax-qualified retirement plan, persons required to recognize income for U.S. federal income tax purposes no later than
when such income is included on an “applicable financial statement,” persons subject to the “base-erosion and anti-avoidance”
tax and investors that own, actually or under applicable constructive ownership rules, 10% or more (by vote or value) of our
shares of common shares) may be subject to special rules. This discussion addresses U.S. Holders who hold our common shares
as a capital asset (generally, property held for investment). You are encouraged to consult with, and rely solely upon, your own
tax advisors concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local or
non-U.S. law with respect to the ownership of our common shares. This summary is based on the provisions of the Internal
Revenue Code of 1986, as amended (the “Code”), U.S. Treasury Department regulations promulgated thereunder (“Treasury
Regulations”), administrative rulings, and judicial decisions, all as in effect on the date hereof, and all of which are subject to
change or differing interpretation, possibly with retroactive effect. We cannot assure you that a change in law will not
significantly alter the tax considerations that we describe in this summary. We have not sought any ruling from the US IRS with
respect to the statements made and the positions and conclusions described in the following summary. There can be no
assurance that the US IRS or a court will agree with any of such statements, positions, or conclusions.
Taxation of Operating Income
U.S. Taxation of our Company
Gross income that is attributable to transportation that either begins or ends, but that does not both begin and end, in the United
States generally will be considered to be 50% derived from sources within the United States (“U.S. Source International
Transportation Income”) and may be subject to U.S. federal income tax as described below. Gross income attributable to
transportation that both begins and ends in the United States (“Domestic Transportation Income”) generally will be considered
to be 100% derived from sources within the United States. We are not permitted by law to engage in transportation that gives
rise to Domestic Transportation Income. Gross income attributable to transportation exclusively between non-U.S. destinations
generally will be considered to be 100% derived from sources outside of the United States and generally will not be subject to
U.S. federal income tax. Certain of our activities give rise to U.S. Source International Transportation Income, which could be
subject to U.S. federal income taxation, in the manner discussed below, unless the exemption from U.S. taxation under Section
883 of the Code (the “Section 883 Exemption”) applies.
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Section 883 Exemption
We and each of our subsidiaries generating transportation income, generally, will be eligible for the Section 883 Exemption and
exempt from U.S. federal income taxation on our U.S. Source International Transportation Income if the following three
conditions are met:
•
•
•
we and each of our subsidiaries that earns U.S. Source International Transportation Income is organized in a jurisdiction
outside the United States that grants an equivalent exemption from tax to corporations organized in the United States with
respect to the types of U.S. Source International Transportation Income that we earn (or an equivalent exemption) (the
“Country of Organization Requirement”);
we satisfy either the Qualified Shareholder Stock Ownership Test or the Publicly Traded Test (each as defined below); and
we meet certain substantiation, reporting and other requirements.
The U.S. Treasury Department has recognized (i) Bermuda, our country of incorporation, and (ii) the country of incorporation
of each of our subsidiaries that earn U.S. Source International Transportation Income as foreign countries that satisfy the
requirements set forth in the first bullet above. Accordingly, we believe that we and such subsidiary satisfy the Country of
Organization Requirement.
In general, the Section 883 Exemption is not available to a corporation resident in a foreign country if 50% or more of the value
of the stock of such corporation is owned by individuals who are not residents of such foreign country or another foreign
country meeting the requirements of Section 883 of the Code (the “Qualified Shareholder Stock Ownership Test”). Due to the
public nature of our shareholdings, we do not believe that we will be able to substantiate that we satisfy the Qualified
Shareholder Stock Ownership Test. However, as described below, we believe that we will be able to satisfy the Publicly Traded
Test (as defined below).
A foreign corporation that does not satisfy the Qualified Shareholder Stock Ownership Test may be eligible for the Section 883
Exemption if the stock of such corporation is primarily and regularly traded on an established securities market in such foreign
country, in another foreign country meeting the requirements of Section 883, or in the United States (the “Publicly Traded
Test”). Under the Treasury Regulations to Section 883, the stock of a foreign corporation will be considered to be “primarily
traded” on an “established securities market” in a country if the number of shares of each class of stock that are traded during
any taxable year on “established securities markets” in that country exceeds the number of shares in each such class that are
traded during that year on “established securities markets” in any other single country. During 2023, we believe that our stock
was “primarily traded” on the Nasdaq, which we believe constitutes an “established securities market” in the United States.
Under the Treasury Regulations to Section 883, our common shares will be considered to be “regularly traded” on an
“established securities market” if one or more classes of our stock representing more than 50% of our outstanding shares, by
total combined voting power of all classes of stock entitled to vote and total value, is listed on such established securities
market (such requirement, the “Listing Requirement”). As our common shares are listed on the Nasdaq, we believe that we will
satisfy the Listing Requirement.
The Treasury Regulations to Section 883 further require that with respect to each class of stock relied upon in satisfying the
Listing Requirement: (i) such class of stock is traded on the market, other than in minimal quantities, on at least 60 days during
the taxable year (the “Trading Frequency Test”); and (ii) the aggregate number of shares of such class of stock traded on such
market is at least 10% of the average number of shares of such class of stock outstanding during such year (the “Trading
Volume Test”). We believe that our common shares satisfied the Trading Frequency Test and the Trading Volume Test in
2023. Even if this were not the case, the Treasury Regulations provide that the Trading Frequency Test and the Trading Volume
Test will be deemed satisfied by a class of stock if, as we expect to be the case with our common shares, such class of stock is
traded on an “established securities market” in the United States and such class of stock is regularly quoted by dealers making a
market in such stock.
Notwithstanding the foregoing, the Treasury Regulations to Section 883 provide, subject to certain exceptions, that our
common shares will not be considered to be regularly traded on an established securities market with respect to any taxable year
in which 50% or more of our outstanding common shares, by vote and value, are owned, for more than half the days of the
taxable year, by persons who each own 5% or more of the vote and value of our outstanding common shares (the “5% Override
Rule”).
55
Based on our public shareholdings for 2023, we do not believe that we were subject to the 5% Override Rule for our 2023
taxable year. Therefore, we believe that we satisfied the Publicly Traded Test for our 2023 taxable year and, as a result, that we
and our subsidiaries that currently generate U.S. Source International Transportation Income are eligible for the Section 883
Exemption with respect to our U.S. Source International Transportation Income. This expectation is based upon factual matters
that are subject to change and, in some cases, are not within our control. To the extent that we become subject to the 5%
Override Rule in future years (as a result of changes in the ownership of our common shares), we may not be eligible for the
Section 883 Exemption unless we can substantiate that we qualify for Qualified Shareholder Stock Ownership Test (described
above).
If we were not eligible for the Section 883 Exemption, our U.S. source shipping income would be subject to U.S. federal
income tax as described in more detail below.
Taxation in Absence of Exemption Under Section 883 of the Code
To the extent the Section 883 Exemption is unavailable and our U.S. Source International Transportation Income is not
considered to be “effectively connected” with the conduct of a U.S. trade or business, such U.S. Source International
Transportation Income will generally be subject to a 4% U.S. federal income tax imposed by Section 887 of the Code on a gross
basis, without allowance for deductions. Since under the sourcing rules described above, we expect that no more than 50% of
the shipping income earned by us or our subsidiaries that generate shipping income will be derived from U.S. sources, we
expect that the maximum effective rate of U.S. federal income tax on such gross shipping income should not exceed 2%.
To the extent the Section 883 Exemption is unavailable and our U.S. Source International Transportation Income is considered
to be “effectively connected” with the conduct of a U.S. trade or business (as described below), any such “effectively
connected” income, net of applicable deductions, would be subject to the U.S. federal corporate income tax, currently imposed
at a rate of 21%. In addition, we may be subject to the 30% U.S. “branch profits” tax on earnings effectively connected with the
conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed
paid attributable to the conduct of our U.S. trade or business.
Our U.S. source shipping income would be considered effectively connected with the conduct of a U.S. trade or business only
if:
•
•
we had, or were considered to have, a fixed place of business in the United States involved in the earning of our U.S.
Source International Transportation Income; and
substantially all of our U.S. Source International Transportation Income was attributable to regularly scheduled
transportation, such as the operation of a ship that followed a published schedule with repeated sailings at regular intervals
between the same points for voyages that begin or end in the United States.
We believe that our operations will not give rise to these conditions because we do not intend to have, or permit circumstances
that would result in having, such a fixed place of business in the United States or any ship sailing to or from the United States
on a regularly scheduled basis.
Gain on Sale of Vessels
If we and our subsidiaries that generate U.S. Source International Transportation Income qualify for the Section 883 Exemption
in respect of our U.S. Source International Transportation Income, the gain on the sale of any vessel earning such U.S. Source
International Transportation Income should likewise be exempt from U.S. federal income tax. Even if we and our subsidiaries
are unable to qualify for the Section 883 Exemption and we, as the seller of such vessel, are considered to be engaged in the
conduct of a U.S. trade or business, gain on the sale of such vessel may not be subject to U.S. federal income tax in certain
circumstances. To the extent possible, we intend to structure sales of our vessels in a manner that would not be subject to U.S.
federal income tax.
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U.S. Taxation of U.S. Holders
The term “U.S. Holder” means a beneficial owner of our common shares that is (i) an individual who is a citizen or resident of
the United States, (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created,
organized, or treated as organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii)
an estate the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust the administration of
which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons (within the meaning of
Section 7701(a)(30) of the Code) who have the authority to control all substantial decisions of the trust, or which has made a
valid election under applicable Treasury Regulations to be treated as a U.S. person.
If a partnership (including an entity or an arrangement treated as a partnership for U.S. federal income tax purposes) holds our
common shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner, the
activities of the partnership, and certain determinations made at the partner level. If you are a partner in a partnership holding
our common shares, you are urged to consult with, and rely solely upon, your tax advisor.
Distributions with Respect to Common Shares
Any distributions made by us with respect to our common shares to a U.S. Holder will generally constitute dividends to the
extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. Dividends
paid on our common shares to a U.S. Holder who is an individual, trust, or estate (a “United States Individual Holder”)
generally will be treated as “qualified dividend income” that is taxable to such United States Individual Holders at preferential
tax rates provided that (i) our common shares are readily tradable on an established securities market in the United States (such
as the Nasdaq Stock Market); (ii) we are not a PFIC for the taxable year during which the dividend is paid or the immediately
preceding taxable year (see the discussion below under the heading “Passive Foreign Investment Company”; and (iii) the
United States Individual Holder owns the common shares for more than 60 days in the 121-day period beginning 60 days before
the date on which the common shares become ex-dividend. However, there is no assurance that any dividends paid by us will
be eligible for these preferential tax rates in the hands of United States Individual Holder. Any dividends paid by us, which are
not eligible for these preferential tax rates, will be taxed as ordinary income to a United States Individual Holder. Because we
are not a U.S. corporation, U.S. Holders that are corporations will generally not be entitled to claim a dividends-received
deduction with respect to any distributions they receive from us. Dividends paid on our common shares generally will be
income from sources outside the United States and will generally constitute “passive category income” or, in the case of certain
U.S. Holders, “general category income” for U.S. foreign tax credit limitation purposes. Distributions in excess of our earnings
and profits will be treated first as a non-taxable return of capital to the extent of the U.S. Holder’s tax basis in its common
shares, on a dollar-for-dollar basis, and thereafter as a taxable capital gain.
Sale, Exchange or other Disposition of Our Common Shares
Subject to the discussion below under the heading “Passive Foreign Investment Company,” a U.S. Holder generally will
recognize taxable gain or loss upon a sale, exchange or other disposition of our common shares in an amount equal to the
difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s
tax basis in the common shares. Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder’s holding
period in such common shares is greater than one year at the time of the sale, exchange or other disposition. Otherwise, such
gain or loss will be treated as short-term capital gain or loss. A U.S. Holder’s ability to deduct capital losses is subject to certain
limitations. A U.S. Holder’s gain or loss will generally be treated (subject to certain exceptions) as gain or loss from source
within the United States for U.S. foreign tax credit limitation purposes.
Passive Foreign Investment Company
Adverse U.S. federal income tax rules apply to a U.S. Holder that holds shares in a foreign corporation classified as a “passive
foreign investment company” (or “PFIC”) for U.S. federal income tax purposes. In general, we will be treated as a PFIC with
respect to a U.S. Holder in any taxable year in which, after applying certain look-through rules, either:
•
•
at least 75% of our gross income for such taxable year is “passive income” (e.g., dividends, interest, capital gains, and rents
derived other than in the active conduct of a rental business); or
the average percentage by value of our assets during such taxable year that produce or are held for the production of
passive income is at least 50%.
57
For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the
income and assets, respectively, of (i) any of our subsidiary corporations in which we own 25% or more of the value of the
subsidiary’s stock and (ii) any partnership in which we either own 25% or more of the equity interests (by value) or satisfy an
“active partner” test and do not elect out of “look through” treatment for the partnership. To date, we and our subsidiaries have
derived most of our income from the LTA for FLNG Hilli, as well as time and voyage charters for our legacy shipping
operations. We believe this income should be treated as services income, and not as “passive income” for PFIC purposes. While
there is substantial legal authority supporting our conclusions, including US IRS pronouncements concerning the
characterization of income derived from time charters as services income, there is also authority that characterizes such time
charter income as rental income rather than services income for other tax purposes.
Based on the foregoing, we believe that we were not a PFIC with respect to our 2023 taxable year or any prior taxable year.
However, the US IRS or a court could disagree with our position. Because PFIC status depends upon the composition of a
company’s income and assets and the market value of its assets from time to time, and because there is no controlling authority
for determining whether certain types of our income constitute passive income for PFIC purposes, there can be no assurance
that we will not be considered a PFIC for the current year or any future taxable year.
If we were a PFIC for any taxable year, U.S. Holders would face adverse U.S. tax consequences and certain information
reporting requirements regardless of whether we remain a PFIC in subsequent years. In addition, although we intend to conduct
our affairs in a manner to avoid being classified as a PFIC, we cannot assure you that the nature of our assets, income, and
operations will not change, or that we can avoid being treated as a PFIC for any taxable year. Furthermore, the PFIC rules may
change, which could result in us being treated as a PFIC in the future as a result of such change in law.
If we were treated as a PFIC for any taxable year, a U.S. Holder who does not make either a “mark-to-market” election or a
“qualified electing fund” election (both described below) for that year, whom we refer to as a “Non-Electing Holder,” would be
subject to special rules with respect to (i) any excess distribution (i.e., the portion of any distributions received by the Non-
Electing Holder on our common shares in a taxable year in excess of 125% of the average annual distributions received by the
Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the
common shares) and (ii) any gain realized on the sale, exchange, or other disposition of our common shares. Under these
special rules:
•
•
•
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the
common shares;
the amount allocated to the current taxable year or to any portion of the U.S. Holder’s holding period prior to the first
taxable year for which we were a PFIC would be taxed as ordinary income; and
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the
applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with
respect to the resulting tax attributable to each such other taxable year.
If we were treated as a PFIC for any taxable year, a U.S. Holder that owns our common shares would be required to file an
annual information return with the IRS reflecting such ownership, regardless of whether a mark-to-market election or a
qualified electing fund election had been made.
If we become a PFIC and, provided that, as we anticipate, our common shares are treated as “marketable stock,” a U.S. Holder
may make a “mark-to-market” election with respect to our common shares, provided the U.S. Holder completes and files the
applicable US IRS Form 8621 in accordance with the relevant instructions and related Treasury regulations. Under this mark-
to-market election, any excess of the fair market value of the common shares at the close of any tax year over the U.S. Holder’s
adjusted tax basis in the common shares is included in the U.S. Holder’s income as ordinary income. In addition, the excess, if
any, of the U.S. Holder’s adjusted tax basis at the close of any taxable year over the fair market value of the common shares is
permitted as an ordinary loss in an amount equal to the lesser of the amount of such excess or the net “mark-to-market” amount
that the U.S. Holder included in income in previous years. Gain realized on the sale, exchange, or other disposition of our
common shares would be treated as ordinary income, and any loss realized on the sale, exchange, or other disposition of the
common shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market amount
previously included in income by the U.S. Holder. If a U.S. Holder makes a “mark-to-market” election after the beginning of its
holding period of our common shares, the U.S. Holder does not avoid the PFIC rules described above with respect to the
inclusion of ordinary income, and the imposition of interest thereon, attributable to periods before the election.
58
In some circumstances, a shareholder in a PFIC may avoid the adverse tax consequences of the PFIC rules by making a
qualified electing fund election. A U.S. Holder would make a qualified electing fund election with respect to any year that we
are treated as a PFIC by filing one copy of IRS Form 8621 with its U.S. federal income tax return and a second copy in
accordance with the instructions to such form. However, a U.S. Holder cannot make a qualified electing fund election with
respect to us unless such U.S. Holder complies with certain reporting requirements. We do not intend to provide the information
necessary to meet such reporting requirements.
U.S. Federal Income Tax Consequences to Non-U.S. Holders of Our Common Shares
For purposes of this discussion, a beneficial owner of our common shares (other than a partnership) that is not a U.S. Holder is
referred to herein as a “Non-U.S. Holder”. It is assumed for purposes of this section that the Non-U.S. Holder (i) is not engaged
in the conduct of a United States trade or business and (ii) (a) if an individual, is not treated as a U.S. resident pursuant to the
substantial presence test (generally treating a non-resident individual alien as a resident if such person is present in the United
States for more than a weighted sum of 183 days during a three-year period and the nonresident alien is present for at least 31
days in the current year) and is not present in the United States for 183 days or more in the taxable year of disposition of
common shares or (b) if not a natural person, has not made any election to subject itself to, or is otherwise subject to, U.S.
federal income taxation on a net basis.
Subject to the discussion below regarding backup withholding and information reporting, a Non-U.S. Holder will generally not
be subject to U.S. federal income tax as a result of the ownership, sale or other disposition of our common shares.
Backup Withholding and Information Reporting
In general, payments to a non-corporate U.S. Holder of distributions or proceeds of a disposition of common shares will be
subject to information reporting requirements. Such payments also may be subject to “backup withholding” if the non-corporate
U.S. Holder:
•
•
•
fails to provide an accurate taxpayer identification number;
is notified by the US IRS that it has failed to report all interest or corporate distributions required to be reported on its U.S.
federal income tax returns; or
in certain circumstances, fails to comply with applicable certification requirements.
Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by
certifying their status on the appropriate US IRS Form W-8. If a shareholder sells our common shares to or through a U.S.
office or broker, the payment of the proceeds is subject to both U.S. information reporting and “backup withholding” unless the
shareholder establishes an exemption. If the shareholder sells our common shares through a non-U.S. office of a non-U.S.
broker and the sales proceeds are paid to the shareholder outside the United States, then information reporting and “backup
withholding” generally will not apply to that payment. However, U.S. information reporting requirements, but not “backup
withholding,” will apply to a payment of sales proceeds, including a payment made to a shareholder outside the United States,
if the shareholder sells the common shares through a non-U.S. office of a broker that is a U.S. person or has some other contacts
with the United States.
Backup withholding is not an additional tax. Rather, a taxpayer generally may obtain a refund of any amounts withheld under
“backup withholding” rules that exceed such taxpayer’s U.S. federal income tax liability by filing a refund claim with the US
IRS, provided that the required information is timely furnished to the US IRS.
Individuals who are U.S. Holders (and to the extent specified in the applicable Treasury Regulations, certain individuals who
are non-U.S. Holders and certain U.S. entities) who hold “specified foreign financial assets” (as defined in Section 6038D of
the Code and the applicable Treasury Regulations) are required to file US IRS Form 8938 (Statement of Specified Foreign
Financial Assets) with information relating to each such asset for each taxable year in which the aggregate value of all such
assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year. Specified foreign
financial assets would include, among other assets, our common shares, unless the common shares were held through an
account maintained with a U.S. financial institution. Substantial penalties apply to any failure to timely file US IRS Form 8938,
unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, the statute of limitations
on the assessment and collection of U.S. federal income tax with respect to a taxable year for which the filing of US IRS Form
8938 is required may not close until three years after the date on which US IRS Form 8938 is filed. U.S. Holders (including
U.S. entities) and non-U.S. Holders are encouraged to consult with, and rely solely upon, their own tax advisors regarding their
reporting obligations under Section 6038D of the Code.
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Bermuda Taxation
The following is a discussion of certain Bermuda tax considerations. As of March 15, 2024, there is no Bermuda income or
profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by us or by our
shareholders in respect of our shares. However, on December 27, 2023, Bermuda enacted the Corporate Income Tax Act (the
“CIT Act”). Entities subject to tax under the CIT Act are the Bermuda organized entities and businesses that are constituent
parts of multinational groups. A multinational group is defined under the CIT Act as a group with entities in more than one
jurisdiction with consolidated revenues of at least EUR 750 million for two out of the last four fiscal years. If Bermuda
organized entities and businesses that are constituent parts of a multinational group are subject to tax under the CIT Act, for
taxable years beginning on or after January 1, 2025, Bermuda will impose a 15% corporate income tax, as determined in
accordance with and subject to the adjustments set out in the CIT Act (including adjustments in respect of foreign tax credits
applicable to the Bermuda organized entities and businesses).
The Minister of Finance in Bermuda has granted us a tax exempt status until March 31, 2035, under which no income taxes or
other taxes (other than duty on goods imported into Bermuda and payroll tax in respect of any Bermuda-resident employees)
are payable by us in Bermuda. While we have such tax assurance under the Exempted Undertakings Tax Protection Act 1966
(the “EUTP Act”), the CIT Act applies notwithstanding any assurance given pursuant to the EUTP Act. Based on a number of
operational, economic and regulatory assumptions with respect to the current year, we do not expect to have consolidated
revenue sufficient for us to fall within scope of the CIT Act in 2025. We will monitor the developments on the Bermuda
internal regulations with regards to the CIT Act implementation. To the extent our consolidated revenue is sufficient for us to be
within the CIT Act thresholds in the future, we may be subject to taxation in Bermuda.
F. Dividends and Paying Agents
Not applicable.
G. Statements by Experts
Not applicable.
H. Documents on Display
We will file reports and other information with the Commission. The Commission maintains a website (http://www.sec.gov)
that contains reports, proxy and information statements and other information regarding registrants that file electronically with
it.
I. Subsidiary Information
Not applicable.
J. Annual report to security holders
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risks, including interest rate, commodity price and foreign currency exchange risks. We enter
into a variety of derivative instruments and contracts to maintain the desired level of exposure arising from these risks. Our
policy is to hedge our exposure to risks, when possible, within boundaries deemed appropriate by management.
A discussion of our accounting policies for derivative financial instruments is included in note 2 “Basis of Preparation and
Significant Accounting Policies” of our consolidated financial statements included herein. Further information on our exposure
to various market risks arising on our financial instruments is included in note 27 “Financial Instruments” of our consolidated
financial statements included herein. The following analysis provides quantitative information regarding our exposure to
foreign currency exchange rate risk, interest rate risk and commodity price risk. There are certain shortcomings inherent in the
sensitivity analysis presented, primarily due to the assumption that exchange rates change in a parallel fashion and that interest
rates change instantaneously.
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Interest rate risk. A significant portion of our long-term debt obligation is subject to adverse movements in interest rates. We
enter into economic hedge agreements in order to reduce the risk associated with adverse fluctuations in interest rates. Interest
rate swaps are used to convert floating rate debt obligations to a fixed rate in order to achieve an overall desired position of
fixed and floating rate debt to manage our exposure to adverse movements in interest rates. Credit exposures are monitored on a
counterparty basis, with all new transactions subject to senior management approval.
As of December 31, 2023, the notional amount of interest rate swaps outstanding in respect of our debt obligation was $709.4
million, representing approximately 88.5% of our floating rate loans. The principal of our floating rate loans outstanding as of
December 31, 2023 was $801.3 million. Based on our floating rate debt at December 31, 2023, a one-percentage point increase
in the floating interest rate would increase our interest expense by $1.5 million per annum. See note 27 “Financial Instruments”
of our consolidated financial statements included herein for additional information.
Foreign currency risk. The majority of our transactions, assets and liabilities are denominated in U.S. Dollars, our functional
currency. Periodically, we may be exposed to foreign currency exchange fluctuations as a result of expenses paid by certain
subsidiaries in currencies other than U.S. Dollars, which includes GBP, NOK, Euros and BRL in relation to our administrative
office in the UK, operating expenses and capital expenditure projects incurred in a variety of foreign currencies. Based on our
GBP and NOK expenses for 2023, a 10% depreciation of the U.S. Dollar against GBP and NOK would have increased our
expenses by $0.9 million and $2.3 million, respectively.
The base currency of the majority of our seafaring officers’ remuneration was the Euro and XAF. Based on the crew costs
incurred in 2023, a 10% depreciation of the U.S. Dollar against the Euro and XAF would have increased our crew cost for 2023
by $0.7 million and $0.5 million, respectively.
Commodity price risks. As of December 31, 2023, we have certain derivative instruments in relation to the LTA for FLNG Hilli
and have entered in to commodity swaps to manage our commodity risks.
The realized gain/(loss) on oil and gas derivative instruments results from monthly billings above the FLNG Hilli base tolling
fee and the exercised incremental capacity increase under the LTA as amended by LTA Amendment 3 whereas the unrealized
gain/(loss) on oil and gas derivative instruments results from movements in forecasted oil and natural gas prices and Euro/USD
exchange rates.
Oil component: The realized gain/(loss) on oil derivative instrument represents the monthly billings above the FLNG Hilli base
tolling fee of $60.00 per barrel over the contract term for 1.2 million tonnes of LNG. The unrealized gain/(loss) on oil
derivative instrument is determined using the estimated discounted cash flows of payments due as a result of the oil price
moving above the contractual floor of $60.00 per barrel over the remaining term of the LTA. Based on the liquefaction services
revenue invoiced in 2023, we bear no downside risk to the movement of oil prices should the oil price move below $60.00.
Based on the realized gain on FLNG Hilli’s oil derivative instrument invoiced in 2023, a 10% change to the Brent linked crude
oil price would have decreased our realized gain on FLNG Hilli’s oil derivative instrument for 2023 by $23.7 million.
Natural gas component: The realized gain/(loss) on gas derivative instrument represents the monthly billings above the
contractual floor rate of $0.5652/MMBTu over the contract term for 0.2 million tonnes of LNG. The unrealized gain/(loss) on
gas derivative instrument is determined using the estimated discounted cash flows of payments due as a result of the gas price
moving above the contractual floor of $0.5652/MMBTu over the remaining term of the LTA. The tolling fee is linked to TTF
and the Euro/USD foreign exchange movements. Based on the liquefaction services revenue invoiced in 2023, we bear no
downside risk to the movement of natural gas prices should the TTF price move below $0.5652/MMBTu. Based on the realized
gain on FLNG Hilli’s gas derivative instrument invoiced in 2023, a 10% change to the TTF linked gas price and USD against
the Euro exchange rates used, would have decreased our realized gain on FLNG Hilli’s gas derivative instrument for 2023 by
$9.9 million.
As of December 31, 2023, we were party to commodity swaps to manage our exposure to TTF prices arising from the portion
of FLNG Hilli’s tolling fee that is linked to the TTF index (resulting from LTA Amendment 3). The notional quantity of
commodity swaps outstanding was 1,613,004 MMBtu, hedging a portion of our 2024 exposure. Due to the offsetting positions
of our commodity swaps, there is no exposure to TTF prices in our remaining hedges. See note 27 “Financial Instruments” of
our consolidated financial statements included herein for additional information.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
61
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Commission’s
rules and forms, and that such information is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision of our Company’s Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of
the effectiveness of our disclosure controls and procedures, pursuant to Rule 13a-15(b) and 15d-15(b) of the Exchange Act of
1934, as of December 31, 2023. At the time our Annual Report on Form 20-F for the year ended December 31, 2023 was filed
on March 28, 2024, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of December 31, 2023.
(b) Management’s annual report on internal control over financial reporting
In accordance with the requirements of Rule 13a-15 of the Securities Exchange Act of 1934, as amended, the following report
is provided by management in respect of our internal control over financial reporting. As defined in the Rule 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended, internal control over financial reporting is a process
designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, or persons performing
similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes
in accordance with U.S. GAAP and includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and
dispositions of assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated
financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in
accordance with authorizations of our management and our directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal
control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of our published consolidated financial statements in accordance with U.S. GAAP.
In connection with the preparation of our annual consolidated financial statements, management has undertaken an assessment
of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the
operational effectiveness of those controls. Based on this assessment, management has concluded and hereby reports that as of
December 31, 2023, our internal control over financial reporting was effective.
Our independent registered public accounting firm has issued an attestation report on the effectiveness of our internal control
over financial reporting.
62
(c) Attestation report of the registered public accounting firm
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young
LLP, an independent registered public accounting firm, as stated in their report which appears on page F-2 of our consolidated
financial statements included herein.
(d) Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting during the period covered by this Annual Report that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Lori Wheeler Naess and Daniel Rabun each qualify as an Audit Committee financial
expert and are both independent, in accordance with Commission Rule 10a-3 pursuant to Section 10A of the Securities
Exchange Act of 1934.
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Conduct that applies to all our employees. A copy of our Code of Conduct may be found on our
website www.golarlng.com. This website is provided as an inactive textual reference only. Information contained on our
website does not constitute part of this annual report. We will provide any person, free of charge, a copy of our Code of
Conduct upon written request to our registered office. Additionally, our Code of Conduct is included as Exhibit 11.1 of this
annual report. Any waivers that are granted from any provision of our Corporate Code of Business Ethics and Conduct may be
disclosed on our website within five business days following the date of such waiver.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a)
Audit Fees
The following table sets forth, for the two most recent fiscal years, the aggregate fees billed for professional services rendered
by the principal accountant, Ernst & Young LLP for the audit of our annual financial statements and services provided by the
principal accountant in connection with statutory and regulatory filings or engagements for the two most recent fiscal years.
(in thousands of $)
Fiscal year ended December 31, 2023
Fiscal year ended December 31, 2022
(b)
Audit-Related Fees
$
$
1,712
1,563
The following table sets forth, for the two most recent fiscal years, the aggregate fees billed for assurance and related services,
not included under “(a) Audit Fees”, rendered by the principal accountant for the audit of our annual financial statements and
services provided by the principal accountant in connection with statutory and regulatory filings or engagements for the two
most recent fiscal years.
(in thousands of $)
Fiscal year ended December 31, 2023
Fiscal year ended December 31, 2022
(c)
Audit Committee’s Pre-Approval Policies and Procedures
$
$
71
121
Our board of directors has adopted pre-approval policies and procedures in compliance with paragraph (c)(7)(i) of Rule 2-01 of
Regulation S-X that require our board of directors to approve the appointment of our independent auditor before such auditor is
engaged and to approve each of the audit and non-audit related services to be provided by such auditor. All services provided
by the principal auditor in 2023 and 2022 were approved by our board of directors pursuant to the pre-approval policy.
63
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
In May 2023, our board of directors approved a share buyback program of up to $150 million of our common shares. During
2023, we repurchased an aggregate of 2.9 million shares for a cost of $61.7 million and concurrently cancelled our treasury
shares. In March 2024, we repurchased a further 0.7 million shares for a cost of $14.2 million. All repurchases were made in
open market transactions.
Total number
of shares
purchased
Average price
paid per share
1,396,735 $
153,697 $
782,601 $
564,001 $
678,676 $
3,575,710
21.06
21.36
21.59
21.32
20.87
Total number
of shares
purchased as
part of publicly
announced
plan or
program
Maximum
value of shares
(in $) that may
yet be
purchased
under the plan
or program
1,396,735
120,552,576
153,697
782,601
564,001
678,676
3,575,710
117,266,529
100,351,370
88,316,948
74,137,472
June 1, 2023 to June 30, 2023
August 24, 2023 to August 29, 2023
November 22, 2023 to November 30, 2023
December 1, 2023 to December 19, 2023
March 1, 2024 to March 7, 2024
Total
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Pursuant to an exception under Nasdaq Rule 5615, or Nasdaq listing standards available to foreign private issuers, we are not
required to comply with all of the corporate governance practices followed by U.S. companies under the Nasdaq’s listing
standards, which are available at www.nasdaq.com. As a foreign private issuer, we are permitted to follow our home country
practices in lieu of certain Nasdaq corporate governance requirements. We have certified to Nasdaq that our corporate
governance practices are in compliance with, and are not prohibited by, the laws of Bermuda.
We are exempt from many of the Nasdaq’s corporate governance practices other than the requirements regarding the disclosure
of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance with Nasdaq's
corporate governance practices and the establishment and composition of an audit committee and a formal written audit
committee charter. The practices we follow in lieu of Nasdaq’s corporate governance requirements are as follows:
Independence of directors. We are exempt from certain Nasdaq requirements regarding independence of directors. Consistent
with Bermuda law, our board of directors is not required to be composed of a majority of independent directors. Currently, five
of the seven members of the board of directors, Daniel Rabun, Lori Wheeler Naess, Carl Steen, Niels Stolt-Nielsen and Thorleif
Egeli are independent according to Nasdaq's standards for independence. Our board of directors does not hold meetings at
which only independent directors are present.
Audit Committee. We are exempt from certain Nasdaq requirements regarding our Audit Committee. Consistent with Bermuda
law, the directors on our Audit Committee are not required to comply with certain of Nasdaq’s independence requirements for
Audit Committee members, and our management is responsible for the proper and timely preparation of our annual reports,
which are audited by independent auditors. However, the committee currently consists of three independent directors, Lori
Wheeler Naess, Daniel Rabun and Thorleif Egeli.
64
Compensation Committee. We are exempt from certain Nasdaq requirements regarding our Compensation Committee.
Consistent with Bermuda law, our Compensation Committee may consist of members who are not independent directors.
However, the committee currently consists of three independent directors, Carl Steen, Niels Stolt-Nielsen and Daniel Rabun.
The primary responsibility of this committee is to review, approve and make recommendations to the board regarding
compensation for directors and management.
Nomination Committee. We are exempt from certain Nasdaq requirements regarding our Nomination Committee. Consistent
with Bermuda law, our Nomination Committee may consist of members who are not independent directors. However, the
committee is currently comprised of two independent directors, Carl Steen and Daniel Rabun. The primary responsibility of this
committee is to select and recommend to the board, director and committee member candidates.
Share Issuance. In lieu of obtaining shareholder approval prior to the issuance of securities in certain circumstances, consistent
with Bermuda law and our Bye-Laws, the board of directors approves share issuances.
As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq’s
corporate governance rules or Bermuda law. Consistent with Bermuda law, and as provided in our amended Bye-laws, we will
notify our shareholders of shareholder meetings at least seven days before such meeting. This notification will contain, among
other things, information regarding business to be transacted at the meeting.
We believe that our established corporate governance practices satisfy the Nasdaq listing standards. Further information and our
corporate governance documents are available in the “Governance” section of our website at (www.golarlng.com).
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
We have adopted an insider trading compliance policy that governs the purchase, sale, and other dispositions of our securities
by our officers, directors, board members, employees (full and part-time), and consultants that is reasonably designed to
promote compliance with applicable insider trading laws, rules and regulations, and any applicable listing standards.
ITEM 16K. CYBERSECURITY
Risk Management and Strategy
We have established comprehensive cybersecurity risk management procedures, encompassing vulnerability assessments,
application security assessments, penetration testing, security audits, and ongoing risk evaluations. Additionally, we have
implemented cybersecurity and data protection policies, along with annual security training, to proactively mitigate risks and
ensure regulatory compliance. In the event of an incident, we intend to follow our incident response plan, which outlines the
steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas (e.g.,
legal), as well as senior leadership and the board of directors, as appropriate.
To further enhance our cybersecurity posture, we engage a third-party service provider for comprehensive support in
identifying, assessing, managing, and mitigating risks associated with cybersecurity threats and incidents. We recognize that
third-party service providers may introduce cybersecurity risks. In an effort to mitigate these risks, we assess third party
cybersecurity controls through a cybersecurity questionnaire and include security and privacy addenda to our contracts where
applicable.
65
The above cybersecurity risk management processes are integrated into our overall risk management program. Cybersecurity
threats are understood to be dynamic and to intersect with various other enterprise risks. As such, cybersecurity is considered an
integral component of our enterprise-wide risk management approach. The responsibility for identifying risks that may impede
the effectiveness of our control activities rests with the management. An annual risk assessment process, or as necessitated by
evolving business needs, is in place. Each identified risk is evaluated based on its potential impact and the likelihood of
occurrence.
Our Head of Information Technology (“IT”) with nearly two decades of experience in information technology, oversees risk
related to our IT. This role is further supported by the Group Lead in Electro Instrument Control Telecom (“EICT”),
specifically focusing on risks within operational technology. This collaborative oversight is designed to create a robust
approach to safeguarding our information systems against potential threats.
Governance
The Head of IT and EICT Group Lead update the Cybersecurity Steering Committee (“CSC”) when potential risks arising from
cybersecurity threats and incidents are identified. The CSC includes key executives such as the Chief Financial Officer, Chief
Accounting Officer, Head of Legal, Head of Investor Relations, and Head of IT. The committee is responsible for assessing the
materiality of cybersecurity risks and incidents. Significant cybersecurity risks identified by the CSC are communicated to the
Audit Committee, and a comprehensive report is subsequently presented to the board of directors.
As of March 15, 2024, though Golar and our service providers have experienced certain cybersecurity incidents, we are not
aware of any identified material risks from cybersecurity threats that have materially affected or are reasonably likely to
materially affect Golar, our business strategy, results of operations and financial condition.
ITEM 17. FINANCIAL STATEMENTS
See Item 18.
ITEM 18. FINANCIAL STATEMENTS
The following financial statements listed below and set forth on pages F-1 through to F-67 are filed as part of this Annual
Report.
ITEM 19. EXHIBITS
The following exhibits are filed as part of this Annual Report:
Number
Description of Exhibit
1.1**
Memorandum of Association of Golar LNG Limited as adopted on May 9, 2001, incorporated by reference to
Exhibit 1.1 of Golar LNG Limited’s Registration Statement on Form 20-F, filed with the Commission on
November 27, 2002, File No. 00050113, or the Original Registration Statement.
1.2**
Bye-Laws of Golar LNG Limited amended and adopted September 20, 2013, incorporated by reference to Exhibit
3.1 to Golar LNG Limited’s Report of Foreign Issuer on Form 6-K filed on July 1, 2014.
1.3**
Bye-Laws of Golar LNG Limited amended and adopted September 24, 2020, incorporated by reference to Exhibit
4.1 to Golar LNG Limited’s Report of Foreign Issuer on Form 6-K filed on November 30, 2020.
1.4**
Certificate of Incorporation as adopted on May 10, 2001, incorporated by reference to Exhibit 1.3 of Golar LNG
Limited’s Original Registration Statement.
66
Number
Description of Exhibit
1.5**
1.6**
Certificate of deposit of memorandum of increase of share capital of Golar LNG Limited registered on June 20,
2001 (increasing Golar LNG Limited’s authorized capital), incorporated by reference to Exhibit 1.4 of Golar
LNG Limited’s Original Registration Statement.
Certificate of deposit of memorandum of increase of share capital of Golar LNG Limited registered November 6,
2014, incorporated by reference to Exhibit 1.6 of Golar LNG Limited Annual Report on Form 20-F for the fiscal
year ended December 31, 2014.
2.1**
Form of share certificate incorporated by reference to Exhibit 2.1 of Golar LNG Limited’s Annual Report on
Form 20-F for the fiscal year ended December 31, 2010.
2.2*
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.1**
Bermuda Tax Assurance, dated May 23, 2011, incorporated by reference to Exhibit 4.4 of Golar LNG Limited’s
Annual Report on Form 20-F for the fiscal year ended December 31, 2013.
4.2**
4.3**
4.4**
4.5**
Memorandum of Agreement, dated September 9, 2015, by and between Golar Hilli Corporation and Fortune
Lianjiang Shipping S.A., providing for, among other things, the sale and leaseback of the Hilli, incorporated by
reference to Exhibit 4.21 of Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December
31, 2015.
Bareboat charter by and between Golar Hilli Corp. and Fortune Lianjiang Shipping S.A., dated September 9,
2015, incorporated by reference to Exhibit 4.2 to Golar LNG Limited’s Report of Foreign Issuer on Form 6-K
filed on August 31, 2018.
Additional Clauses to the Bareboat Charter Party dated September 9, 2015 between Golar Hilli Corp. and Fortune
Lianjiang Shipping S.A., incorporated by reference to Exhibit 4.3 to Golar LNG Limited’s Report of Foreign
Issuer on Form 6-K filed on August 31, 2018.
Common Terms Agreements, by and between Golar Hilli Corp. and Fortune Lianjiang Shipping S.A., dated
September 9, 2015, incorporated by reference to Exhibit 4.4 to Golar LNG Limited’s Report of Foreign Issuer on
Form 6-K filed on August 31, 2018.
4.6*/++
Amendment Agreement to Common Terms dated 5 July 2023, by and between Golar Hilli Corp. and Fortune
Lianjiang Shipping S.A.
4.7*
Supplemental Agreement to Amendment to Common Terms dated September 18, 2023, by and between Golar
Hilli Corp. and Fortune Lianjiang Shipping S.A.
4.8**
2017 long-term incentive plan, incorporated by reference to Exhibit 4.6 to Golar LNG Limited's Registration
statement on form S-8, filed on November 20, 2017.
4.9**/+
Liquefaction Tolling Agreement, dated November 29, 2017, between Société Nationale des Hydrocarbures,
Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU, incorporated by reference to Exhibit
4.29 of Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December 31, 2017.
67
Number
Description of Exhibit
4.10**/++
First Amendment to Liquefaction Tolling Agreement, dated November 15, 2019, between Société Nationale des
Hydrocarbures, Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU, incorporated by
reference to Exhibit 4.10 of Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December
31, 2021.
4.11**/++
Second Amendment to Liquefaction Tolling Agreement, dated March 23, 2021, between Société Nationale des
Hydrocarbures, Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU, incorporated by
reference to Exhibit 4.11 of Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December
31, 2021.
4.12**/++
Third Amendment to Liquefaction Tolling Agreement, dated July 22, 2021, between Société Nationale des
Hydrocarbures, Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU, incorporated by
reference to Exhibit 4.12 of Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December
31, 2021.
4.13*/++
Fourth Amendment to Liquefaction Tolling Agreement dated April 20, 2023, by and between Société Nationale
des Hydrocarbures, Perenco Cameroon SA, Golar Hilli Corporation and Golar Cameroon SASU.
4.14**
4.15**
Amended and Restated Limited Liability Company Agreement of Golar Hilli LLC, dated July 12, 2018,
incorporated by reference to Exhibit 4.1 to Golar LNG Limited’s Report of Foreign Issuer on Form 6-K filed on
August 31, 2018.
Amended and Restated Limited Liability Company Agreement of Golar Hilli LLC dated as of April 15, 2021, by
and among Golar LNG Limited, Golar Partners Operating LLC, KSI Investments Pte. Ltd. and Black & Veatch
International Corporation, incorporated by reference to Exhibit 4.14 to Golar LNG Limited Annual Report on
Form 20-F for the fiscal year ended December 31, 2020.
4.16**/+
Lease and Operate Agreement by and between Gimi MS Corporation and BP Mauritania Investments Limited,
dated February 26, 2019, incorporated by reference to Exhibit 4.26 to Golar LNG Limited Annual Report on
Form 20-F for the fiscal year ended December 31, 2018.
4.17**/+
Amended and Restated Deed relating to the Lease and Operate Agreement dated February 26, 2019 by and
between Gimi MS Corporation, Golar MS Operator S.A.R.L., BP Mauritania Investments Limited, Golar LNG
Limited, Keppel Offshore & Marine Limited, BP Exploration Operating Company Limited, Kosmos Energy
Limited and BP Senegal Investments Limited, dated September 3, 2021 incorporated by reference to Exhibit 4.18
to Golar LNG Limited's Annual Report on Form 20-F for the fiscal year ended December 31, 2022.
4.18**/++
$700 million facility agreement dated October 24, 2019, by and between Gimi MS Corporation, ABN Amro Bank
N.V., Clifford Capital Pte. Ltd., ING Bank N.V. and Natixis, incorporated by reference to Exhibit 1.1 to Golar
LNG Limited's Report of Foreign Issues on Form 6-K filed on November 30, 2020.
4.19**/++
First supplemental agreement to $700 million facility dated January 19, 2021, by and among Gimi MS
Corporation, Golar LNG Limited, Gimi Holding Company Limited and ING Bank N.V., incorporated by
reference to Exhibit 4.18 to Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December
31, 2020.
4.20**/++
Second supplemental agreement to $700 million facility agreement dated March 2, 2021, by and between Gimi
MS Corporation, ABN Amro Bank N.V., Clifford Capital Pte. Ltd., ING Bank N.V. and Natixis, incorporated by
reference to Exhibit 4.20 of Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December
31, 2021.
4.21**/++
Third supplemental agreement to $700 million facility agreement dated February 17, 2023, by and between Gimi
MS Corporation, ABN Amro Bank N.V., Clifford Capital Pte. Ltd., ING Bank N.V. and Natixis, incorporated by
reference to Exhibit 4.22 of Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December
31, 2022.
4.22*
Amendment to $700 million facility agreement dated July 7, 2023, by and between Gimi MS Corporation, ABN
Amro Bank N.V., Clifford Capital Pte. Ltd., ING Bank N.V. and Natixis.
68
Number
4.23**
4.24**
Description of Exhibit
Omnibus Agreement dated as of April 15, 2021, by and among Golar LNG Limited, certain direct and indirect
subsidiaries of Golar LNG Limited and New Fortress Energy, Inc, incorporated by reference to Exhibit 4.23 to
Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December 31, 2020.
$300 million unsecured Norwegian Bond dated March 11, 2022, by and between Golar LNG Limited, DNB Bank
ASA, Danske Bank A/S, Pareto Securities AS and Nordea Bank Abp, incorporated by reference to Exhibit 4.28 of
Golar LNG Limited Annual Report on Form 20-F for the fiscal year ended December 31, 2021.
4.25*
Amendment to $300 million unsecured Norwegian Bond dated May 25, 2023, by and between Golar LNG
Limited and Nordic Trustee AS.
4.26**/++
Share purchase agreement dated June 30, 2022 by and between Golar Management (Bermuda) Limited and Cool
Company Ltd. incorporated by reference to Exhibit 4.33 of Golar LNG Limited Annual Report on Form 20-F for
the fiscal year ended December 31, 2022.
4.27**/++
Share purchase agreement dated May 31, 2022 by and between Golar LNG Limited and Asset Company 11
S.R.L. incorporated by reference to Exhibit 4.35 to Golar LNG Limited's Annual Report on Form 20-F for the
fiscal year ended December 31, 2022.
8.1*
Golar LNG Limited subsidiaries.
11.1*
Golar LNG Limited Code of Conduct amended and adopted on November 30, 2023.
12.1*
Certification of the Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
12.2*
Certification of the Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
13.1*
Certification under Section 906 of the Sarbanes-Oxley act of 2002 of the Principal Executive Officer.
13.2*
Certification under Section 906 of the Sarbanes-Oxley act of 2002 of the Principal Financial Officer.
15.1*
Consent of Independent Registered Public Accounting Firm - Ernst & Young LLP.
69
Number
Description of Exhibit
97.1*
Golar LNG Limited Incentive-Based Compensation Recoupment Policy adopted on August 7, 2023.
_________________________
* Filed herewith.
** Incorporated by reference.
+ Certain portions have been omitted pursuant to a confidential treatment request. Omitted information have been
separately filed with the Securities and Exchange Commission.
++ Certain portions have been omitted.
101. INS* XBRL Instance Document
101. SCH* XBRL Taxonomy Extension Schema
101. CAL* XBRL Taxonomy Extension Schema Calculation Linkbase
101. DEF* XBRL Taxonomy Extension Schema Definition Linkbase
101. LAB* XBRL Taxonomy Extension Schema Label Linkbase
101. PRE* XBRL Taxonomy Extension Schema Presentation Linkbase
70
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.
SIGNATURES
Date
March 28, 2024
By
Golar LNG Limited
(Registrant)
/s/ Eduardo Maranhão
Eduardo Maranhão
Principal Financial Officer
71
GOLAR LNG LIMITED
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 1438)
Page
F-2
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022
AND 2021
F-5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) FOR THE YEARS ENDED
DECEMBER 31, 2023, 2022 AND 2021
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2023 AND 2022
F-6
F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022
AND 2021
F-8
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31,
2023, 2022 AND 2021
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
F-11
F-12
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Golar LNG Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Golar LNG Limited (the Company) as of December 31,
2023 and 2022, the related consolidated statements of operations, comprehensive income/(loss), changes in equity and cash
flows for each of the three years in the period ended December 31, 2023 and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting
principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated March 28, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures
that are material to the consolidated financial statements, and (2) involved our especially challenging, subjective or complex
judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on
the critical audit matter or on the accounts or disclosures to which it relates.
F-2
Impairment assessment of Vessels and equipment, net and Asset under development
Description
of the
matter
As described in Note 19 and Note 18 to the consolidated financial statements, at December 31, 2023, the
Company’s consolidated “Vessels and equipment, net” and “Asset under development” balances were $1,077.7
million and $1,562.8 million, respectively. As more fully described in Note 2 to the consolidated financial
statements, management performs an annual impairment assessment to evaluate whether events or changes in
circumstances could indicate that the carrying value of vessels and asset under development may not be
recoverable. To evaluate whether there are impairment indicators, management considers significant current
and future customer contracts and broker valuations, amongst other events and circumstances. Specifically, for
FLNG Hilli, significant judgment was applied in assessing whether the brokers’ valuation methodologies and
assumptions were appropriate given the uncertainty with respect to the utilization of FLNG Hilli after expiry of
its current contract in July 2026. For FLNG Gimi, significant judgment was applied in determining the
estimated forecasted returns calculated in the vessel’s economic model. As a result of the assessment, the
Company determined that there are no impairment indicators for FLNG Hilli and FLNG Gimi at December 31,
2023.
Auditing the Company’s impairment assessment was complex due to the level of judgment and estimation
uncertainty involved, specifically in assessing the broker’s valuation methodology and assumptions used for
FLNG Hilli and the estimated forecasted returns applied in the vessel’s economic model for FLNG Gimi. These
significant judgments were subjective and dependent upon future events.
How we
addressed
the matter
in our audit
Our audit procedures included obtaining an understanding of the Company’s impairment assessment process
and evaluating the design and testing the operating effectiveness of controls, including management’s review
control over the assessment for impairment indicators.
As part of our audit procedures, we evaluated management’s impairment indicator assessment by comparing
the methodology applied against the accounting guidance in ASC 360 – Property, Plant and Equipment.
Our procedures also included, amongst others, evaluating the objectivity and competence of the third party
brokers who performed the valuations of FLNG Hilli, by considering the scope of work that they were engaged
to perform, their professional qualifications, the existence of any other relationships with the Company and
their relevant experience. We compared the book value of FLNG Hilli to the average of the broker’s valuations.
We reviewed the broker valuation reports to understand the valuation methodologies used, where stipulated,
and compared the input assumptions and information provided to the brokers by management to vessel records
and supporting documentation. Our valuation specialists assisted us in our evaluation of the discount rate
calculated by one of the brokers by comparing the discount rate to an independent calculation using observable
market data such as competitor's betas and gearing. We also performed inquiries of management to understand
the current redeployment options being pursued for FLNG Hilli after expiry of its current contract in July 2026.
We compared the key inputs into management’s economic model for FLNG Gimi to the customer contract and
underlying source documents covering the construction, future expected revenues and financing arrangements.
We reviewed the mathematical accuracy of the model and made inquiries of management to understand the
timeline prior to commencement of commercial operations and the impact of related cash flows, including the
recoverability of project delay payments.
In addition, we assessed the adequacy of the related impairment indicator assessment disclosures in the
consolidated financial statements against the requirements of the relevant accounting standards.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2014.
London, United Kingdom
March 28, 2024
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Golar LNG Limited
Opinion on Internal Control Over Financial Reporting
We have audited Golar LNG Limited’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Golar LNG Limited (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the 2023 consolidated financial statements of the Company and our report dated March 28, 2024 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
London, United Kingdom
March 28, 2024
F-4
GOLAR LNG LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(in thousands of $, except per share amounts)
Notes
2023
2022
2021
Liquefaction services revenue
Vessel management fees and other revenues
Time and voyage charter revenues
Total operating revenues
Vessel operating expenses
Voyage, charterhire and commission expenses
Administrative expenses
Project development expenses
Depreciation and amortization
Impairment of long-lived assets
Total operating expenses
Realized and unrealized (loss)/gain on oil and gas derivative instruments
Other operating gain/(loss)
Total other operating (loss)/income
Operating income
Realized and unrealized mark-to-market (loss)/gain on our investment in listed
equity securities
Other non-operating income/(loss), net
Total other non-operating (loss)/income
Interest income
Interest expense, net
(Losses)/gains on derivative instruments, net
Other financial items, net
Net financial income/(expense)
Income/(loss) before taxes and net (loss)/income from equity method
investments
Income tax (expense)/benefit
Net (loss)/income from equity method investments
Net (loss)/income from continuing operations
Net income/(loss) from discontinued operations
Net (loss)/income
7
7
13
6
6
6
6
6
19
19
5, 6, 8
6, 7
9
27, 28
10
10, 28
11
17
14
245,418
213,970
221,020
35,086
17,925
44,085
9,685
27,777
11,476
298,429
267,740
260,273
(91,149)
(72,802)
(64,366)
(2,183)
(33,462)
(39,130)
(50,294)
(5,021)
(2,444)
(38,100)
(8,017)
(51,712)
(76,155)
(669)
(35,311)
(2,521)
(55,362)
—
(221,239)
(249,230)
(158,229)
(84,751)
520,997
204,663
23,359
(15,417)
—
(61,392)
505,580
204,663
15,798
524,090
306,707
(62,308)
400,966
(295,777)
9,823
11,916
(66,027)
(52,485)
412,882
(361,804)
46,061
—
(7,227)
(900)
37,934
1,247
(1,870)
(2,520)
12,225
(19,286)
71,497
(5,380)
59,056
128
(34,486)
24,348
693
(9,317)
996,028
(64,414)
438
19,041
(1,440)
1,080
(3,143)
1,015,507
(64,774)
293
(76,450)
625,389
(2,850)
939,057
560,615
Net income attributable to non-controlling interests - continuing operations
(43,943)
(143,078)
(111,186)
Net income attributable to non-controlling interests - discontinued operations
—
(8,206)
(35,578)
Total net income attributable to non-controlling interests
(43,943)
(151,284)
(146,764)
Net (loss)/income attributable to stockholders of Golar LNG Limited
(46,793)
787,773
413,851
(Loss)/earnings per share attributable to Golar LNG Limited stockholders
Per common share amounts
Basic (loss)/earnings per share from continuing operations
Dilutive (loss)/earnings per share from continuing operations
Basic and diluted earnings/(loss) per share from discontinued operations
$
$
12
12
12
(0.44) $
(0.44) $
0.00 $
8.09 $
8.04 $
(0.79) $
(1.60)
(1.60)
5.38
The accompanying notes are an integral part of these consolidated financial statements.
F-5
GOLAR LNG LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(in thousands of $)
Net (loss)/income
Notes
2023
2022
2021
(2,850)
939,057
560,615
Other comprehensive income
Gain associated with pensions, net of tax
Share of equity method investment’s comprehensive losses from continuing
operations (1)
Share of equity method investment’s comprehensive losses from discontinued
operations (1)
Realized accumulated comprehensive income on disposal of investment in
affiliate
Net other comprehensive income
25
17
1,227
5,820
5,006
(488)
(797)
—
—
—
(3,147)
—
739
—
5,023
43,380
45,239
Comprehensive (loss)/income
(2,111)
944,080
605,854
Comprehensive (loss)/income attributable to:
Stockholders of Golar LNG Limited
Non-controlling interests - continuing operations
Non-controlling interests - discontinued operations
Comprehensive (loss)/income
(46,054)
43,943
—
792,796
143,078
8,206
(2,111)
944,080
459,090
111,186
35,578
605,854
(1) No tax impact for the years ended December 31, 2023, 2022 and 2021.
The accompanying notes are an integral part of these consolidated financial statements.
F-6
GOLAR LNG LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2023 AND 2022
(in thousands of $)
ASSETS
Current assets
Cash and cash equivalents
Restricted cash and short-term deposits
Trade accounts receivable
Amounts due from related parties
Current assets held for sale
Other current assets
Total current assets
Non-current assets
Restricted cash
Equity method investments
Asset under development
Vessels and equipment, net
Non-current amounts due from related parties
Other non-current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Current portion of long-term debt and short-term debt
Trade accounts payable
Accrued expenses
Current liabilities held for sale
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term debt
Other non-current liabilities
Total liabilities
Commitments and contingencies
EQUITY
Share capital 104,578,080 common shares of $1.00 each issued and outstanding (2022:
107,225,832)
Additional paid-in capital
Contributed surplus
Accumulated other comprehensive loss
Retained earnings
Total stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Notes
2023
2022
15
28
16
15
17
18
19
28
20
21
22
23
21
24
29
26
679,225
878,838
18,115
38,915
7,312
—
21,693
41,545
475
721
71,997
315,234
815,564
1,258,506
74,130
53,982
112,350
104,108
1,562,828
1,152,032
1,077,677
1,137,053
—
3,472
499,806
512,039
4,083,987
4,279,560
(342,566)
(344,778)
(7,454)
(144,810)
—
(8,983)
(32,833)
(373)
(50,950)
(27,445)
(545,780)
(414,412)
(874,164)
(844,546)
(61,600)
(120,428)
(1,481,544)
(1,379,386)
(104,578)
(107,226)
(1,691,128)
(1,936,746)
(200,000)
(200,000)
5,072
5,811
(77,035)
(262,063)
(2,067,669)
(2,500,224)
5
(534,774)
(399,950)
(2,602,443)
(2,900,174)
(4,083,987)
(4,279,560)
GOLAR LNG LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND
2021
Notes
2023
2022
2021
(in thousands of $)
OPERATING ACTIVITIES
Net (loss)/income
Add: Net (income)/loss from discontinued operations
Net (loss)/income from continuing operations
Adjustments to reconcile net (loss)/income from continuing operations to net
cash provided by/(used in) operating activities:
Depreciation and amortization
Loss on disposal of long lived asset
Impairment of long-lived assets
Amortization of deferred charges and debt guarantees, net
Net loss/(income) from equity method investments
Drydocking expenditure
Compensation cost related to employee stock awards
Net foreign exchange losses/(gains)
Change in fair value of investment in listed equity securities
Change in fair value of derivative instruments (interest rate swaps)
Change in fair value of derivative instruments (oil and gas derivatives),
commodity swaps and amortization of day 1 gains
19
19
19
17
9
10
Change in assets and liabilities:
Trade accounts receivable
Other current and non-current assets
Amounts due from related parties
Trade accounts payable
Accrued expenses
Other current and non-current liabilities (1)
Net cash provided by continuing operations
(2,850)
939,057
560,615
(293)
76,450
(625,389)
(3,143)
1,015,507
(64,774)
50,294
51,712
55,362
491
5,021
1,822
2,520
(6,724)
5,824
941
62,308
15,582
—
76,155
3,555
(19,041)
—
3,410
(1,584)
—
—
1,768
(1,080)
—
2,625
383
(400,966)
295,777
(72,269)
(27,016)
272,117
(311,585)
(181,487)
3,205
(266,025)
172
(18)
8,554
(10,917)
(26,692)
367
3,085
(4,213)
(18,335)
(27,470)
134,606
279,054
(3,083)
(1,409)
144
(4,648)
(11,957)
59,776
120,381
Net income/(loss) from discontinued operations
14
293
(76,450)
625,389
Drydocking expenditure
Deconsolidation of lessor VIEs
Depreciation and amortization
Amortization of deferred charges
(Gain)/loss on disposal and impairment of long-lived assets
Compensation cost related to employee stock awards
14
14
Net foreign exchange losses
Change in assets and liabilities:
Trade accounts receivable
Other current and non-current assets
Amounts due from related parties
Trade accounts payable
Accrued expenses
Other current and non-current liabilities
Net cash provided by/(used in) discontinued operations
—
—
20
—
(27)
3
17
—
300
—
(2)
(165)
(163)
276
—
(1,591)
(59,085)
8,732
3,932
—
50,590
1,280
105,201
(564,902)
239
571
897
82
837
(5,299)
(804)
(7,472)
(6,134)
(24,941)
1,836
1,737
(9,563)
5,598
18,147
3,999
(60,673)
133,499
F-8
(in thousands of $)
INVESTING ACTIVITIES
Additions to asset under development
Deposit paid for vessel
Additions to equity method investments
Short-term loan advanced to related parties
Additions to vessels and equipment
Proceeds from short-term loan advanced to related parties
Dividends received from listed equity securities
Consideration received for long-lived assets held for sale
Proceeds from sale of listed equity securities
Proceeds from sale of equity method investment
Proceeds from subscription of equity interest in Gimi MS Corporation
Net cash (used in)/provided by investing activities
Net proceeds from disposals of long-lived assets
Dividends received
Additions to vessels and equipment
Net cash provided by discontinued investing activities
FINANCING ACTIVITIES
Repayments of short-term and long-term debt
Cash dividends paid
Reacquisition of common units in Golar Hilli LLC
Purchase of treasury shares
Financing costs paid
Proceeds from exercise of share options
Proceeds from short-term and long-term debt
Net cash (used in)/provided by financing activities
Proceeds from short-term and long-term debt
Repayments of short-term and long-term debt
Financing costs paid
Net cash used in discontinued financing activities
Cash and cash equivalents, restricted cash and short-term deposits within
assets held for sale at the beginning of period
Cash and cash equivalents, restricted cash and short-term deposits within
assets held for sale at the end of period
Net decrease/(increase) in cash and cash equivalents, restricted cash and
short-term deposits within assets held for sale
Notes
2023
2022
2021
17
28
5
14
2
26
(308,093)
(267,421)
(213,481)
(15,500)
(9,678)
(3,561)
(1,621)
60
9,824
15,190
45,552
56,097
80,021
—
(2,447)
—
—
—
5,328
—
625,844
97,844
39,275
—
(8,625)
(1,750)
—
—
5,029
—
—
—
25,403
(131,709)
498,423
(193,424)
—
—
—
—
569,298
119,535
—
—
460
(925)
569,298
119,070
(125,925)
(719,917)
(289,148)
(55,169)
(33,136)
(102,897)
(100,047)
(61,684)
(10,445)
—
—
(25,479)
(9,599)
161
156,045
276,640
(244,953)
(533,363)
—
(24,484)
(13,300)
—
411,866
51,798
—
—
—
—
—
168,402
(158,000)
(268,107)
(280)
(3,700)
(158,280)
(103,405)
369
80,869
65,316
—
369
80,869
369
80,500
(15,553)
Net (decrease)/increase in cash and cash equivalents, restricted cash,
short-term deposits and cash within assets held for sale
Cash and cash equivalents, restricted cash and short-term deposits at the
beginning of the period
Cash and cash equivalents, restricted cash and short-term deposits at the
end of the period
14
14
(241,411)
674,959
112,366
1,012,881
337,922
225,556
771,470
1,012,881
337,922
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest paid, net of capitalized interest (2)
Income taxes paid
—
857
74,566
1,465
35,887
694
F-9
(1) Includes accretion of discount on convertible bonds of $nil , $1.7 million and $15.9 million for the years ended December 31, 2023, 2022
and 2021, respectively.
(2) Includes interest paid of $24.3 million, $92.6 million, $48.2 million and capitalized interest of $27.1 million, $18.0 million, $12.3 million
for the years ended December 31, 2023, 2022 and 2021, respectively.
Supplemental note to the consolidated statements of cash flows
The following table identifies the balance sheet line items included in cash, cash equivalents and restricted cash presented in the
consolidated statements of cash flows:
(in thousands of $)
Cash and cash equivalents
Restricted cash and short-term deposits
Restricted cash (non-current portion)
Notes
15
15
2023
679,225
18,115
74,130
2022
878,838
21,693
112,350
771,470
1,012,881
2021
231,849
34,025
72,048
337,922
2020
85,996
77,540
62,020
225,556
F-10
GOLAR LNG LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(in thousands of $)
Notes
Share
Capital
Additional
Paid-in
Capital
Contributed
Surplus
Accumulated
Other
Comprehensive
Loss (1)
Retained
(Losses)/
Earnings
Non-
controlling
Interests
Total
Equity
Balance at December 31, 2020
109,944
1,969,602
200,000
(56,073)
(930,950)
338,124
1,630,647
Net income
Dividends
Employee stock compensation
Forfeiture of employee stock compensation
Restricted stock units
Proceeds from subscription of equity interest in
Gimi MS Corporation
Repurchase and cancellation of treasury shares
Realized accumulated comprehensive losses on
disposal of investment in affiliate
Deconsolidation of lessor VIEs
Other comprehensive income
Balance at December 31, 2021
Opening adjustment (2)
5
26
5
3
—
—
—
—
264
—
(1,985)
—
—
—
—
—
4,330
(809)
(264)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
43,380
—
1,859
413,851
146,764
560,615
—
—
—
—
—
(22,499)
—
—
—
(37,136)
(37,136)
—
—
—
4,330
(809)
—
25,403
25,403
—
—
(24,484)
43,380
(25,888)
(25,888)
—
1,859
108,223
1,972,859
200,000
(10,834)
(539,598)
447,267
2,177,917
—
(39,861)
—
—
38,175
—
(1,686)
Adjusted balance at January 1, 2022
108,223
1,932,998
200,000
(10,834)
(501,423)
447,267
2,176,231
Net income
Dividends
Exercise of share options
Employee stock compensation
Forfeiture of employee stock compensation
Restricted stock units
Proceeds from subscription of equity interest in
Gimi MS Corporation
Repurchase and cancellation of treasury shares
Deconsolidation of lessor VIEs
Other comprehensive income
Balance at December 31, 2022
Net (loss)/income
Dividends
Employee stock compensation
Forfeiture of employee stock compensation
Restricted stock units
Proceeds from subscription of equity interest in
Gimi MS Corporation
Repurchase and cancellation of treasury shares
Other comprehensive income
Reacquisition of common units of Golar Hilli
LLC
5
26
5
5
26
5
—
—
6
—
—
187
—
(1,190)
—
—
—
—
155
3,937
(157)
(187)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,023
787,773
151,284
939,057
—
—
—
—
—
—
(55,169)
(55,169)
—
—
—
—
161
3,937
(157)
—
39,275
39,275
(24,287)
—
(25,477)
—
—
(182,707)
(182,707)
—
5,023
107,226
1,936,746
200,000
(5,811)
262,063
399,950
2,900,174
—
—
—
—
249
—
(2,897)
—
—
—
—
5,989
(109)
(249)
—
—
—
(251,249)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
739
—
(46,793)
43,943
(2,850)
(79,448)
(23,449)
(102,897)
—
—
—
—
(58,787)
—
—
—
—
—
5,989
(109)
—
80,021
80,021
—
—
(61,684)
739
34,309
(216,940)
Balance at December 31, 2023
104,578
1,691,128
200,000
(5,072)
77,035
534,774
2,602,443
(1) As of December 31, 2023, 2022 and 2021, our accumulated other comprehensive loss consisted of (i) $3.8 million, $5.0 million and $10.8 million losses in
relation to our pension and post retirement benefit plan and (ii) $1.3 million, $0.8 million and $nil share of equity method investment’s comprehensive losses
from continuing operations, respectively.
(2) Opening adjustment to the December 31, 2021 equity relates to the adoption of ASU 2020-06 Debt – Debt with Conversion and Other Options (Topic 470)
and Derivatives and Hedging - Contracts in Entity’s Own Equity (Topic 815), relating to an amendment to simplify an issuer’s accounting for convertible
instruments, such convertible debt was derecognized in February 2022.
The accompanying notes are an integral part of these consolidated financial statements.
F-11
GOLAR LNG LIMITED
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.
GENERAL
Golar LNG Limited (the “Company” or “Golar”) was incorporated in Hamilton, Bermuda on May 10, 2001 for the purpose of
acquiring the liquefied natural gas (“LNG") shipping interests of Osprey Maritime Limited, which was owned by World
Shipholding Limited.
Our operations have evolved from LNG shipping, floating regasification, combined cycle gas fired power plants to our current
focus on floating liquefaction operations. We design, construct, own and operate marine infrastructure for the liquefaction of
natural gas, storage and offloading of LNG. As of December 31, 2023, our fleet was comprised of two floating liquefaction
natural gas vessels (“FLNGs”), the Hilli Episeyo (the “FLNG Hilli”) which is operational and Gimi (the “FLNG Gimi”), which
is now moored offshore Mauritania and Senegal, ready for connection to the upstream project infrastructure and one LNG
carrier, the Golar Arctic.
We are listed on the Nasdaq under the ticker: “GLNG”.
As used herein and unless otherwise required by the context, the terms “Golar”, the “Company”, “we”, “our”, “us” and words
of similar import refer to Golar or any one or more of its consolidated subsidiaries, or to all such entities.
2.
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”).
The accounting policies set out below have been applied consistently to all periods in these consolidated financial statements.
Principles of consolidation
A variable interest entity (“VIE”) is defined as a legal entity where either (a) equity interest holders as a group lack the
characteristics of a controlling financial interest, including decision-making ability and an interest in the entity’s residual risks
and rewards, (b) equity interest holders have not provided sufficient equity investment to permit the entity to finance its
activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to
their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or
both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has
disproportionately few voting rights. A party that is a variable interest holder is required to consolidate a VIE if the holder has
both (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation
to absorb losses that could potentially be significant to the VIE or the right to receive benefits from the VIE that could
potentially be significant to the VIE. These consolidated financial statements consolidate the entities listed in notes 4 and 5.
Investments in entities in which we directly or indirectly hold more than 50% of the voting control are consolidated in our
consolidated financial statements unless the non-controlling interests have substantive participating rights that allow the non-
controlling interests to effectively participate in significant financial and operating decisions of the entity that are made in the
ordinary course of business.
All inter-company balances and transactions of consolidated entities are eliminated. The non-controlling interests of our
consolidated subsidiaries are included in our consolidated financial statements in line-item “non-controlling interests”.
F-12
Changes in our ownership interest while we retain a controlling financial interest in a subsidiary are accounted for as equity
transactions. The carrying amount of the non-controlling interest is adjusted to reflect changes in our ownership interest, with
any difference between the fair value of consideration and the amount of the adjusted non-controlling interest being recognized
in equity. We recognize a gain or loss when a subsidiary issues its stock to third parties at a price per share in excess or below
its carrying value resulting in a reduction in our ownership interest in the subsidiary. The gain or loss is recorded in line-item
“Additional paid-in capital” within the statement of changes in equity. When a consolidated subsidiary issues preferred stock,
such preferred stock is classified as equity. Preferred stock issued by a consolidated subsidiary to non-controlling interests is
recorded as non-controlling interests for the proceeds received upon issuance.
Foreign currencies
Our functional currency is the U.S. dollar as most of our revenues are received in U.S. dollars and a majority of our
expenditures are incurred in U.S. dollars. Our reporting currency is U.S. dollars. Transactions in foreign currencies during the
year are translated into U.S. dollars at the exchange rates in effect at the date of the transaction. Monetary assets and liabilities
are translated using exchange rates at the balance sheet date. Non-monetary assets and liabilities are translated using historical
exchange rates. Foreign currency transaction and translation gains or losses are included in the consolidated balance sheets and
consolidated statements of operations.
Use of estimates
The preparation of our consolidated financial statements requires management to make estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet
date, and the reported amounts of revenue and expenses during the reporting period. We base our estimates, judgments and
assumptions on our historical experience and on information that we believe to be reasonable under the circumstances at the
time they are made. Estimates and assumptions about future events and their effects cannot be perceived with certainty and
these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as
our operating environment changes. Actual results could differ from these estimates. Estimates are used for, but are not limited
to, determining the recoverability of our vessels and asset under development and the valuation of our oil and gas derivative
instruments.
Fair value measurements
We account for fair value measurements in accordance with ASC 820 Fair value measurement to measure assets and liabilities.
Fair value, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. In determining fair value, we use observable market data when available, or
models that incorporate observable market data. In the absence of such data, we consider information that we believe that
market participants would take into account in measuring fair value.
Lease versus revenue accounting
Contracts relating to our LNG carrier and FLNG assets can take various forms including leases, tolling services and
management service agreements. To determine whether a contract contains a lease agreement for a period of time, at inception
of the agreement we assess whether, throughout the period of use, the counterparty has both of the following:
•
•
the right to obtain substantially all of the economic benefits from the use of the identified asset; and
the right to direct the use of that identified asset.
If a contract conveys both of these rights we generally account for the agreement as a lease and if a contract does not convey
both of these rights, we generally account for the agreement as a revenue contract with a customer. A contract relating to an
asset will generally be accounted for as a revenue contract if the customer does not contract for substantially all of the capacity
of the asset (i.e., another third party could contract for a meaningful amount of the asset capacity). In situations where we have
historically provided management services unrelated to an asset contract, we account for the contract as a revenue contract with
a customer.
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Lease accounting
When a contract contains a lease, which is assessed at inception, we make an assessment of the lease classification criteria of
ASC 842 Leases. An agreement will be classified as a sales-type lease for a lessor (or a finance lease for a lessee) if any of the
following conditions are met at lease commencement:
•
•
•
•
•
ownership of the asset is transferred at the end of the lease term;
the contract contains an option to purchase the asset which is reasonably certain to be exercised;
the lease term is for a major part of the remaining useful life of the contract, although contracts entered into the last
25% of the underlying asset’s useful life are not subject to this criterion;
the present value of the lease payments and any residual value guarantees present represent substantially all of the fair
value of the underlying asset; and
the asset is heavily customized such that it could not be used for another use at the end of the term.
If none of these criteria are met for a lessor, the lease will be classified as a direct financing lease (if the present value of the
sum of the lease payments and any residual value guarantee present equals or exceeds substantially all of the fair value of the
underlying asset and it is probable that the lessor will collect lease payments and any residual value guarantee) or an operating
lease. If none of these criteria are met for a lessee, the lease will be classified as an operating lease.
The lease term is assessed at lease commencement. The existence of any purchase options, extension options, termination
options and residual value guarantees, if any are disclosed. Agreements which include extension options are included in the
lease term if we believe they are reasonably certain to be exercised by the lessee. Agreements which contain purchase options
and termination options are included in the lease term if we believe they are reasonably certain to not be exercised by the lessee.
An extension option or a termination option is included in the lease term if the exercise of the option is controlled by the lessor.
The determination of whether options are reasonably certain considers whether the option creates an economic incentive.
•
Lessor accounting
Lease accounting generally commences when the asset is made available to the counterparty, however, where a contract
contains specific acceptance testing conditions, lease accounting will not commence until the asset has successfully passed the
acceptance tests. We assess a lease under the modification guidance when there is a change to the terms and conditions of the
contract that results in a change in the scope or the consideration of the lease.
For operating leases, costs directly associated with the execution of the lease or costs incurred after lease inception (the
execution of the contract) but prior to the commencement of the lease that directly relates to preparing the asset for the contract
(for example bunker costs), are capitalized and amortized to the consolidated statement of income over the lease term. We also
defer upfront net revenue payments (for example positioning fees) for operating leases to our consolidated balance sheet and
amortize these amounts in the consolidated statement of income over the lease term. Fixed revenue from operating leases is
accounted for on a straight-line basis over the life of the lease; while variable revenue is accounted for as incurred in the
relevant period. Fixed revenue includes fixed payments and variable payments based on a rate or index. For our operating
leases for LNG carriers, we have historically elected the practical expedient to combine our service revenue and operating lease
income generated from our time charter agreements as both the timing and the pattern of transfer of the components are the
same.
•
Time charter agreements
Revenues include minimum lease payments under time charters, fees for positioning and repositioning vessels, and gross pool
revenues. Revenues generated from time charters, which we generally classify as operating leases, are recorded over the term of
the charter as service is provided. However, we do not recognize revenue if a charter has not been contractually committed to
by a customer and ourselves, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next
voyage. Initial direct costs (those directly related to the negotiation and consummation of the lease) are deferred and allocated
to earnings over the lease term. Rental income and expense are amortized over the lease term on a straight-line basis.
Repositioning fees (included in time and voyage charter revenues) received in respect of time charters are recognized at the end
of the charter when the fee becomes fixed and determinable. However, where there is a fixed amount specified in the charter,
which is not dependent upon redelivery location, the fee will be recognized evenly over the term of the charter.
F-14
Under time charters, voyage expenses are generally paid by our customers. Voyage related expenses, principally fuel, may also
be incurred when positioning or repositioning the vessel before or after the period of time charter and during periods when the
vessel is not under charter or is off-hire, for example when the vessel is undergoing repairs. These expenses are recognized as
incurred. Bunkers consumption represents mainly bunkers consumed during commercial waiting time and off-hire.
Revenue accounting
Contracts within the scope of revenue accounting are generally those that do not contain a lease or that form part of our
ordinary activities of developing and operating FLNG projects. Contracts with a customer are assessed to identify the
performance obligations in the contract, determine the transaction price and allocation of the transaction price to the
performance obligations identified. Revenue is recognized when the performance obligations are satisfied – either at a point in
time or over time, considering the appropriate pattern of transfer of control over time. Contract liabilities arise when the
customer makes payments in advance of receiving services while contract assets arise when services are provided in advance of
customer payments being received.
•
Liquefaction services revenue
For liquefaction services revenue, the provision of liquefaction services capacity is considered a single performance obligation
recognized evenly over time. We consider our services (the receipt of customer’s gas, treatment and temporary storage on board
our FLNG and delivery of LNG to waiting carriers) to be a series of distinct services that are substantially the same and have
the same pattern of transfer to our customer. We recognize revenue when obligations under the terms of our contract are
satisfied. We have applied the practical expedient to recognize liquefaction services revenue in proportion to the amount we
have the right to invoice. Overproduction and underutilization arrangements in the LTA are variable consideration, estimated
using the expected value method and recognized using the output method to the extent it is probable that a significant reversal
will not occur.
Contractual payment terms for liquefaction services is monthly in arrears. The period between invoicing and due date is not
significant.
•
Services revenue
Services revenue is generated from services rendered which includes but not limited to performing drydocking, site
commissioning, hook-up services, FLNG studies and other services.
• Management fees
Management fees are generated from vessel management, which includes commercial and technical vessel-related services,
ship operations and maintenance services and administrative services. The management services we provide are considered a
single performance obligation recognized evenly over time as our services are rendered. We consider our services as a series of
distinct services that are substantially the same and have the same pattern of transfer to the customer. We recognize revenue
when obligations under the terms of our contracts with our customers are satisfied. We have applied the practical expedient to
recognize management fee revenue in proportion to the amount that we have the right to invoice. Our contracts generally have
an initial term of one year or less, after which the arrangement continues until the end of the contract.
•
Cool Pool
Pool revenues and expenses under the legacy Cool Pool arrangement are accounted for in accordance with the guidance for
collaborative arrangements when two (or more) parties are active participants in the activity and are exposed to significant risks
and rewards dependent on the commercial success of the activity. Active participation is deemed to occur when participating on
the Cool Pool steering committee.
F-15
When accounting for a collaborative arrangement, we present our share of net income earned under the Cool Pool across a
number of lines in our consolidated statement of operations. Net revenue and expenses incurred specifically to Golar vessels
and for which we are deemed to be the principal, are presented gross on the face of our consolidated statement of operations in
the line items “Time and voyage charter revenues” and “Voyage, charterhire and commission expenses.” Pool net revenues,
generated by the other participants in the pooling arrangement, are presented separately in revenue and expenses from
collaborative arrangements. Each participant’s share of the net pool revenues is based on the number of days such vessels
participated in the pool. Refer to note 28 for an analysis of the impact of our legacy pooling arrangement on our consolidated
statement of operations.
Absent the presence of a collaborative arrangement, we present our gross share of income earned and costs incurred under the
Cool Pool on the face of our consolidated statement of operations in the line items “Time and voyage charter revenues” and
“Voyage, charterhire and commission expenses” respectively. For pool net revenues and expenses generated by the other
participants in the legacy pooling arrangement, we analogize these to be either the cost of obtaining a contract or the benefit of
operating within the Cool Pool, which are included in the line item “Voyage, charterhire and commission expenses” on our
consolidated statement of operations .
Leases as lessee
Operating leases where we are the lessee result in recognition of a right-of use (“ROU”) asset with a corresponding lease
liability. The ROU asset is included in balance sheet line-items ‘Other current assets’ and ‘Other non-current assets’, depending
on its maturity and the lease liability is included in balance sheet line-items ‘Other current liabilities’ and ‘Other non-current
liabilities’. The ROU asset represents our right to use an underlying asset for the lease term and the lease liability represents our
obligation to make lease payments per the lease agreement. Operating leases are recognized at commencement date based on
the present value of lease payments over the lease term, using our incremental borrowing rate as assessed at lease
commencement date. We do not separate the lease and non-lease components; they are considered a single lease component.
The impact of subsequent amendments to lease agreement terms and conditions is assessed prospectively.
Insurance claims
We have two main types of insurance policies, being loss of hire (“LOH”) and hull and machinery (“H&M”).
LOH policies provides coverage for loss of revenue for our insured vessels and related claims are generally considered gain
contingencies, which are recognized when the proceeds from our insurance syndication are realized or deemed realizable, net of
any deductions where applicable. LOH is recognized on the face of our consolidated statement of operations in the line item
“Other operating gains/(losses)”.
H&M policies protects us from damages in relation to our vessels and on-board equipment. Our insurance policies are
considered loss recoveries. We recognize costs incurred at the time a loss event occurs. Insurance proceeds received from
insured losses are recognized when considered probable of being recovered from the counterparty and for an amount net of any
deductions that may apply. H&M costs and insurance recoveries are recognized on the face of our consolidated statement of
operations in line item “Vessel operating expenses”.
Vessel operating expenses
Vessel operating expenses are recognized when incurred and include crewing, repairs and maintenance, insurance, stores, lube
oils, communication expenses and third-party management fees.
Project development expenses
Project development expenses are recognized when incurred and include legal, professional, consultancy, integration and non-
core feasibility projects and other costs associated with pursuing future contracts and developing our pipeline of activities that
have not met our internal threshold for capitalization.
F-16
Cash and cash equivalents
We consider all demand and time deposits and highly liquid investments with original maturities of three months or less to be
equivalent to cash. Amounts are presented net of allowances for expected credit losses, which are assessed based on
consideration of whether the balances have short-term maturities and whether the counterparty has an investment grade credit
rating, limiting any credit exposure.
Restricted cash and short-term deposits
Restricted cash consists of bank deposits which may only be used to settle certain pre-arranged loans, bid bonds in respect of
tenders for projects we have entered into, cash collateral required for certain swaps and other contracts which require us to
restrict cash.
Short-term deposits represent highly liquid deposits placed with financial institutions, primarily from our consolidated VIEs,
which are readily convertible into known amounts of cash with original maturities of less than 12 months. Interest income
earned on our short-term deposits are recognized on an accrual basis on the face of our consolidated statement of operations in
line item “Interest income”.
Amounts are presented net of allowances for expected credit losses, which are assessed considering whether the balances have
short-term maturities and whether the counterparty has an investment grade credit rating, limiting any credit exposure.
Trade accounts receivables
Trade receivables are presented net of allowances for expected credit losses. At each balance sheet date, all potentially
uncollectible accounts are assessed individually for the purpose of determining the appropriate allowance for expected credit
loss. Our trade receivables have short maturities so we have considered that forecasted changes to economic conditions will
have an insignificant effect on the estimate of the allowance, except in extraordinary circumstances.
Allowance for credit losses
Financial assets recorded at amortized cost and off-balance sheet credit exposures not accounted for as insurance (including
financial guarantees) reflect an allowance for current expected credit losses (“credit losses”) over the lifetime of the instrument.
The allowance for credit losses reflects a deduction to the net amount expected to be collected on the financial asset. Amounts
are written off against the allowance when management believes the un-collectability of a balance is confirmed or certain.
Expected recoveries will not exceed the amounts previously written-off or current credit loss allowance by financial asset
category. We estimate expected credit losses based on relevant information about past events, including historical experience,
current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. We have
elected to calculate expected credit losses on the combined balance of both the amortized cost and accrued interest from the
unpaid principal balance. Specific calculation of our credit allowances is included in the respective accounting policies included
herein; all other financial assets are assessed on an individual basis calculated using the method we consider most appropriate
for each asset.
Inventories
Inventories, which are comprised principally of fuel, are stated at the lower of cost and net realizable value. Cost is determined
on a first-in, first-out basis.
F-17
Equity method investments
Equity method investments relate to our investments in entities over which we have significant influence, but over which we do
not exercise control or have the power to control their financial and operational policies. Investments in these entities are
accounted for by the equity method of accounting. This may also extend to certain investments in entities in which we hold a
majority voting or ownership interest, but we do not control, due to the other parties’ substantive participating rights. Under this
method, we record our investment at cost and adjust the carrying amount for our share of the income or losses from these equity
method investments subsequent to the date of the investment and report the recognized earnings or losses in income. Dividends
received from an equity method investment reduce the carrying amount of the investment. When we decrease our investment in
equity method investments but continue to retain significant influence, we recognize a gain or loss for the difference between
proceeds and carrying amount of the investment sold in the statement of operations line item “Net (losses)/income from equity
method investments”. The excess, if any, of the purchase price over book value of our equity method investments, or basis
difference, is included in our consolidated balance sheets included in the carrying amount of our equity method investment. We
allocate the basis difference across the assets and liabilities of the investee, with the residual assigned to goodwill. Any negative
goodwill is recognized immediately in the income statement as a gain on bargain purchase. The basis difference will then be
amortized through our consolidated statements of operations as part of the equity method of accounting.
Where there are indicators that fair value is below carrying value of our investments, we will evaluate these for other-than-
temporary impairment. Consideration will be given to (i) the length of time and the extent to which fair value is below carrying
value, (ii) the financial condition and near-term prospects of the investee and (iii) our intent and ability to hold the investment
until any anticipated recovery. Where determined to be other-than-temporary impairment, we will recognize an impairment loss
in the period in the line item “Net income/(losses) from equity method investments” in the consolidated statements of
operations.
Vessels and equipment
Vessels and equipment are stated at cost less accumulated depreciation. The cost of vessels and equipment, less the estimated
residual values, is depreciated on a straight-line basis over the assets’ remaining useful economic lives. Management estimates
the residual values of our vessels based on broker scrap value cost of steel and aluminum times the weight of the ship noted in
lightweight ton. Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or
other reasons.
The cost of construction of FLNG Hilli’s mooring equipment is capitalized and depreciated over the term of the LTA.
Refurbishment costs incurred during the period are capitalized as part of vessels and equipment and depreciated over the
vessels’ remaining useful economic lives. Refurbishment costs are costs that appreciably increase the capacity or improve the
efficiency or safety of vessels and equipment.
Drydocking expenditures are capitalized when incurred and amortized over the period until the next anticipated drydocking. For
vessels that are newly built or acquired, we have adopted the “built-in overhaul” method of accounting. The built-in overhaul
method is based on the segregation of vessel costs into those that should be depreciated over the useful life of the vessel and
those that require drydocking at periodic intervals to reflect the different useful lives of the components of the assets. The
estimated cost of the drydocking component is amortized until the date of the first drydocking following acquisition, upon
which the cost is capitalized and the process is repeated. When a vessel is disposed of, any unamortized drydocking expenditure
is charged against income in the period of disposal.
The capital costs include the addition of new equipment or modifications to the vessel which enhance or increase the
operational efficiency and functionality of the vessel. These expenditures are capitalized and depreciated over the remaining
useful life of the vessel. Expenditures of routine repairs and maintenance nature that do not improve the operating efficiency or
extend the useful lives of the vessels are expensed as incurred.
F-18
Useful lives applied in depreciation are as follows:
Vessels (excluding FLNG)
Vessels - FLNG
Deferred drydocking expenditure
Deferred drydocking expenditure - FLNG
Mooring equipment - FLNG
Office equipment and fittings
Asset under development
40 years
30 years from conversion date
5 years
20 years
8 years
3 to 6 years
An asset is classified as an asset under development when there is a firm commitment from us to proceed with the construction
of the asset and the likelihood of conversion is virtually certain to occur. An asset under development is classified as non-
current and is stated at cost. All costs incurred during the construction of the asset, including conversion installment payments,
interest, supervision and technical costs are capitalized. Nonrefundable reimbursements are offset against the cost incurred for
the construction of the asset. Interest costs directly attributable to construction of the asset are capitalized. Capitalization ceases
and depreciation commences once the asset is completed and available for its intended use.
Interest costs capitalized
Interest is capitalized on all qualifying assets that require a period of time to get ready for their intended use. Qualifying assets
consist of new vessels under construction, asset under development and vessels undergoing conversion into FLNGs for our own
use. In addition, certain equity method investments may be considered qualifying assets prior to commencement of their
planned principal operation. The interest capitalized is calculated using the rate of interest on the loan to fund the expenditure or
our weighted average cost of borrowings, where appropriate, from commencement of the asset development until substantially
all the activities necessary to prepare the assets for their intended use are complete. If our financing plans associate a specific
borrowing with a qualifying asset, we use the rate on that borrowing as the capitalization rate to be applied to that portion of the
average accumulated expenditures for the asset provided that does not exceed the amount of that borrowing. We do not
capitalize amounts beyond the actual interest expense incurred in the period.
Asset retirement obligation
An asset retirement obligation (“ARO”) is a liability associated with the eventual retirement of a fixed asset.
The fair value of an ARO is recorded as a liability in the period when the obligation arises. The fair value of the ARO is
measured using expected future discounted cash outflows. When the liability is recognized, we also capitalize the related ARO
cost by adding it to the carrying amount of the related fixed asset. Each period, the liability is increased for the change in its
present value with a corresponding charge to operating expenses. Changes in the amount or timing of the estimated ARO are
recorded as an adjustment to the related liability and asset.
Held for sale assets and disposal group
Individual assets or subsidiaries to be disposed of, by sale or otherwise in a single transaction, are classified as held for sale if
all of the following criteria are met at the balance sheet date:
• management, having the authority to approve the action, commits to a plan to sell the assets or subsidiaries;
•
the asset or subsidiaries are available for immediate sale in its (their) present condition subject only to terms that are
usual and customary for such sales;
an active program to locate a buyer and other actions required to complete the plan to sell have been initiated;
the sale is probable; and
the transfer is expected to qualify for recognition as a completed sale, within one year.
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The term probable refers to a future sale that is likely to occur, the asset or subsidiaries (disposal group) is being actively
marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan
indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
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A disposal group is classified as discontinued operations if either of the following criteria are met: (1) a component of an entity
or group of components that has been disposed of by sale, disposed of other than by sale or is classified as held for sale that
represents a strategic shift that has or will have a major effect on our financial results and operations or (2) an acquired business
or non-profit activity (the entity to be sold) that is classified as held for sale on the date of the acquisition.
Assets or subsidiaries held for sale are carried at the lower of their carrying amount and fair value less costs to sell. Interest and
other expenses attributable to the liabilities of a disposal group classified as held for sale shall continue to be accrued. As an
exception, investments in associates classified as held for sale continue to be measured in accordance with ASC 323
Investments - Equity Method and Joint Venture. Upon classification as held for sale, the assets are no longer depreciated.
If, at any time, the criteria for held for sale is no longer met, then the asset or disposal group will be reclassified to held and
used. The asset or disposal group will be valued at the lower of the carrying amount before the asset or disposal group was
classified as held for sale (as adjusted for any subsequent depreciation and amortization) and its fair value at the date of the
subsequent decision not to sell. The effect of any such adjustment would be included in our income from continuing operations
at the date of the decision not to sell and/or for the period in which the criterion for held for sale are no longer met.
Gain or loss on disposals of held for sale assets is recognized as the difference between the fair value of consideration received
and the carrying amount of the assets disposed.
Impairment of vessels and asset under development
We continually monitor events and changes in circumstances that could indicate that the carrying amounts of our vessels and
asset under development may not be recoverable. Indicators that we consider include, but are not limited to:
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•
•
•
a significant decrease in the market price of the asset;
a significant adverse change in the extent or manner in which the asset is being used or in its physical condition;
a significant adverse change in legal factors in the business climate that could affect the value of the asset, including an
adverse action or assessment by a regulator;
an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of
an asset;
a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection of
or forecast that demonstrates continuing losses associated with the use of an asset; and
a current expectation that it is considered more likely than not that an asset will be sold or otherwise disposed of
significantly before the end of its useful life.
We perform an annual impairment assessment considering the indicators listed above. If the results of our recoverability
assessment demonstrates that the carrying amount of our vessels and asset under development exceeds the estimated
undiscounted future cash flows that we have estimated as the fair value, we recognize an impairment loss based on the excess.
As at December 31, 2023, the FLNG Hilli is an operational FLNG and forms part of “Vessels and equipment, net”. FLNG Hilli
is operating under the terms of a long-term arrangement with the Customer which matures in mid-July 2026. There is
uncertainty with respect to the utilization of FLNG Hilli after the expiry of its current contract, as a new contract has not yet
been agreed. In assessing whether indicators of impairment existed for FLNG Hilli, we engaged two third-party ship brokers to
provide a valuation for FLNG Hilli. Management compared the average of the ship broker valuations to FLNG Hilli’s carrying
amount as at December 31, 2023. For FLNG Hilli, significant judgment was applied in assessing whether the brokers’ valuation
methodologies and assumptions were appropriate given the uncertainty with respect to the utilization of FLNG Hilli after the
expiry of its current contract.
As at December 31, 2023, FLNG Gimi reported within “Asset under development” was not an operational vessel, having
arrived at the GTA field offshore Mauritania and Senegal in January 2024, ahead of commissioning. Project delays have
resulted in pre-commissioning payments and ongoing arbitration for Project Delay Payments (PDPs) expected from the
customer. We evaluated whether indicators of impairment existed by assessing the returns on the cash flows, including PDPs,
across the project from initial construction through operations with the customer using estimated forecasted returns which are
highly subjective and dependent on future events. For FLNG Gimi, significant judgment was applied in determining the
estimated forecasted returns applied in the economic model which are dependent on the expected date of commencement of
commercial operations and other events.
As a result of the assessment, we determined that there is no impairment indicator for FLNG Hilli and FLNG Gimi at December
31, 2023.
F-20
Investments in listed equity securities
Investments in listed equity securities represents ownership interests of a publicly listed entity. Investments in listed equity
securities are recorded at fair value with changes in fair value reported in “Other non-operating income/(losses), net”. We
classify our investment in listed equity securities in the consolidated statement of operations as non-operating because it is not
integrated with our operations therefore is non-operating in nature. We use quoted market prices to determine the fair value of
listed equity securities with a readily determinable fair value, unless the presence of certain restrictions warrants the application
of a discount to fair value. We do not assess our investments in listed equity securities for impairment given they are carried at
fair value.
We classify our investments in listed equity securities as current assets because the investment is available to be sold to meet
liquidity needs if necessary, even if it is not the intention to dispose of the investment in the next twelve months.
Dividends received from our investments in listed equity securities are reflected as operating activities in the statement of cash
flows unless such distributions relate to a return of capital in which case it is reflected as an investing activity in the statement
of cash flows.
Debt
Our debt has consisted of short-term and long-term debt securities, convertible debt securities and credit facilities with banks
and other lenders. Debt issuances are placed directly by us or through securities dealers or underwriters and are held by
financial institutions. Debt is recorded on our consolidated balance sheets at par value adjusted for unamortized discount or
premium and net of unamortized debt issuance costs. Debt issuance costs directly related to the issuance of debt are amortized
over the life of the debt using the effective interest method and are recorded in interest expense, net of capitalized interest.
Gains and losses on the extinguishment of debt are recorded in other financial items, net on our consolidated statements of
operations.
Costs associated with long-term financing, including debt arrangement fees, are deferred and amortized over the term of the
relevant debt under the effective interest method. Amortization of debt issuance costs is included in interest expense, net. These
costs are presented as a deduction from the corresponding liability, consistent with debt discounts.
Derivatives
We use derivatives to reduce market risks associated with our operations. We use interest rate swaps for the management of
interest rate risk exposure. The interest rate swaps effectively convert a portion of our debt from a floating to a fixed rate over
the life of the transactions without an exchange of underlying principal. We use commodity swaps to reduce our economic
exposure to fluctuations in the underlying commodities for our natural-gas linked tolling fee billings. We seek to reduce our
exposure to fluctuations in foreign exchange rates through the use of foreign currency forward contracts. Certain of our
contracts contain embedded derivatives. We do not apply hedge accounting.
All derivative instruments are initially recorded at fair value as either assets or liabilities in our consolidated balance sheets and
subsequently remeasured to fair value, regardless of the purpose or intent for holding the derivative. Where the fair value of a
derivative instrument is a net liability, the derivative instrument is classified in “Other current liabilities” in our consolidated
balance sheets. Where the fair value of a derivative instrument is a net asset, the derivative instrument is classified in “Other
current assets” and “Other non-current assets” in our consolidated balance sheets, depending on its maturity.
The changes in the fair value of our interest rate and foreign exchange swap derivative instruments are recognized each period
in “(Losses)/gains on derivative instruments, net” in our consolidated statements of operations while the changes in the fair
value of our commodity swap derivative instruments are recognized each period in “Realized and unrealized (loss)/gain on oil
and gas derivative instruments” in our consolidated statements of operations.
It is our policy to enter into master netting agreements with counterparties to derivative financial instrument contracts, which
give us the legal right to discharge all or a portion of the amounts owed to the counterparty by offsetting them against amounts
that the counterparty owes to us. We have elected not to offset the fair values of derivative assets and liabilities executed with
the same counterparty that are generally subject to enforceable master netting arrangements.
F-21
The fair values of the oil and gas derivative instruments were determined using the estimated discounted cash flows of the
additional payments due to us as a result of oil and gas prices moving above the contractual floor price over the remaining term
of the LTA. Significant inputs used in the valuation of the oil and gas derivative instruments include the Euro/U.S. Dollar
exchange rates based on the forex forward curve for the gas derivative instrument and management’s estimate of an appropriate
discount rate and the length of time necessary to blend the long-term and short-term oil and gas prices obtained from quoted
prices in active markets. The oil and gas derivative instruments are classified in “Other non-current assets” in the consolidated
balance sheets, depending on the LTA’s maturity. The changes in fair value of our oil and gas derivative instruments are
recognized in each period within “Realized and unrealized gain/(loss) on oil and gas derivative instruments” in our consolidated
statement of operations.
Convertible Bonds
We account for debt instruments with convertible features in accordance with the details and substance of the instruments at the
time of their issuance. For convertible debt instruments issued at a substantial premium to equivalent instruments without
conversion features, or those that may be settled in cash upon conversion, it is presumed that the premium or cash conversion
option represents an equity component.
Accordingly, we determine the carrying amounts of the liability and equity components of such convertible debt instruments by
first determining the carrying amount of the liability component by measuring the fair value of a similar liability that does not
have an equity component. The carrying amount of the equity component representing the embedded conversion option is then
determined by deducting the fair value of the liability component from the total proceeds from the issue. The resulting equity
component is recorded, with a corresponding offset to debt discount which is subsequently amortized to interest cost using the
effective interest method over the period the debt is expected to be outstanding as an additional non-cash interest expense.
Transaction costs associated with the instrument are allocated pro-rata between the debt and equity components.
For conventional convertible bonds which do not have a cash conversion option or where no substantial premium is received on
issuance, it may not be appropriate to separate the bond into the liability and equity components.
Contingencies
We may, from time to time, be involved in various legal proceedings, claims, lawsuits and complaints that arise in the ordinary
course of business. We will recognize a contingent liability in our consolidated financial statements if the contingency has
occurred at the balance sheet date and where we believe that the likelihood of loss was probable and the amount can be
reasonably estimated. If we determine that the reasonable estimate of the loss is a range and there is no best estimate within the
range, we will recognize the lower amount within the range. A contingent gain is only recognized when the amount is
considered realized or realizable. Legal costs are expensed as incurred.
Pensions
Defined benefit pension costs, assets and liabilities requires significant actuarial assumptions to be adjusted annually to reflect
current market and economic conditions. Our accounting policy provides that full recognition of the funded status of defined
benefit pension plans is to be included within our consolidated balance sheets. The pension benefit obligation is calculated by
using a projected unit credit method.
Defined contribution pension costs represent our promise to make defined amounts of contributions to an individual
participant’s retirement account prior to retirement, and the participant bears all the actuarial risk relating to that account once
the contribution is made. Pension benefit cost is recognized in respect of the accounting period in which a contribution to the
scheme is payable and is recorded in our consolidated statements of operations. A liability on our balance sheet will be
recognized for any contributions due but unpaid as of the balance sheet date.
F-22
Guarantees
Guarantees issued by us, excluding those that are guaranteeing our own performance, are recognized at fair value at the time
that the guarantees are issued, or upon the deconsolidation of a subsidiary, and reported in “Other current liabilities” and “Other
non-current liabilities”. A liability is recognized for the fair value of the obligation undertaken in issuing the guarantee. If it
becomes probable that we will have to perform under a guarantee, we will recognize an additional liability if (and when) the
amount of the loss can be reasonably estimated. The recognition of fair value is not required for certain guarantees such as the
parent’s guarantee of a subsidiary’s debt to a third party.
Financial guarantees are assessed for expected credit losses and any allowance is presented as a liability for off-balance sheet
credit exposures where the balance exceeds the collateral provided over the remaining instrument life. The allowance is
assessed at the individual guarantee level, calculated by multiplying the balance exposed on default by the probability of default
and loss given default over the term of the guarantee.
Treasury shares
Treasury shares are recognized as a separate component of equity for an amount corresponding to the purchase consideration
transferred to repurchase the shares. Upon subsequent disposal of treasury shares, any consideration is recognized directly in
equity.
Stock-based compensation
Our stock-based compensation includes both stock options and restricted stock units (“RSUs”). We expense the fair value of
stock-based compensation issued to employees and non-employees over the period the stock options or RSUs vest (fair value as
determined for stock-based compensation uses some fair value measurement techniques, which differs from other fair value
measurements). We recognize stock-based compensation cost for awards containing a service condition only on a straight-line
basis over the employee’s requisite service period or the non-employee’s vesting period, unless the award contains performance
and/or market conditions, in which case stock-based compensation cost is recognized using the graded vesting method. Certain
stock options and RSUs provide for accelerated vesting in the event of death or disability in service or a change in control (as
defined in the Golar LNG Limited Long Term Incentive Plan (the “LTIP”)). No compensation cost is recognized for stock-
based compensation for which the individuals do not render the requisite service. We have elected to recognize forfeitures as
they occur. The fair value of stock options is estimated using the Black-Scholes option pricing model. The fair value of RSUs is
estimated using the market price of our common shares at grant date or the Monte Carlo simulation model, as appropriate. Upon
eventual stock option exercises or RSU conversions, shares delivered will be made available from either our authorized
unissued shares, treasury shares or repurchasing our shares in the open market.
Earnings per share
Basic earnings per share (“EPS”) is computed based on the income available to common shareholders and the weighted average
number of shares outstanding for basic EPS. Treasury shares are not included in the calculation. Diluted EPS includes the effect
of the assumed conversion of potentially dilutive instruments. Such potentially dilutive common shares are excluded when the
effect would be to increase earnings per share or reduce a loss per share.
Income tax (expense)/ benefit
Income taxes are based on a separate return basis. The guidance on “Income tax (expense)/ benefit” prescribes a recognition
threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return.
Penalties and interest related to uncertain tax positions are recognized in “Income tax (expense)/ benefit” in the consolidated
statements of operations.
F-23
Deferred taxes
Deferred tax assets and liabilities are recognized principally for the expected tax consequences of temporary differences
between the tax bases of assets and liabilities and their reported amounts. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will
not be realized. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future
years.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized
or the liability is settled, based on the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet
date. Income tax relating to items recognized directly in the statement of comprehensive income is recognized in the statement
of changes in equity and not in the consolidated statements of operations.
Acquisitions
When the assets acquired and liabilities assumed constitute a business, then the acquisition is a business combination. If
substantially all of the fair value of the gross asset acquired is concentrated in a single identifiable asset or group of similar
identifiable assets, the asset is not considered a business. Business combinations are accounted for under the acquisition
method. On acquisition, the identifiable assets, liabilities and contingent liabilities are measured at their fair values at the date of
acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as
goodwill. In instances where the cost of acquisition is lower than the fair values of the identifiable net assets acquired (i.e.
bargain purchase), the difference is credited to the statement of operations in the period of acquisition. The consideration
transferred for an acquisition is measured at fair value of the consideration transferred. Acquisition related costs are expensed as
incurred. The results of operations of acquired businesses are included from the date of acquisition.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, we will recognize a measurement-period adjustment during the period in which we determine the amount of the
adjustment, including the effect on earnings of any amounts we would have recorded in previous periods if the accounting had
been completed at the acquisition date.
For acquisitions that do not meet the definition of a business, we account for the transaction as an asset acquisition whereby the
cost of the acquisition is allocated to the assets acquired and liabilities assumed and no goodwill is recognized.
Related parties
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence
over the other party in making financial and operating decisions. Parties are also related if they are subject to common control
or significant influence. Amounts due from related parties are presented net of allowances for expected credit losses, which are
calculated using a loss rate applied against an aging matrix.
Advances or loans to/from related parties are recorded at cost.
Segment reporting
A segment is a distinguishable component of the business that is engaged in business activities from which we earn revenues
and incur expenses whose operating results are regularly reviewed by the chief operating decision maker (“CODM”), and which
are subject to risks and rewards that are different from those of other segments. Our CODM deems that we provide three
distinct services and operate in the following three reportable segments: “FLNG”, “Corporate and other” and “Shipping”.
F-24
3.
RECENTLY ISSUED ACCOUNTING STANDARDS
Adoption of new accounting standards
In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference
Rate Reform on Financial Reporting, as amended by ASU 2021-01 Reference Rate Reform (Topic 848): Scope issued in
January 2021 and ASU 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 issued in
December 2022. This guidance provides temporary optional expedients and exceptions for applying U.S. GAAP to contracts,
hedging relationships, and other transactions affected by reference rate reform if certain criteria are met, which are available for
election until December 31, 2024. Amendments to certain contracts affected by reference rate reform have been entered into,
applying the optional expedients where available. There has not been a material impact on our consolidated financial statements
or related disclosures following adoption of the reference rate reform standards.
In October 2021, the FASB issued ASU 2021-08 Business Combinations (Topic 805) - Accounting for contract assets and
contract liabilities from contracts with customers. We adopted this with effect from January 1, 2023. The adoption of ASU
2021-08 had no impact on our consolidated financial statements.
Accounting pronouncements that have been issued but not yet adopted
The following table provides a brief description of other recent accounting standards that have been issued but not yet adopted
as of December 31, 2023:
Standard
Description
ASU 2022-03 Fair Value
Measurement (Topic 820) -
Fair Value Measurement of
Equity Securities Subject to
Contractual Sale Restrictions
ASU 2023-05 Business
Combinations—Joint Venture
Formations (Subtopic 805-60):
Recognition and Initial
Measurement.
ASU 2023-07 Segment
Reporting (Topic 280):
Improvements to Reportable
Segment Disclosures
This amendment is intended to reduce diversity in
practice in the measurement of the fair value of
equity securities subject to contractual sale
restrictions. For entities that have investments in
equity securities that are subject to contractual
sale restrictions, the contractual restriction on the
sale is not considered part of the unit of account
of the equity security, is not considered when
measuring fair value and additional disclosures
are required. This amendment is required to be
applied prospectively from date of adoption; early
adoption is permitted.
Removes diversity in practice and requires certain
joint ventures, upon formation, to apply a new
basis of accounting consistent with ASC 805
Business Combinations in the joint venturer’s
separate financial statements. This guidance is
effective for all joint ventures with a formation
date on or after January 1, 2025; early adoption is
permitted.
These amendments require disclosure of
significant segment expenses and other segment
items by reportable segment, introduces or
permits new disclosures, and expands the extent
of interim segment disclosures. The guidance is
applied retrospectively to all periods presented in
the financial statements, unless it is impracticable
to do so. The guidance is effective for us for
annual periods beginning in 2024 and for interim
periods in 2025. Early adoption is permitted.
Expected
date of
Adoption
Effect on our
Consolidated Financial
Statements
January 1,
2024
No impact expected as a
result of the adoption of
this ASU.
January 1,
2025
No impact expected as a
result of the adoption of
this ASU.
January 1,
2024
We are assessing the
impact of this ASU.
Upon adoption, we expect
that any impact will be
limited to additional
segment disclosures in
our annual financial
statements in 2024 and in
our interim financial
statements in 2025.
F-25
Standard
Description
Expected
date of
Adoption
Effect on our
Consolidated Financial
Statements
ASU 2023-09 Income Taxes
(Topic 740): Improvements to
Income Tax Disclosures
These amendments enhance disclosures relating
to income taxes, including the income tax rate
reconciliation and information related to income
taxes paid. The guidance is effective for us on
January 1, 2025. Early adoption is permitted.
January 1,
2025
We are assessing the
impact of this ASU. Upon
adoption, if material, the
impact will be limited to
additional disclosure
requirements in our
annual financial
statements in 2025.
4.
SUBSIDIARIES
The following table lists our significant subsidiaries and their purpose as of December 31, 2023. Unless otherwise indicated, we
own a 100% ownership interest in each of the following subsidiaries.
Name
Jurisdiction of
Incorporation
Purpose
Gimi Holding Company Limited
Golar LNG Energy Limited
Bermuda
Bermuda
Holding company
Holding company
Golar Hilli LLC
Marshall Islands
Holding company
Golar Hilli Corporation
Marshall Islands
Leases the FLNG Hilli*
Golar LNG 2216 Corporation
Marshall Islands
Owns the Golar Arctic
Gimi MS Corporation
Marshall Islands
Owns the FLNG Gimi
Golar Management (Bermuda) Limited
Bermuda
Management company
Golar Management Limited
United Kingdom
Management company
Golar Management AS
Golar Viking Management D.O.O
Norway
Croatia
Vessel management company
Vessel management company
* The above table excludes mention of the lessor variable interest entity (“lessor VIE”) that we have leased a vessel from under a finance
lease. The lessor VIE is a wholly-owned, newly formed special purpose vehicle (“SPV”) of a financial institution. While we do not hold any
equity investments in this SPV, we have concluded that we are the primary beneficiary of this lessor VIE and accordingly have consolidated
this entity into our financial results (note 5).
5.
5.1
VARIABLE INTEREST ENTITIES
Lessor VIEs
As of December 31, 2023 and 2022, we leased one vessel from a VIE as part of a sale and leaseback agreement.
As discussed in note 14, during the year ended December 31, 2022, the CoolCo Disposal resulted in the disposal of our
subsidiaries, including the disponent owners of seven vessels that were subject to these sale and leaseback agreements (Golar
Seal, Golar Crystal, Golar Bear, Golar Glacier, Golar Snow, Golar Ice and Golar Kelvin). This resulted in the deconsolidation
of the lessor VIEs associated with the seven vessels and corresponding non-controlling interests of $182.7 million on our
consolidated balance sheet.
F-26
Our continuing lessor VIE as of December 31, 2023, is with a China State Shipbuilding Corporation entity (“CSSC entity”).
The CSSC entity is a wholly-owned, special purpose vehicle (“Lessor SPV”). In this transaction, we sold our vessel, the FLNG
Hilli and then subsequently leased back the vessel on a bareboat charter for a term of fifteen years, post amendment. In June
2023, we entered into the fourth side letter to FLNG Hilli’s sale and leaseback facility which amended the reference rate to a
Secured Overnight Financing Rate (“SOFR”) from London Interbank Offered Rate (“LIBOR”), reduced the margin and
extended the tenor of the facility by five years to 2033. These amendments did not impact our total bareboat obligations. We
have an option to repurchase the vessel at a fixed predetermined amount during its charter period and an obligation to
repurchase the vessel at the end of the vessel’s lease period.
While we do not hold any equity investments in the Lessor SPV, we have determined that we have a variable interest in the
Lessor SPV and that the lessor entity, that owns the vessel, is the lessor VIE. Based on our evaluation of the agreements, we
have concluded that we are the primary beneficiary of the lessor VIE and, accordingly, the lessor VIE is consolidated into our
financial statements. We did not record any gains or losses from the sale of this vessel as if continued to be reported as a vessel
at its original cost in our consolidated financial statements at the time of transaction. Similarly, the effect of the bareboat charter
arrangement is eliminated upon consolidation of the Lessor SPV. The equity attributable to the respective lessor VIE is
included in non-controlling interests in our consolidated financial statements. As of December 31, 2023 and 2022, the vessel is
reported under “Vessels and equipment, net” in our consolidated balance sheets.
The following table gives a summary of our sole sale and leaseback arrangement, including the repurchase option and
obligation as of December 31, 2023:
Vessel
Effective
from
Lessor
Sales value
(in $
millions)
FLNG Hilli
June 2018 CSSC entity
1,200.0
Lease
duration
15 years
Next
repurchase
option (in $
millions)
Date of next
repurchase
option
Net
repurchase
obligation
at end of
lease term
(in $
millions)
End of lease
term
421.0
June 2028
207.9
June 2033
A summary of our payment obligations (excluding the repurchase option and obligation) under the bareboat charter with our
sole lessor VIE as of December 31, 2023, are shown below:
(in thousands of $)
FLNG Hilli (1)
2024
82,389
2025
79,478
2026
76,567
2027
73,739
2028
70,745
2029+
286,272
(1) The payment obligations above include variable rental payments due under the lease based on assumed SOFR plus a margin.
The assets and liabilities of the lessor VIE that most significantly impact our consolidated balance sheets as of December 31,
2023 and 2022, are as follows:
(in thousands of $)
Assets
2023
2022
Restricted cash and short-term deposits (note 15)
18,085
21,693
Liabilities
Debt:
Current portion of long-term debt and short-term debt (1)
Long-term debt (1)
(1) Where applicable, these balances are net of deferred finance charges (note 21).
(299,576)
(93,617)
(393,193)
(337,547)
(156,563)
(494,110)
F-27
The most significant impact of the lessor VIE’s operations on our consolidated statements of operations, consolidated
statements of changes in equity and consolidated statements of cash flows, for the years ended December 31, 2023, 2022 and
2021 are as follows:
(in thousands of $)
Statement of operations
Interest expense
Statement of cash flows
Net debt repayments
Net debt receipts
Financing costs paid
Statement of operations
Interest expense
Statement of cash flows
Net debt repayments
Net debt receipts
Financing costs paid
5.2
Golar Hilli LLC
Continuing operations
2023
2022
2021
Discontinued operations
11,015
8,406
5,178
(98,242)
(123,554)
(97,056)
—
20,640
(3,158)
—
2,848
—
—
3,814
17,492
—
—
—
—
—
—
(234,873)
10,402
(1,568)
Golar Hilli LLC (“Hilli LLC”) owns Golar Hilli Corp. (“Hilli Corp”), the disponent owner of FLNG Hilli. The ownership
interests in Hilli LLC are represented by three classes of units: the common units (“Hilli Common Units”), Series A Units
(“Series A Special Units”) and Series B Units (“Series B Special Units”). In July 2018, we and affiliates of Seatrium Limited
(“Seatrium”, formerly known as Keppel Shipyard Limited) and Black & Veatch Corporation (“B&V”) completed the sale of
1,230 Hilli Common Units to our former affiliate, Golar LNG Partners LP (“Golar Partners”). We are the managing member of
Hilli LLC and are responsible for all operational, management and administrative decisions relating to Hilli LLC’s business.
We have retained sole control over the most significant activities and the greatest exposure to variability in residual returns and
expected losses from the FLNG Hilli and, as a result, we concluded that Hilli LLC is a VIE, that we are the primary beneficiary
and that we consolidate both Hilli LLC and Hilli Corp. The ownership interests in Hilli LLC held by Seatrium, B&V and Golar
Partners were considered non-controlling interests. The July 2018 disposal of the non-controlling interests in Hilli LLC
represented a decrease in our ownership interest in Hilli LLC while control is retained and this disposal was considered an
equity transaction. In April 2021, we sold Golar Partners to New Fortress Energy Inc. (“NFE”), which included its 1,230 Hilli
Common Units.
On March 15, 2023, we repurchased the 1,230 Hilli Common Units, held by Golar Partners from NFE in exchange for cash
consideration of $100.0 million, our 4.1 million Class A common shares of NFE (“NFE Shares”) with a fair value of
$116.9 million and our assumption of distribution rights to these 1,230 Hilli Common Units for the period from January 1, 2023
to March 15, 2023 (which NFE waived) with a fair value of $3.9 million (the “Hilli Buyback”).
The Hilli Buyback is a reacquisition of a non-controlling interest in Hilli LLC, a consolidated VIE. We reconsidered whether
Hilli LLC is a VIE and concluded that following the Hilli Buyback, we continue to have a variable interest in Hilli LLC. Hilli
LLC remains a VIE, we remain the primary beneficiary and continue to consolidate Hilli LLC. The Hilli Buyback represents an
increase in our ownership interest in Hilli LLC while control is retained and this reacquisition is considered an equity
transaction. A loss of $251.2 million for the Hilli Buyback is recorded in equity.
F-28
Following the completion of the Hilli Buyback , the ownership structure of Hilli LLC is as follows:
Golar LNG Limited
Seatrium
B&V
Percentage ownership interest
Hilli Common Units
Series A Special Units Series B Special Units
94.6 %
5.0 %
0.4 %
89.1 %
10.0 %
0.9 %
89.1 %
10.0 %
0.9 %
As the managing member of Hilli LLC, we are responsible for all operational, management and administrative decisions
relating to Hilli LLC’s business. We have retained sole control over the most significant activities and the greatest exposure to
variability in residual returns and expected losses from the FLNG Hilli and, as a result, management has concluded that Hilli
LLC is a VIE and that we are the primary beneficiary. As such, we continue to consolidate both Hilli LLC and Hilli Corp.
All three classes of ownership interests in Hilli LLC have certain participating and protective rights. We reflect Seatrium and
B&V’s ownership in Hilli LLC as non-controlling interests in our financial statements.
Hilli LLC shall make distributions to holders of Hilli Common Units when, as and if declared by us; provided, however, that no
distributions may be made on the Hilli Common Units on any distribution date unless Series A Distributions (defined below)
and Series B Distributions (defined below) for the most recently ended quarter and any accumulated Series A Distributions and
Series B Distributions in arrears for any past quarter have been or contemporaneously are being paid or provided for.
Series A Special Units:
The Series A Special Units of Hilli LLC rank senior to the Hilli Common Units and on par with the Series B Special Units.
Upon termination of the LTA, Hilli LLC has a right to redeem the Series A Special Units from legally available funds at a
redemption price of $1 (per Series A Special Unit) plus any unpaid distributions. There are no conversion features on the Series
A Special Units. “Series A Distributions” reflect all incremental cash receipts by Hilli Corp during such quarter when Brent
linked crude prices rise above $60 per barrel with contractually defined adjustments.
Series B Special Units:
The Series B Special Units of Hilli LLC rank senior to the Hilli Common Units and on par with the Series A Special Units.
There are no conversion or redemption features on the Series B Special Units. Incremental returns generated from future vessel
expansion capacity (currently uncontracted and excluding the exercise of additional capacity under the existing LTA) include
cash receipts and contractually defined adjustments. Of such vessel expansion capacity distributions (“Series B Distributions”):
•
•
holders of Series B Special Units are entitled to 95% of these distributions; and
holders of Hilli Common Units are entitled to 5% of these distributions.
Hilli Common Units:
Distributions attributable to holders of Hilli Common Units are not declared until any accumulated Series A Special Units and
Series B Special Units distributions have been paid. As discussed above, holders of Hilli Common Units are entitled to receive
a pro rata share of 5% of the vessel expansion capacity distributions.
Summarized financial information of Hilli LLC
The assets and liabilities of Hilli LLC(1) that most significantly impacted our consolidated balance sheet as of December 31,
2023 and 2022, are as follows:
(in thousands of $)
Balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
2023
2022
70,461
105,738
1,212,922
1,481,722
(342,480)
(125,094)
(381,131)
(240,146)
(1) As Hilli LLC is the primary beneficiary of the lessor VIE (see above) the Hilli LLC balances include the lessor VIE.
F-29
The most significant impacts of the lessor VIE’s operations on our consolidated statements of operations, consolidated
statements of changes in equity and consolidated statements of cash flows, for the years ended December 31, 2023, 2022 and
2021 are as follows:
(in thousands of $)
Statement of operations
Liquefaction services revenue
Realized and unrealized gain/(loss) on oil and gas derivative instruments
2023
2022
2021
245,418
(84,751)
213,970
520,997
221,020
204,663
Statement of changes in equity
Additional paid-in capital
Non-controlling interest
Statement of cash flows
(251,249)
34,309
—
—
Reacquisition of common units in Hilli LLC
(100,047)
—
—
—
—
Net debt repayments
Net debt receipts
Financing costs paid
Cash dividends paid
5.3
Gimi MS Corporation
(98,242)
(123,554)
(97,056)
—
20,640
—
2,848
—
(55,169)
(33,136)
(3,158)
(23,449)
In April 2019, Gimi MS Corporation (“Gimi MS”) entered into a subscription agreement with First FLNG Holdings, a wholly-
owned subsidiary of Keppel Asia Infrastructure Fund, in respect to First FLNG Holdings’ participation in a 30% share of the
FLNG Gimi (the “Subscription Agreement”). Gimi MS will construct, own and operate the FLNG Gimi and First FLNG
Holdings subscribed for 30% of the total issued common share capital of Gimi MS for a subscription price equivalent to 30% of
the estimated project cost. Under the Subscription Agreement, Gimi MS may call for cash from the shareholders for any future
funding requirements and shareholders are required to contribute to such cash calls up to a defined cash call contribution.
Concurrent with the closing of the sale of the common shares, we determined that (i) Gimi MS is a VIE and (ii) we are the
primary beneficiary and retain sole control over the most significant activities and the greatest exposure to variability in residual
returns and expected losses from the Gimi. Thus, Gimi MS continues to be consolidated into our financial statements.
Summarized financial information of Gimi MS
The assets and liabilities of Gimi MS that most significantly impacted our consolidated balance sheet as of December 31, 2023
and 2022, are as follows:
(in thousands of $)
Balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
2023
2022
17,359
12,460
1,702,148
1,195,725
(168,370)
(585,678)
(10,666)
(516,298)
F-30
The most significant impacts of Gimi MS VIE’s operations on our consolidated statement of cash flows, for the years ended
December 31, 2023, 2022 and 2021 are as follows:
(in thousands of $)
Statement of cash flows
Additions to asset under development
Capitalized financing costs
Net debt receipts
Proceeds from subscription of equity interest
6.
SEGMENT INFORMATION
2023
2022
2021
308,093
(1,780)
95,000
80,021
267,421
(2,748)
125,000
39,275
213,481
(5,605)
110,000
25,403
We provide three distinct services and operate in the following three reportable segments: “FLNG”, “Corporate and other” and
“Shipping” and our key performance indicator is Adjusted EBITDA. A reconciliation of net (loss)/income to Adjusted EBITDA
for the years ended December 31, 2023, 2022 and 2021 is as follows:
(in thousands of $)
Net (loss)/income
Income tax (expense)/ benefit
(Loss)/income before income taxes
Depreciation and amortization
Impairment of long-lived assets (note 19)
2023
(2,850)
1,870
(980)
50,294
5,021
2022
939,057
(438)
938,619
51,712
76,155
2021
560,615
1,440
562,055
55,362
—
Unrealized loss/(gain) on oil and gas derivative instruments, net (note 8)
284,658
(288,977)
(179,891)
Realized and unrealized mark-to-market losses/(gains) on our investment
in listed equity securities (note 9)
Other non-operating (income)/loss (note 9)
Interest income
Interest expense, net
Losses/(gains) on derivative instruments, net (note 10)
Other financial items, net (note 10)
Net loss/(income) from equity method investments (note 17)
Net (income)/loss from discontinued operations (note 14)
Adjusted EBITDA
Our three distinct reportable segments are as follows:
62,308
(9,823)
(46,061)
—
7,227
900
2,520
(293)
355,771
(400,966)
(11,916)
(12,225)
19,286
(71,497)
5,380
(19,041)
76,450
362,980
295,777
66,027
(128)
34,486
(24,348)
(693)
(1,080)
(625,389)
182,178
•
•
•
FLNG – This segment includes our operations of FLNG vessels or projects. We convert LNG carriers into FLNG vessels
or build new FLNG vessels and subsequently contract them to third parties. We currently have one operational FLNG,
the FLNG Hilli, and one FLNG moored at the GTA field offshore Mauritania and Senegal, the FLNG Gimi (note 18).
Corporate and other – This segment includes our vessel management, floating storage and regasification unit (“FSRU”)
services for third parties, administrative services to affiliates and third parties, our corporate overhead costs and other
strategic investments.
Shipping – This segment includes our operations of the transportation of LNG carriers. We currently have one
operational LNG carrier, the Golar Arctic (note 13).
F-31
(in thousands of $)
Statement of Operations:
Total operating revenues
Vessel operating expenses
Voyage, charterhire and commission expenses, net
Administrative expenses
Project development expenses
Realized gain on oil and gas derivative instruments (note 8)
Other operating income (notes 7, 8 and 19)
Adjusted EBITDA
Year Ended December 31, 2023
FLNG
Corporate
and other (1)
Shipping
Total results
from
continuing
operations
245,418
(65,748)
(583)
(417)
(4,151)
199,907
15,542
35,086
(19,248)
(19)
(33,031)
(34,909)
—
7,817
17,925
(6,153)
(1,581)
(14)
(70)
—
—
389,968
(44,304)
10,107
298,429
(91,149)
(2,183)
(33,462)
(39,130)
199,907
23,359
355,771
Net (losses)/income from equity method investments
(note 17)
—
(4,834)
2,314
(2,520)
(1) Includes inter-segment eliminations arising from vessel and administrative management fees revenue between segments.
Balance Sheet:
(in thousands of $)
Total assets
Equity method investments (note 17)
Capital expenditures (notes 18, 19 and 20)
December 31, 2023
FLNG
Corporate
and other (1)
Shipping
Total
3,160,457
866,088
57,442
4,083,987
—
568,485
53,982
4,406
—
8,492
53,982
581,383
(1) Includes inter-segment eliminations arising from vessel and administrative management fees revenue between segments.
(in thousands of $)
Statement of Operations:
Total operating revenues (1)
Vessel operating expenses
Voyage, charterhire and commission expenses/(income)
Administrative expenses
Project development income/(expenses)
Realized gain on oil and gas derivative instruments (note 8)
Other operating losses
Adjusted EBITDA
Year Ended December 31, 2022
FLNG
Corporate
and other (2)
Shipping
Total results
from
continuing
operations
214,825
(58,583)
(600)
22
(5,335)
232,020
(15,417)
366,932
43,230
(6,578)
(34)
(38,224)
(2,637)
-
-
9,685
(7,641)
(1,810)
102
(45)
-
-
267,740
(72,802)
(2,444)
(38,100)
(8,017)
232,020
(15,417)
(4,243)
291
362,980
Net (losses)/income from equity method investments
(note 17)
—
(5,193)
24,234
19,041
(1) Total operating revenues under the FLNG segment includes $0.9 million revenue from a FLNG study (note 7).
(2) Includes inter-segment eliminations arising from vessel and administrative management fees revenue between segments.
F-32
Balance Sheet:
December 31, 2022
(in thousands of $)
Total assets
FLNG
Corporate
and other (1)
Shipping
Segment
assets from
continuing
operations
Assets held
for sale
Total
2,815,552
1,410,587
52,700
4,278,839
721
4,279,560
Equity method investments (note 17)
—
48,669
55,439
104,108
Capital expenditures (note 18)
301,292
—
2,901
304,193
—
—
104,108
304,193
(1) Includes inter-segment eliminations arising from vessel and administrative management fees revenue between segments.
(in thousands of $)
Statement of Operations:
Total operating revenues
Vessel operating expenses
Voyage, charterhire and commission expenses
Administrative expenses (2)
Project development expenses
Realized gain on oil and gas derivative instruments (note 8)
Year Ended December 31, 2021
FLNG
Corporate
and other (1)
Shipping
Total results
from
continuing
operations
221,020
(51,195)
(600)
(241)
(3,171)
24,772
27,777
(12,119)
166
(34,913)
507
—
11,476
(1,052)
(235)
(157)
143
—
260,273
(64,366)
(669)
(35,311)
(2,521)
24,772
Adjusted EBITDA
190,585
(18,582)
10,175
182,178
Net income from equity method investments
(note 17)
—
1,080
—
1,080
(1) Includes inter-segment eliminations arising from vessel and administrative management fees revenue between segments.
(2) Included within the “Corporate and other” “administrative expenses” is $0.5 million of redundancy costs from an overhead streamlining
exercise following the completion of the sale of our investments in Golar Partners and Hygo to NFE, (the “GMLP Merger” and “Hygo
Merger”, respectively) (note 14).
Revenues from external customers
For the years ended December 31, 2023, 2022 and 2021, revenues from the following customer accounted for over 10% of our
total operating revenues:
(in thousands of $)
Perenco and SNH (1)
2023
2022
2021
245,418
82 %
213,970
80 %
221,020
85 %
(1) LTA with Perenco Cameroon S.A. (“Perenco”) and Société Nationale des Hydrocarbures (“SNH”), (together, the “Customer”) in relation
to the FLNG Hilli (note 7).
The revenue from external customers above excludes vessel and other management fees from related parties (note 28).
Geographic data
The following geographical data presents our revenues and total assets associated with the FLNG Hilli, while operating under
the LTA in Cameroon. Our CODM do not evaluate our performance according to geographical region.
Cameroon
(in thousands of $)
Liquefaction services revenue
Year Ended December 31,
2023
245,418
2022
213,970
2021
221,020
F-33
(in thousands of $)
Total assets
December 31,
2023
2022
2021
1,256,193
1,559,158
1,408,444
Following disposal of most of our LNG carriers, we have limited revenue from time and voyage charters. As of December 31,
2023, our fleet includes a single LNG carrier, Golar Arctic. The charterer controls the routes of LNG carriers, which are
generally worldwide.
7.
REVENUE
The following table represents a disaggregation of revenue earned from contracts with customers during the years ended
December 31, 2023, 2022 and 2021. Liquefaction services revenue is included in our “FLNG” segment while Vessel
management fees and other revenues is included in our “Corporate and other” segment.
(in thousands of $)
Base tolling fee (1)
Amortization of deferred commissioning period revenue (2)
Amortization of Day 1 gains (3)
Overproduction/ (underutilization) (4)
Incremental base tolling fee (5)
Other (6)
Liquefaction services revenue
Management fees revenue (7)
Service revenue (8)
Other revenues (9)
Vessel management fees and other revenues
Year Ended December 31,
2023
2022
2021
204,501
204,501
204,501
4,120
12,541
20,129
5,000
(873)
4,120
22,608
(20,089)
5,000
(2,170)
4,120
9,712
3,249
—
(562)
245,418
213,970
221,020
20,983
13,798
305
35,086
27,916
14,423
1,746
44,085
27,411
—
366
27,777
(1) The LTA bills at a base rate in periods when the oil price is $60 or less per barrel, and at an increased rate when the oil price is greater
than $60 per barrel. The oil price above the base rate is recognized as a derivative and included in “Realized and unrealized (loss)/gain on oil
and gas derivative instruments” in the consolidated statements of operations (note 8).
(2) Customer billing during the commissioning period, prior to vessel acceptance and commencement of the contract term was deferred (note
23 and 24) and recognized evenly over the term of the LTA.
(3) Day 1 gain results from amount established on the initial recognition of the FLNG Hilli’s oil derivative instrument embedded in the LTA
and the FLNG Hilli's gas derivative instruments pursuant to LTA (“LTA Amendment 3”) (note 23 and 24). These amounts were deferred on
initial recognition and amortized evenly over the contract term.
(4) In March 2021, we signed an agreement with the Customer (“LTA Amendment 2”), to change the contract term from one linked to fixed
capacity of 500.0 billion cubic feet to one of a fixed term, terminating on July 18, 2026. This amendment also permits billing adjustments for
amounts over or under the annual contracted capacity in a given contract year (“overproduction” or “underutilization”, respectively),
commencing from contract year 2019. Amounts for overproduction were invoiced at the end of a given contract year, while amounts for
underutilization (which is capped per contract year) will be a reduction against our final invoice to the Customer at the end of the LTA in July
2026. Pursuant to LTA Amendment 2, we have billed and recognized overproduction revenue in relation to excess production over contracted
annual capacity during contract years 2021 and 2023.
Pursuant to the fourth amendment to the LTA, we agreed with the Customer to increase contract year 2023 annual contracted capacity by 0.04
million tonnes (from 1.4 million tonnes to 1.44 million tonnes) resulting from the inclusion of contract year 2022 underutilization into
contract year 2023 annual LNG production. The increased contract year 2023 annual LNG production was met and we have subsequently
released the contract year 2022 underutilization liability of $35.8 million to our consolidated statement of operations, of which $20.1 million
is recognized in “Liquefaction services revenue” and $15.7 million is recognized in “Other operating income”.
F-34
(5) In July 2021, we entered into LTA Amendment 3 which increased the annual capacity utilization of FLNG Hilli by 0.2 million tonnes of
LNG for the 2022 contract year. In July 2022, the Customer exercised its option pursuant to LTA Amendment 3 for 0.2 million tonnes (out of
0.4 million tonnes) from January 2023 to the end of the LTA. The combined effect results in annual contracted base capacity of 1.4 million
tonnes of LNG from January 1, 2022 to the end of the LTA. The tolling fee is linked to TTF and the Euro/U.S. Dollar foreign exchange
movements. The contractual floor rate is recognized in “Liquefaction services revenue” and the tolling fee above the contractual floor rate is
recognized as a derivative in “Realized and unrealized (loss)/gain on oil and gas derivative instruments” in the consolidated statements of
operations (note 8).
(6) “Other” includes accrued demurrage cost of $0.3 million (2022: $1.6 million), recognized in the period in which a production delay
occurred, and the unwinding of deferred liquidated damages that were incurred prior to the commencement of the contract term of
$0.6 million (2022: $0.6 million).
(7) Comprised of ship management, administrative and vessel operation and maintenance services. We entered into several agreements to
provide ship management and administrative services to external customers and related parties (note 14 and 28). We also entered into a FSRU
Operation and Services Agreement with a subsidiary of Italy’s SNAM group (“Snam”) for the Golar Tundra, pursuant to which we are
required to provide FSRU operating and maintenance services in exchange for various payments.
(8) In August 2022, we entered into a development agreement with Snam to provide drydocking, site commissioning and hook-up services
for the Golar Tundra (the “Development Agreement”), which it acquired from us in May 2022 (note 14.2). The Development Agreement
includes contractual fixed payments recognized over the period of time that we provide the services to Snam. We completed the Development
Agreement in May 2023 and recognized services revenue of $13.8 million for the year ended December 31, 2023 (2022: $14.4 million).
(9) Included in “Other revenues” are revenues from a FLNG study of $nil (2022: $0.9 million) which was completed in December 2022 and
sub-leasing income of $0.1 million (2022: $0.4 million) (note 13).
Contract Assets and Liabilities
The following table represents our contract assets and liabilities balances as of December 31, 2023 and 2022:
(in thousands of $)
Contract assets
Current contract liabilities (1)
Non-current contract liabilities (2) (3)
Total contract liabilities (4)
The movement of our contract liabilities are as follows:
Opening balance on January 1
Deferral of revenue (5)
Recognition of unearned revenue (1) (2)
Recognition of deferred revenue (3) (5)
Closing balance on December 31
December 31,
2023
21,403
2022
21,297
(4,220)
(6,276)
(10,496)
(8,398)
(54,018)
(62,416)
2023
(62,416)
(2,325)
44,104
10,141
2022
(18,736)
(62,223)
18,543
—
(10,496)
(62,416)
(1) As of December 31, 2023 and 2022, we recognized a current contract liability of $nil and $4.2 million, respectively, in relation to the
Development Agreement.
(2) Due to a production shortfall of the FLNG Hilli for the 2022 contract year, we recognized a non-current contract liability for
underutilization of $35.8 million as of December 31, 2022 (note 24). As of December 31, 2023, we met the contract year 2023 annual LNG
production and unwound the underutilization liability of $35.8 million.
(3) Pursuant to the agreements with Snam for the future sale of the Golar Arctic following her conversion into a FSRU (“Arctic SPA”), upon
receipt of a notice to proceed, we will convert LNG carrier Golar Arctic to a FSRU which would lead to her eventual sale to Snam. The Arctic
SPA included contractual fixed payments (recognized over the period of time that we would have provided the services to Snam) and as of
December 31, 2022, we recognized a non-current contract liability of $7.8 million (note 24). In June 2023, Snam’s option to issue the notice
to proceed lapsed and in accordance with the Arctic SPA, we retained and recognized the first advance payment and presented in “Other
operating income” in the consolidated statements of operations.
(4) Included within “Total contract liabilities” is the deferred commissioning revenue in relation to the FLNG Hilli of $10.5 million as of
December 31, 2023 (December 31, 2022: $14.6 million) (note 23 and 24). We expect to recognize liquefaction services revenue related to the
partially unsatisfied performance obligation at the balance sheet date evenly over the remaining LTA contract term of three years, including
the components of transaction price described above.
F-35
(5) Included in “deferral of revenue” and “recognition of deferred revenue” in the reconciliation of contract liabilities table above, is the
deposit of $2.3 million received for the sale of the Gandria in May 2023 which was completed in November 2023 (note 19).
8.
REALIZED AND UNREALIZED (LOSS)/GAIN ON OIL AND GAS DERIVATIVE INSTRUMENTS
The realized and unrealized gain/(loss) on the oil and gas derivative instruments is comprised of the following:
(in thousands of $)
Realized mark-to-market (“MTM”) adjustment on commodity swap derivatives
Realized gain on FLNG Hilli’s oil derivative instrument
Realized gain on FLNG Hilli’s gas derivative instrument
Realized gain on oil and gas derivative instruments, net
Unrealized (loss)/gain on FLNG Hilli’s gas derivative instrument (note 20)
Unrealized (loss)/gain on FLNG Hilli’s oil derivative instrument (note 20)
Unrealized MTM adjustment for commodity swap derivatives
Unrealized (loss)/gain on oil and gas derivative instruments, net
Year Ended December 31,
2023
2022
87,555
(18,605)
2021
—
73,120
110,696
24,772
39,232
139,929
—
199,907
232,020
24,772
(142,521)
121,959
51,286
(76,847)
55,315
126,940
(65,290)
111,703
1,665
(284,658)
288,977
179,891
Realized and unrealized (loss)/gain on oil and gas derivative instruments (note 27)
(84,751)
520,997
204,663
The realized gain on oil and gas derivative instruments results from monthly billings above the FLNG Hilli base tolling fee and
the incremental capacity increase pursuant to LTA amendments, whereas the unrealized (loss)/gain on oil and gas derivative
instruments results from movements in forecasted oil and natural gas prices and Euro/U.S. Dollar exchange rates.
9.
OTHER NON-OPERATING (LOSS)/INCOME
Other non-operating (loss)/income, net is comprised of the following:
(in thousands of $)
Dividend income from our investment in listed equity securities
UK tax lease liability (1)
Realized and unrealized MTM (losses)/gains on our investment in listed
equity securities (note 16) (2)
Others
Other non-operating (loss)/income
Year Ended December 31,
2023
9,823
—
2022
4,768
7,148
2021
5,588
(71,739)
(62,308)
400,966
(295,777)
—
—
124
(52,485)
412,882
(361,804)
(1) In April 2022, we settled our liability to the UK tax authority in relation to former leasing arrangements of $66.4 million, inclusive of fees
and released the remaining UK tax lease liability of $5.3 million and recognized a foreign exchange movement of $1.8 million.
(2) “Investment in listed equity securities”, included in balance sheet line-item “Other current assets” (note 16), relates to our equity holding
in NFE of nil and 5.3 million shares as of December 31, 2023 and 2022, respectively. During the years ended December 31, 2023, 2022 and
2021, we recognized $nil, $350.9 million unrealized MTM gains and $295.8 million unrealized MTM losses, respectively.
In 2023 and 2022, we sold 1.2 million and 13.3 million of our NFE Shares at a price range between $36.90 and $40.38 per share and $40.80
and $58.29 per share for an aggregate consideration of $45.6 million and $625.6 million which resulted to $62.3 million realized MTM losses,
$50.1 million realized MTM gains, respectively. There was no comparable sale of our NFE Shares during the year ended December 31, 2021.
On March 15, 2023, we disposed of our remaining 4.1 million NFE Shares that were applied as partial consideration for the repurchase of
1,230 Hilli common from NFE, which NFE acquired pursuant to the sale of our investment in Golar Partners to NFE in April 2021. Following
these transactions, we no longer hold any listed equity securities.
F-36
10.
(LOSSES)/GAINS ON DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL ITEMS, NET
(Losses)/gains on derivative instruments, net is comprised of the following:
(in thousands of $)
Unrealized MTM adjustment for interest rate swap (“IRS”) derivatives
Net interest income/(expense) on undesignated IRS derivatives
Foreign exchange gain on terminated undesignated foreign exchange
swaps
(Losses)/gains on derivative instruments, net
Other financial items, net is comprised of the following:
(in thousands of $)
Financing arrangement fees and other related costs (1)
Amortization of debt guarantees
Foreign exchange (loss)/gain on operations
Other
Other financials items, net
Year Ended December 31,
2023
(15,583)
8,356
2022
72,269
(772)
—
—
(7,227)
71,497
Year Ended December 31,
2023
(1,667)
2,019
(941)
(311)
(900)
2022
(9,340)
2,657
1,598
(295)
(5,380)
2021
27,016
(2,908)
240
24,348
2021
(1,201)
2,569
(384)
(291)
693
(1) Financing arrangement fees and other related costs for the year ended December 31, 2022 is mainly comprised of (i) $4.9 million write-off
of deferred financing fees and expenses in relation to an undrawn corporate bilateral facility, the availability of which expired in June 2022;
(ii) $2.3 million loss on partial repurchase of our $300.0 million senior unsecured bonds (“Unsecured Bonds”) in December 2022 (note 21);
and (iii) $1.4 million commitment fees paid in relation to the undrawn portion of the Corporate RCF, which was canceled in November 2022
(note 21).
11.
INCOME TAX (EXPENSE)/ BENEFIT
The components of income tax (expense)/benefit are as follows:
(in thousands of $)
Current tax expense
Deferred tax (expense)/benefit (1)
Total income tax (expense)/ benefit
Year ended December 31,
2023
(521)
(1,349)
(1,870)
2022
(520)
958
438
2021
(1,445)
5
(1,440)
The income taxes for the years ended December 31, 2023, 2022 and 2021 differed from the amounts computed by applying the
Bermuda statutory income tax rate of 0% as follows:
(in thousands of $)
Effect of movement in deferred tax and prior period adjustment
Effect of prior periods adjustment in current tax
Effect of taxable income in various countries
Total income tax (expense)/ benefit
Jurisdictions open to examinations
Year ended December 31,
2023
(1,349)
189
(710)
(1,870)
2022
958
346
(866)
438
2021
5
(232)
(1,213)
(1,440)
The earliest tax years that remain subject to examination by the major taxable jurisdictions in which we operate are: 2022 (UK),
2021 (Croatia) and 2019 (Norway and Mauritania/Senegal).
F-37
Deferred taxes
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for
financial reporting purposes and such amounts recognized for tax purposes and pensions.
As of December 31, 2023, we have a deferred tax liability of $0.3 million (2022: $0.4 million).
12.
(LOSS)/EARNINGS PER SHARE
Basic (loss)/earnings per share (“LPS”)/(“EPS”) is calculated with reference to the weighted average number of common shares
outstanding during the year.
The components of the numerator for the calculation of basic and diluted (LPS)/EPS are as follows:
(in thousands of $)
Net (loss)/income net of non-controlling interests - continuing operations -
basic and diluted
Net income/(loss) net of non-controlling interests - discontinued
operations - basic and diluted
Year ended December 31,
2023
2022
2021
(47,086)
872,429
(175,960)
293
(84,656)
589,811
The components of the denominator for the calculation of basic and diluted (LPS)/EPS are as follows:
(in thousands)
Basic:
Year ended December 31,
2023
2022
2021
Weighted average number of common shares outstanding
106,620
107,860
109,644
Dilutive:
Dilutive impact of share options and RSUs (1)
Weighted average number of common shares outstanding
(LPS)/EPS per share are as follows:
Basic (LPS)/EPS from continuing operations
Diluted (LPS)/EPS from continuing operations (1)
Basic and diluted EPS/(LPS) from discontinued operations
—
682
—
106,620
108,542
109,644
Year ended December 31,
2023
(0.44) $
(0.44) $
0.00 $
2022
8.09 $
8.04 $
(0.79) $
2021
(1.60)
(1.60)
5.38
$
$
(1) The effects of stock awards and convertible bonds have been excluded from the calculation of diluted EPS/LPS from continuing
operations for the years ended December 31, 2023 and 2021 because the effects were anti-dilutive.
13.
OPERATING LEASES
Rental income
The minimum contractual future revenues to be received on a time charter agreement in respect of the Golar Arctic as of
December 31, 2023, are as follows:
Year ending December 31
(in thousands of $)
2024 (1)
Total minimum contractual future revenues
(1) This includes revenues from the Golar Arctic's new charter entered subsequent to December 31, 2023.
2,907
2,907
F-38
The cost and accumulated depreciation, including impairment of the Golar Arctic, leased to third parties at December 31, 2023
and 2022 were $195.4 million and $144.9 million; $196.0 million and $152.3 million, respectively.
The components of operating lease income were as follows:
(in thousands of $)
Operating lease income
Variable lease income (1)
Total operating lease income (2)
Year ended December 31,
2023
16,843
1,082
17,925
2022
8,857
828
9,685
2021
11,476
—
11,476
(1) “Variable lease income” is excluded from lease payments that comprise the minimum contractual future revenues from non-cancellable
operating leases.
(2) Total operating lease income is presented in the consolidated statement of operations line item “Time and voyage charter revenues”.
Rental expense
We lease certain office premises under operating leases. Certain of these lease agreements include one or more options to
renew. We will include these renewal options when we are reasonably certain that we will exercise the option at our discretion.
Variable lease cost relates to certain of our lease agreements which include payments that vary. These are primarily generated
from service charges related to our usage of office premises.
The components of operating lease cost were as follows:
(in thousands of $)
Operating lease cost
Variable lease cost (1)
Total operating lease cost (2)
Year ended December 31,
2023
2,335
309
2,644
2022
4,160
1,479
5,639
2021
5,899
1,621
7,520
(1) “Variable lease cost” is excluded from lease payments that comprise the operating lease liability.
(2) Total operating lease cost is included in the consolidated statement of operations line-items “Vessel operating expenses” and
“Administrative expenses”.
As of December 31, 2023 and 2022 the right-of-use assets recognized by Golar as a lessee in various operating leases amounted
to $7.4 million and $5.7 million, respectively (note 20).
The weighted average remaining lease term for our operating leases is 5.6 years (2022: 4.8 years). Our weighted-average
discount rate applied for most of our operating leases is 5.5% (2022: 5.5%).
The maturity of our lease liabilities is as follows:
Year ending December 31
(in thousands of $)
2024
2025
2026
2027
2028 and thereafter
Total minimum lease payments
1,462
1,578
1,491
1,415
1,397
7,343
F-39
14.
ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS
The net income/(loss) from discontinued operations for the years ended December 31, 2023, 2022 and 2021 are as follows:
(in thousands of $)
Income from discontinued operations
Gain on disposal
Net income from discontinued operations
(in thousands of $)
(Loss)/income from discontinued operations
(Loss)/gain on disposal
Net (loss)/income from discontinued operations
(in thousands of $)
Income/(loss) from discontinued operations
Gain on disposal
Net income from discontinued operations
14.1 The CoolCo Disposal
Year Ended December 31, 2023
Golar Partners
and Hygo
TundraCo
Total
CoolCo
266
27
293
—
—
—
—
—
—
266
27
293
Year Ended December 31, 2022
Golar Partners
and Hygo
TundraCo
4,880
123,230
128,110
—
—
—
CoolCo
(194,500)
(10,060)
(204,560)
Total
(189,620)
113,170
(76,450)
Year Ended December 31, 2021
CoolCo
TundraCo
Golar Partners
and Hygo
Total
54,534
—
54,534
2,806
—
2,806
(6,892)
574,941
568,049
50,448
574,941
625,389
The disposals of nine of our wholly owned subsidiaries and the management entities that are responsible for the commercial
and technical vessel management of the LNG carriers to Cool Company Ltd (“CoolCo” and the “CoolCo Disposal”) closed in
stages from March 3, 2022 to June 30, 2022. We recognized a loss on disposal of $10.1 million in relation to the subsidiaries
disposed, comprised of carrying values of the assets and liabilities disposed of $355.4 million, partially offset by the proceeds
received of $218.2 million cash consideration and 12.5 million shares of CoolCo valued at $127.1 million (based on the
respective share price on the phased completion dates).
In November 2022 we agreed with CoolCo to acquire our vessel operations situated in Malaysia and the assets and liabilities of
our Malaysia vessel operations (previously reported in our Corporate and others segment) were classified as held-for-sale and
qualified as a discontinued operation. As such, we have retrospectively reclassified the results as “Net income/(loss) from
discontinued operations.” In May 2023, the sale was completed and we recognized a gain on disposal of $27.0 thousand.
Our continuing involvement with the discontinued operations for the years ended December 31, 2023 and 2022 includes:
•
•
•
•
•
•
our equity method investment in CoolCo until March 2, 2023 (note 17);
$1.0 million and $0.8 million million financial guarantees fees, respectively, with respect to the debt assumed by
CoolCo related to the Golar Kelvin and Golar Ice of $176.7 million;
$1.6 million and $3.1 million management and administrative services revenue, respectively, for the provision of IT
services, routine accounting services, treasury services, finance operation services, and any additional services
reasonably required pursuant to the CoolCo Administrative Services Agreement (“CoolCo ASA”);
$nil and $4.8 million net expenses, respectively, relating to the CoolCo’s vessels participation in the Cool Pool
arrangement. We exited this pooling arrangement in November 2022;
$2.0 million and $5.8 million million ship management fee expense, respectively, for CoolCo’s management of our
LNG carrier Golar Arctic, and our contractual vessel management obligations for Golar Tundra and LNG Croatia; and
$0.1 million and $nil administrative services expense, for CoolCo’s provision of IT and finance services to us pursuant
to our short term CoolCo ASA entered into in May 2023.
F-40
The following table contains the financial statement line-items presented as discontinued operations following the CoolCo
Disposal:
(in thousands of $)
Time and voyage charter revenues
Vessel and other management fees
Vessel operating expenses
Voyage, charterhire and commission expenses
Administrative expenses
Project development expenses
Depreciation and amortization
Impairment of long-lived assets (1)
Other operating income
Operating income/(loss)
Other non-operating losses
Interest income
Interest expense, net
Other financial items, net
Pretax income/(loss) from discontinued operations
Income taxes
Income/(loss) from discontinued operations
Gain/(loss) on CoolCo Disposal (2)
Net income/(loss) from discontinued operations
Period ended
January 1, 2023 to
May 1, 2023
—
262
—
—
57
—
(20)
—
—
299
—
—
—
(18)
281
(15)
266
27
293
Year ended December 31,
2022
2021
37,289
161,957
1,815
(8,466)
(1,229)
1,906
(62)
—
(49,446)
(709)
476
(362)
(5,807)
(43,497)
(218,349)
4,374
(188,529)
—
4
(4,725)
(799)
(194,049)
(451)
(194,500)
(10,060)
(204,560)
—
5,020
73,439
(124)
7
(18,087)
(401)
54,834
(300)
54,534
—
54,534
(1) Impairment of long-lived assets relates to the impairment charge on the held for sale vessels recognized in accordance with ASC 360
Property, plant and equipment, following their classification as held-for-sale.
(2) During the year ended December 31, 2022, we recognized a loss on the CoolCo Disposal of $10.1 million. This is comprised of carrying
values of the assets and liabilities disposed of $355.4 million, partially offset by the proceeds received of $218.2 million cash consideration
and 12.5 million shares of CoolCo valued at $127.1 million (based on the respective share price on the phased completion dates).
14.2 The TundraCo Disposal
On May 31, 2022, we completed the sale of 100% of the share capital of our subsidiary Golar LNG NB 13 Corporation (the
“TundraCo Disposal”), owner of FSRU Golar Tundra and Hygo to Snam for $352.5 million.
Our continuing involvement with the discontinued operations of the Golar Tundra was the Development Agreement which was
completed in May 2023 (note 7). For the years ended December 31, 2023 and 2022, we recognized services revenue in relation
to the Development Agreement amounting to $13.8 million and $14.4 million, respectively.
F-41
The following table contains the financial statement line-items presented as discontinued operations following TundraCo's
Disposal:
Period ended January
1, 2022 to May 31, 2022
Year Ended
December 31, 2021
(in thousands of $)
Time and voyage charter revenues
Vessel operating expenses
Voyage, charterhire and commission expenses
Administrative expenses
Depreciation and amortization
Operating income
Interest income
Interest expense, net
Other financial items, net
Pretax income from discontinued operations
Income taxes
Income from discontinued operations
Gain on disposal of discontinued operations (1)
Net income from discontinued operations
27,776
(5,119)
(10,004)
(16)
(2,955)
9,682
—
(4,649)
(153)
4,880
—
4,880
123,230
128,110
29,534
(6,511)
(9,396)
(89)
(7,092)
6,446
4
(2,589)
(1,055)
2,806
—
2,806
—
2,806
(1) Gain on TundraCo Disposal comprised of (i) cash proceeds received of $352.5 million, (ii) a partially offset by the net asset value of Golar
LNG NB 13 Corporation of $229.0 million and (iii) related fees incurred in relation to disposal of $0.3 million.
14.3 Golar Partners and Hygo disposals
On April 15, 2021, we completed the GMLP and Hygo Merger. We received consideration of $876.3 million which comprised
of (i) $80.8 million cash for our investment in Golar Partners and (ii) $50.0 million cash and 18.6 million NFE Shares valued at
$745.4 million for our investment in Hygo.
The net income/(loss) of equity method investments from discontinued operations for the period ended April 15, 2021 is as
follows:
(in thousands of $)
Net income from equity method investments in Golar Partners
Net loss from equity method investments in Hygo
Loss from discontinued operations
Gain on disposal of equity method investments (1)
Net income from discontinued operations
Period January 1, 2021 to
April 15, 2021
8,116
(15,008)
(6,892)
574,941
568,049
(1) Gain on disposal of discontinued operations comprised of (i) proceeds received of $876.3 million; (ii) release of our tax indemnity
guarantee liability to Golar Partners of $2.0 million; (iii) a partial offset by the carrying values of our investment in affiliates disposed of
$257.3 million as of April 15, 2021; (iv) realized accumulated comprehensive losses on disposal of investment in affiliates of $43.4 million;
and (v) fees incurred in relation to disposals of $2.7 million.
F-42
Golar Partners and Hygo Post-Merger Services Agreements
Upon completion of the GMLP Merger and the Hygo Merger, we entered into certain transition services agreements, corporate
services agreements, ship management agreements and omnibus agreements with Golar Partners, Hygo and NFE. These
agreements replaced the previous management and administrative services agreements, ship management agreements and
guarantees that Golar provided to Golar Partners and Hygo.
Hygo
We and Stonepeak, agreed to severally indemnify NFE Brazil Holdings Limited, NFE, Lobos Acquisition Ltd. and each of their
respective affiliates and representatives, from and against any and all losses, damages, liabilities, costs, charges, fees, expenses,
taxes, disbursements, actions, penalties, proceedings, claims and demands or other liabilities related to certain taxes imposed by
government authorities.
Golar Partners
Under the omnibus agreement, Golar agreed to guarantee the certain obligations of the charters of the Golar Winter, Golar
Eskimo and NR Satu. We shall comply with all covenants and terms, including provision of covenants compliance reports, if
required. We shall also indemnify, defend and hold harmless NFE and each of its affiliates from and against all losses,
liabilities, damages, costs and expenses of every kind and nature, reasonable attorneys’ fees and expert’s fees arising in
connection with our failure to comply with the foregoing. The maximum potential exposure in respect of these guarantees is not
known as these matters cannot be reliably measured. The likelihood of triggering the guarantees is remote based on our past
performance.
For the years ended December 31, 2023, 2022 and 2021 we:
•
•
•
•
earned ship management fees amounting to $nil, $9.5 million and $6.9 million and administrative services fees
amounting to $nil, $4.5 million and $3.1 million, respectively. NFE terminated the transition services and Bermuda
services agreements on December 31, 2022;
incurred pool income/expense from other participants in the pooling arrangement totaling $0.5 million of income and
$2.5 million of expenses for the years ended December 31, 2022 and 2021, respectively. There was no comparable
income/expense for the year ended December 31, 2023;
declared distributions on Hilli LLC totaling $4.1 million, $29.4 million and $21.2 million, respectively, with respect to
the common units owned by Golar Partners and incurred $2.1 million, $4.1 million and $0.1 million, respectively for
Hilli's costs indemnification; and
earned guarantee fees from Golar Partners and Hygo amounting to $1.0 million, $1.7 million and $1.4 million,
respectively.
15.
RESTRICTED CASH AND SHORT-TERM DEPOSITS
Our restricted cash and short-term deposits balances are as follows:
(in thousands of $)
Restricted cash in relation to the FLNG Hilli (1)
Restricted cash and short-term deposits held by lessor VIE (2)
Restricted cash relating to the LNG Hrvatska O&M Agreement (3)
Restricted cash relating to office lease
Restricted cash in relation to the Golar Arctic guarantees (4)
Total restricted cash and short-term deposits
Less: Amounts included in current restricted cash and short-term deposits
Long-term restricted cash
2023
60,996
18,085
12,083
1,081
—
92,245
(18,115)
74,130
2022
60,952
21,691
11,504
1,074
38,822
134,043
(21,693)
112,350
(1) In November 2015, in connection with the issuance of a $400 million letter of credit (“LC”) by a financial institution to the Customer of
the FLNG Hilli, we recognized an initial cash collateral of $305.0 million to support the FLNG Hilli performance guarantee. Under the
provisions of the LC, the terms allow for a stepped reduction in the value of the guarantee over time and a corresponding reduction to the cash
collateral requirements. In May 2021, the FLNG Hilli had achieved 3.6 million tonnes of LNG production, reducing the LC to $100 million
and the cash collateral to $61.0 million as of December 31, 2023. The cash collateral is expected to be restricted until the end of the LTA
term.
F-43
In November 2016, after we satisfied certain conditions precedent, the LC originally issued with an initial expiration date of December 31,
2018, was re-issued and automatically extends, on an annual basis, until the tenth anniversary of the acceptance date of the FLNG Hilli,
unless the bank exercises its option to exit from the arrangement by giving a three months’ notice prior to the next annual renewal date.
(2) This is held by lessor VIE that we are required to consolidate under U.S. GAAP into our financial statements as a VIE (note 5).
(3) In connection with the LNG Hrvatska O&M Agreement, we are required to maintain two performance guarantees, one in the amount of
$10.1 million (€9.1 million) and one in the amount of $1.3 million, both of which will remain restricted throughout the 10-year term until
December 2030.
(4) In connection with the Arctic SPA, we were required to provide a performance guarantee of $29.7 million (€26.9 million) and three
advance repayment guarantees totaling $180.9 million (€163.9 million), which corresponds to the three installment payments from Snam. The
performance guarantee and first of three advance repayment guarantees of $29.7 million (€26.9 million) and $8.9 million (€8.1 million),
respectively, secured our contractual and performance obligations of the conversion of the Golar Arctic. In June 2023, Snam’s option to
exercise the notice to proceed lapsed, rendering the Arctic SPA terminated. Consequently, these guarantees were subsequently released.
16.
OTHER CURRENT ASSETS
Other current assets consists of the following:
(in thousands of $)
MTM asset on TTF linked commodity swap derivatives (note 27)
Receivable from TTF linked commodity swap derivatives
Interest receivable from money market deposits
MTM asset on IRS derivatives (note 27)
Receivable from IRS derivatives
Prepaid expenses
Investment in listed equity securities (note 9)
Others (1)
Other current assets
2023
48,079
7,581
3,929
2,697
2,461
2,292
—
4,958
71,997
2022
73,583
4,638
3,617
—
1,923
2,760
224,788
3,925
315,234
(1) Included in “Others” as of December 31, 2023 and 2022 is inventory balance in relation to unused fuel on board amounting to $2.0 million
and $0.7 million, respectively.
17.
EQUITY METHOD INVESTMENTS
At December 31, 2023 and 2022, we have the following participation in investments that are recorded using the equity method:
Avenir LNG Limited (“Avenir”)
Logística e Distribuição de Gás S.A. (“LOGAS”)
Egyptian Company for Gas Services S.A.E (“ECGS”)
Aqualung Carbon Capture AS (“Aqualung”)
MGAS Comercializadora de Gás Natural Ltda. (“MGAS”)
CoolCo
2023
23.5 %
58.0 %
50.0 %
4.4 %
51.0 %
— %
2022
23.5 %
— %
50.0 %
4.4 %
— %
8.3 %
F-44
The carrying amounts of our equity method investments as of December 31, 2023 and 2022 are as follows:
(in thousands of $)
Avenir
LOGAS
ECGS
Aqualung
MGAS
CoolCo
Total equity method investments
The components of our equity method investments are as follows:
(in thousands of $)
Balance as of January 1,
Additions
Net (losses)/income
Guarantees
Employee stock compensation
Share of other comprehensive losses
Net proceeds from disposal
Balance as of December 31,
Avenir
2023
35,729
9,261
5,237
2,244
1,511
—
53,982
2023
104,108
9,678
(2,520)
(751)
—
(488)
(56,045)
53,982
2022
41,790
—
4,503
2,376
—
55,439
104,108
2022
52,215
129,662
19,041
1,708
127
(797)
(97,848)
104,108
In October 2018, Golar, Stolt-Nielsen Ltd. (“Stolt-Nielsen”) and Höegh LNG Holdings Limited (“Höegh”) entered into a joint
$182.0 million investment in Avenir. Golar contributed $24.8 million in exchange for an initial shareholding of 25% of Avenir.
The other shareholders, Höegh and Stolt-Nielsen held initial shareholdings of 25% and 50%, respectively. In November 2018,
Avenir announced a private placement of 110 million new shares at a par value price of $1.00 per share. Stolt-Nielsen, Golar
and Höegh subscribed for 49.5 million, 24.75 million and 24.75 million shares, respectively. Institutional and other professional
investors had subscribed for the remaining 11 million shares. The ownership of Avenir held by Stolt-Nielsen, Golar and Höegh
after the placement was diluted to 45%, 22.5% and 22.5%, respectively. As a result, Avenir has been considered as our equity
method investment.
In March 2020, Avenir issued an equity shortfall notice of $45.0 million which was funded through issuance of additional
shares at par value of $1.00 per share. As of December 31, 2023, and 2022, our $18.0 million commitment to Avenir was fully
funded, resulting to a total investment of $42.75 million, representing a 23.5% ownership interest. When assessing the
recoverability of the carrying value of our investment in Avenir, we considered factors including but not limited to our
expectations of its current phase of operations and future charter demands.
LOGAS
LOGAS is based in Brazil and provides various services to businesses and local authorities including the distribution and
transportation of compressed natural gas ("CNG"), compression and decompression of CNG, storage and distribution of LNG,
and the purchase and sale of natural gas.
In October 2023, Macaw Brazil entered into an investment agreement to acquire a 58% ownership interest in LOGAS for
BRL45.0 million (approximately $9.3 million) which completed in November 2023. We have a 58% majority voting interest in
LOGAS compared to 42% voting interest held by the non-controlling interest. For so long as the LOGAS non-controlling
interests hold at least 30% of voting shares of LOGAS, the LOGAS non-controlling interests have substantive participating
rights that prevent us from controlling the significant operating and financial decisions made in LOGAS’ ordinary course of
business. We consider that we have significant influence over the operating and financial policies of LOGAS.
F-45
ECGS
In December 2005, we entered into an agreement with the Egyptian Natural Gas Holding Company and HK Petroleum Services
to establish a jointly owned company, ECGS, to develop operations in Egypt, particularly in hydrocarbon and LNG related
areas.
In March 2006, we acquired 0.5 million common shares in ECGS at a subscription price of $1.00 per share. This represents a
50% interest in the voting rights of ECGS and in December 2011, ECGS called up its remaining share capital amounting to
$7.5 million. Of this, we paid $3.75 million to maintain our 50% equity interest. ECGS does not have quoted market price
because the company is not publicly traded. As ECGS is jointly owned and operated, we have adopted the equity method of
accounting for our 50% investment in ECGS, as we consider we have joint control.
CoolCo
In January 2022, we entered into the Vessel SPA with CoolCo, as further described in note 14.1.
In November 2022, we sold 8.0 million of our CoolCo shares or 11.2% at NOK 130 per share for net consideration of
$97.9 million, inclusive of $1.5 million fees. Concurrent with the sale of our CoolCo shares, CoolCo announced a private
placement of 13.7 million new shares at NOK 130 per share which further diluted our interest in CoolCo. Following our sale of
CoolCo shares and CoolCo’s issuance of new shares, our remaining equity holding in CoolCo was reduced to 4.5 million
shares, or 8.3% as of December 31, 2022. This is a partial disposal of an entity in which we have retained the ability to exercise
significant influence and the total gain on disposal of our interest in CoolCo of $0.4 million is included in the consolidated
statement of operations line-item “Net income/(losses) from equity method investments”.
In March 2023, we sold 4.5 million shares of our CoolCo shares at NOK 130.00/$12.60 per share for net consideration of
$56.1 million, inclusive of $0.1 million fees. Consequently, we reclassified the guarantees we continue to provide CoolCo and
recognized in “Other current assets” and “Other non-current asset”. As of December 31, 2023, following the sale of our CoolCo
shares, we retain one common share in CoolCo which is required by debt covenants relating to the guarantees we continue to
provide CoolCo. The gain on disposal of $0.8 million is included in the consolidated statement of operations line-item “Net
income/(losses) from equity method investments”.
Summarized unaudited financial information of our material equity method investments shown on a 100% basis are as follows:
(in thousands of $)
Balance Sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Statement of Operations
Revenue
Net income/(loss)
ECGS
December 31, 2023
Avenir
LOGAS
34,834
72
(22,925)
(931)
25,447
264,124
(39,182)
(128,171)
8,458
8,462
(1,846)
(243)
50,690
881
72,786
(19,377)
11,353
1,876
F-46
(in thousands of $)
Balance Sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Statement of Operations
Revenue
Net income/(loss)
18.
ASSET UNDER DEVELOPMENT
(in thousands of $)
Balance as of January 1,
Additions
Interest costs capitalized
Balance as of December 31,
18.1. Gimi conversion and financing
CoolCo
December 31, 2022
ECGS
Avenir
145,338
1,912,723
(278,589)
(1,063,959)
36,504
97
(25,501)
(931)
34,028
270,177
(69,509)
(92,694)
256,434
110,744
58,680
713
62,875
(16,217)
2023
1,152,032
338,327
72,469
2022
877,838
221,184
53,010
1,562,828
1,152,032
In February 2019, we entered into an agreement (described further below) relating to a FLNG facility to be employed, in
connection with the first phase of the Greater Tortue/Ahmeyim Project (the “GTA Project”). In November 2023, we accepted
redelivery of FLNG Gimi from Singapore’s Seatrium Shipyard and she departed for the LNG hub facilities situated offshore
Mauritania and Senegal (“GTA Hub”). In conjunction with the redelivery of FLNG Gimi from Seatrium and as is customary in
major capital projects, as of December 31, 2023, we remain in negotiations regarding the final settlement of a disputed variation
order under the terms of the relevant conversion contracts.
The aggregate expected conversion cost including financing costs is approximately $1.7 billion of which $700 million is funded
by the Gimi facility (note 21). As of December 31, 2023, the estimated timing of the outstanding payments are as follows:
(in thousands of $)
Period ending December 31,
2024
2025
Total
18.2. Gimi LOA
278,121
14,057
292,178
In February 2019, Gimi MS entered into a Lease and Operate Agreement with BP Mauritania Investments Limited (“BP”),
Gimi MS and our subsidiary Golar MS Operator S.A.R.L. (the “LOA”) which was subsequently amended and restated in
September 2021.
The LOA provides for the construction and conversion of LNG carrier Gimi to a FLNG, transit, mooring and connection to the
upstream project infrastructure (of which BP is the appointed operator), commissioning with the upstream facilities including
its floating production, storage and offloading vessel, completing specified acceptance tests, followed by 20 years of
commercial operations, commencing on the commercial operations date (“COD”).
F-47
FLNG Gimi’s departure from the shipyard was postponed from the first half of 2023 to November 19, 2023 to allow for further
vessel completion, pre-commissioning and testing work to be completed in the shipyard prior to departure, considering that
skills and resources were more accessible in Singapore at the time. We and BP are required to meet various contractual delivery
schedules with delays resulting in contractual prepayments between the parties in advance of COD (note 18.3). Following
COD, we will operate and maintain FLNG Gimi and make her capacity exclusively available for the liquefaction of natural gas
from the GTA Project and offloading of LNG produced for a period of twenty years. Post COD, the contractual dayrate is
comprised of capital and operating elements.
18.3. Gimi LOA pre-commissioning contractual cash flows
As a result of project delays, pre-commissioning contractual cash flows commenced in March 2023 and as of December 31,
2023 Gimi MS recognized $105.4 million of amounts paid to BP (note 20).
The ongoing contract interpretation dispute regarding certain of these pre-commissioning contractual cash flows continues,
including regarding amounts payable by BP to Gimi MS. As of December 31, 2023, we are of the view that Gimi MS is due
Project Delay Payments (“PDPs”) from May 2023 from BP, which BP have disputed. To facilitate a mutual resolution, Gimi
MS followed the dispute resolution provisions included in the LOA and thereafter initiated arbitration proceedings in respect of
the PDPs in August 2023, the resolution of which may take several months or years and no assurance can be given that our
claim will be successful. In the event of a favorable resolution we expect to be entitled to recover all or a portion of our legal
costs and fees incurred from BP. In the event of an unfavorable resolution, we may not be entitled to receive the PDPs in part or
in full and we may be required to reimburse all or a portion of BP’s legal costs and fees incurred. We consider the contractual
PDPs receivable from BP as a contingent gain and no amounts are recognized in our consolidated financial statements as of
December 31, 2023. Any amount we may recover will not be reflected in our consolidated financial statements until such time
as our claim has been resolved and the amount is realized or realizable. Given the complexity and interdependencies of the
activities required during project commissioning leading to COD, it is difficult for us to reasonably estimate eventual net
payments/receipts. We expect any net payments/receipts in advance of COD to be insignificant in the context of the cash flows
we expect to generate over the term of the LOA and we do not believe that this dispute impacts the wider execution of the 20-
year LOA. Refer to note 30 for subsequent developments.
19.
VESSELS AND EQUIPMENT, NET
(in thousands of $)
Cost
As of January 1, 2023
Additions
Disposals (1)
Write-offs (2)
As of December 31, 2023
Vessels and
equipment
Mooring
equipment
Deferred
Drydocking
expenditure
Office
equipment
and fittings
Total
1,374,607
45,771
109,094
7,341
1,536,813
—
(44,044)
—
—
—
—
8,492
—
(9,094)
1,934
—
(3,382)
10,426
(44,044)
(12,476)
1,330,563
45,771
108,492
5,893
1,490,719
Depreciation, amortization and impairment
As of January 1, 2023
Charge for the year (3)
Disposals (1)
Write-offs (2)
Impairment (1)
As of December 31, 2023
(336,055)
(25,906)
(32,011)
(5,788)
(399,760)
(38,166)
29,065
—
(5,021)
(5,544)
—
—
—
(5,264)
—
9,094
—
(828)
—
3,382
—
(49,802)
29,065
12,476
(5,021)
(350,177)
(31,450)
(28,181)
(3,234)
(413,042)
Net book value as of December 31, 2023
980,386
14,321
80,311
2,659
1,077,677
F-48
(in thousands of $)
Cost
As of January 1, 2022
Additions
As of December 31, 2022
Vessels and
equipment
Mooring
equipment
Deferred
Drydocking
expenditure
Office
equipment
and fittings
Total
1,374,607
45,771
109,094
7,264
1,536,736
—
—
—
77
77
1,374,607
45,771
109,094
7,341
1,536,813
Depreciation, amortization and impairment
As of January 1, 2022
Charge for the year (3)
Impairment (4)
As of December 31, 2022
(223,999)
(20,363)
(22,767)
(5,188)
(272,317)
(39,449)
(72,607)
(5,543)
—
(5,696)
(3,548)
(600)
—
(51,288)
(76,155)
(336,055)
(25,906)
(32,011)
(5,788)
(399,760)
Net book value as of December 31, 2022
1,038,552
19,865
77,083
1,553
1,137,053
(1) In May 2023, we entered into an agreement for the sale and recycling of the Gandria (“Gandria SPA”) with Last Voyage, DMCC, for net
consideration of $15.2 million. The Buyer agreed to purchase the Gandria (including vessel and onboard equipment) for demolition and
recycling which will take place at a ship recycling facility in India. Concurrently, the held for sale presentation criteria was met and a
remeasurement of the vessel and onboard equipment to lower of her carrying value and fair value less estimated costs to sell was performed,
resulting in an impairment charge of $5.0 million recognized during the year ended December 31, 2023. Before the held for sale presentation
criteria was met, the Gandria was previously reported in our FLNG segment. The Gandria SPA was completed on November 1, 2023,
resulting in a loss on disposal of $0.5 million recognized in “Other Operating gain/(loss)”, in the consolidated statements of operations (note
6).
(2) Write-offs relates to fully depreciated or fully amortized assets.
(3) Depreciation and amortization charges for the years ended December 31, 2023 and 2022, excludes $0.5 million and, $0.5 million
respectively, of amortization charges in relation to the Cameroon license fee.
(4) Entry into the Arctic SPA changed the expected recovery of Golar Arctic’s carrying amount from continued use in operations over her
remaining useful life, to recovery from sale, and was considered an indicator of impairment. As the revised future estimated cash flows were
less than her carrying amount, an impairment charge of $76.2 million was recognized during the year ended December 31, 2022, reflecting an
adjustment to her fair value (based on average broker valuation at date of measurement and represents the exit price in the principal LNG
carrier sales market). The Golar Arctic is currently within our Shipping segment.
As of December 31, 2023, we performed our annual vessel impairment assessment and determined that the Golar Arctic’s
market valuation of $44.3 million is less than its carrying value of $50.4 million. However, based on the estimated future
undiscounted cash flows of the Golar Arctic which is significantly greater than its carrying value, no impairment was
recognized.
Market values are determined using reference to average broker values provided by independent brokers. Broker values are
considered an estimate of the market value for the purpose of determining whether an impairment trigger exists. Broker values
are commonly used and accepted by our lenders in relation to determining compliance with relevant covenants in applicable
credit facilities for the purpose of assessing security quality. Since vessel values can be volatile, our estimates of market value
may not be indicative of either the current or future prices we could obtain if we sold any of the vessels. In addition, the
determination of estimated market values may involve considerable judgment, given the illiquidity of the second-hand markets
for these types of vessels.
F-49
20.
OTHER NON-CURRENT ASSETS
Other non-current assets are comprised of the following:
(in thousands of $)
Pre-operational assets (1)
Oil derivative instrument (note 27)
Gas derivative instrument (note 27)
MTM asset on IRS derivatives (note 27)
Operating lease right-of-use-assets (2)
MTM asset on TTF linked commodity swap derivatives (note 27)
Others (3)
Other non-current assets
2023
189,023
105,948
53,663
36,690
7,386
—
107,096
499,806
2022
27,098
182,795
196,184
54,970
5,653
39,785
5,554
512,039
(1) As of December 31, 2023, pre-operational assets comprised of capitalized Mark II FLNG (“Mark II”) project engineering costs, long lead
items and deposit for a donor vessel of $59.4 million, $109.8 million and $15.5 million, respectively (2022: $16.7 million, $10.4 million and
$nil, respectively).
(2) Operating lease right-of-use-assets mainly comprises of our office premises leases.
(3) Included within “Others” as of December 31, 2023 and 2022 is pre-commissioning contractual cashflows paid by Gimi MS to BP in
relation to the Gimi LOA of $105.4 million and $nil, respectively (note 18.3).
21.
DEBT
(in thousands of $)
Total debt, net of deferred finance charges
Less: Current portion of long-term debt and short-term debt
Long-term debt
2023
2022
(1,216,730)
(1,189,324)
342,566
344,778
(874,164)
(844,546)
The outstanding debt, gross of deferred finance charges, as of December 31, 2023 is repayable as follows:
Year ending December 31
(in thousands of $)
2024
2025
2026
2027
2028
2029 and thereafter
Total
Deferred finance charges
Golar debt
VIE debt (1)
Total debt
(43,756)
(300,025)
(258,202)
(58,333)
(58,333)
(58,333)
(367,501)
(844,458)
20,921
(60,600)
(35,500)
—
—
—
(343,781)
(318,802)
(93,833)
(58,333)
(58,333)
(367,501)
(396,125)
(1,240,583)
2,932
23,853
Total debt net of deferred finance charges
(823,537)
(393,193)
(1,216,730)
(1) This relates to debt balance of our consolidated lessor VIE entity (note 5).
(in thousands of $)
Gimi facility (1)
Unsecured Bonds
Golar Arctic facility (1)
Subtotal (excluding lessor VIE debt)
CSSC VIE debt - FLNG Hilli facility
Total debt (gross)
2023
(630,000)
(199,869)
(14,589)
(844,458)
2022 Maturity date
(535,000) March 2030
(159,029) October 2025
(21,884) October 2024
(715,913)
(396,125)
(1,240,583)
(494,366)
(1,210,279)
Repayable on
demand/2026
F-50
(in thousands of $)
Less: Deferred finance charges
Total debt, net of deferred financing costs
Gimi facility
2023
2022 Maturity date
23,853
(1,216,730)
20,955
(1,189,324)
In 2019, we entered into a $700 million facility agreement with a group of lenders to finance the conversion of the FLNG Gimi.
The facility is available for drawdown during the Gimi conversion to a FLNG and amortizes upon COD, with a final balloon
payment of $350.0 million, due in 2030. The facility originally bears interest at LIBOR plus a margin of 4.0% during the
conversion phase, reducing to LIBOR plus a margin of 3.0% post COD. In 2023, we executed amendments to transition from
LIBOR to SOFR plus the existing margin. As of December 31, 2023, we had drawn $630.0 million of the available funds.
Subsequent drawdowns are dependent upon reaching further project milestones. A commitment fee is chargeable on any
undrawn portion of this facility.
Unsecured Bonds
In 2021, we closed our $300.0 million senior Unsecured Bonds in the Nordic bond market. The Unsecured Bonds will mature
in October 2025 and bear interest of 7.00% per annum. The net proceeds from the Unsecured Bonds was used to partly
refinance our $402.5 million 2017 convertible bonds which matured in February 2022 (“Convertible Bonds”) and for general
corporate purposes. Contemporaneous with the closing of the Unsecured Bonds, we redeemed $85.2 million of the Convertible
Bonds and recognized loss on partial redemption of $0.8 million.
The terms of the Unsecured Bonds grant us:
•
•
•
•
an early redemption option to redeem the Unsecured Bonds for 100% of the nominal amount if it is required to gross
up any withholding tax from any payments in respect of the Unsecured Bonds;
early redemption call option to redeem all of some of the Unsecured Bonds at multiple dates throughout the four year
term with pricing that reduces as the maturity date approaches;
to purchase and hold the Unsecured Bonds and that such Unsecured Bonds may be retained, sold or cancelled at our
sole discretion; and
grants the bondholders a mandatory repurchase put option to require that that we repurchase some or all of the
Unsecured Bonds for 101% of the Nominal Amount per bond – the put option is triggered by a change of control
event, a delisting event, a disposal event or a total loss event.
In 2022 and 2023, we executed the repurchase of Unsecured Bonds amounting to $140.7 million and $20.4 million,
respectively. The repurchase prices ranged from par to an average price of 100.30% of par, resulting in a total consideration of
$142.2 million and $21.1 million, inclusive of $1.5 million and $0.6 million accrued interest in 2022 and 2023, respectively.
Consequently, we recognized a loss on debt extinguishment of $2.3 million and $0.3 million in “Other financial items, net” in
the consolidated statement operations, in 2022 and 2023, respectively.
Following the approval by bondholders in 2023, we executed an amendment to the terms of the Unsecured Bonds with effect
from May 25, 2023. Specifically the definition of permitted distributions, removed the restriction to pay distributions and
introduced a $100.0 million free liquid assets incurrence test in exchange for a one-time consent fee of 3.75% of the nominal
amount of the outstanding Unsecured Bonds or $5.2 million that we paid to bondholders, which is treated as an additional debt
discount and amortized through the interest expense, net line item of our consolidated statements of operations over the
remaining term of the Unsecured Bonds.
In 2023, we re-issued $61.1 million of our repurchased Unsecured Bonds, at an average price of 98.9% of par, for a total
consideration of $61.0 million inclusive of $0.1 million accrued interest. Consequently, we recognized a net loss on re-issuance
of $0.7 million in “Other financial items, net” in our consolidated statement of operations. These re-issuances did not result in
an amendment to the terms of the outstanding Unsecured Bonds.
Golar Arctic facility
The Arctic facility bears an interest of SOFR plus a margin of 2.75%. The debt facility is repayable in quarterly installments
with a final balloon payment of $9.1 million in October 2024.
F-51
Lessor VIE debt
The following loan relates to the CSSC entity that we consolidate as a VIE. Although we have no control over the funding
arrangement of this entity, we consider ourselves the primary beneficiary of this VIE and therefore are required to consolidate
this loan facility into our financial results (note 5).
Facility
Effective
from
SPV
Loan
counterparty
Loan facility
at inception
(in $
millions)
Loan facility
at December
31, 2023 (in $
millions)
Hilli
June 2018
Fortune
Lianjing
Shipping S.A.
CSSC entity
(840.0)
(120.0)
(156.7)
(239.4)
Loan
duration/
maturity
8 years non-
recourse
Repayable on
demand
Interest
SOFR plus
margin(1)(2)
Nil
(1) In 2023, we entered into the fourth side letter for FLNG Hilli’s sale and leaseback facility, incurring total fees of $6.3 million which have
been deferred and amortized over the remaining term of the sale and leaseback facility (note 5).
(2) In 2023, the SPV, Fortune Lianjiang Shipping S.A., amended the interest-bearing facility, transitioning from LIBOR to SOFR.
The vessel in the table above is secured as collateral against these long-term loans (note 29).
Debt restrictions
Certain of our debts are collateralized by vessel liens. The existing financing agreements impose certain operating and financing
restrictions which may significantly limit or prohibit, among other things, our ability to incur additional indebtedness, create
liens, sell capital shares of subsidiaries, make certain investments, enter into mergers and acquisitions, purchase and sell
vessels, enter into time or consecutive voyage charters or distribute dividends. In addition, lenders may accelerate the maturity
of indebtedness under financing agreements and foreclose upon the collateral securing the indebtedness upon the occurrence of
certain events of default, including a failure to comply with any of the covenants contained in our debt agreements. Many of our
debt agreements contain certain covenants, which require compliance with certain financial ratios. Such ratios include current
assets to liabilities and minimum net worth and minimum free cash restrictions. With regards to cash restrictions, we have
covenanted to retain at least $50.0 million of cash and cash equivalents on a consolidated group basis. As of December 31,
2023, we were in compliance with all our covenants under our various loan agreements.
22.
ACCRUED EXPENSES
Accrued expenses is comprised of the following:
(in thousands of $)
Vessel related (1)
Interest
Administrative related (2)
Current tax payable
Accrued expenses
2023
(120,152)
(13,936)
(10,211)
(511)
(144,810)
2022
(10,795)
(13,514)
(8,039)
(485)
(32,833)
(1) “Vessel related” accrued expenses is comprised of vessel operating expenses such as crew wages, vessel supplies, routine repairs,
maintenance, drydocking, lubricating oils and insurance. Included in “Vessel related” as of December 31, 2023 are the final milestone
payment accrual on the Gimi conversion's main build contract with the yard and related costs and Mark II FLNG accrued project costs of
$96.3 million and $7.8 million, respectively (2022: $0.7 million and $nil).
(2) “Administrative related” accrued expenses is comprised of general overhead including personnel costs, legal and professional fees, costs
associated with project development, property costs and other office and general expenses.
F-52
23.
OTHER CURRENT LIABILITIES
Other current liabilities is comprised of the following:
(in thousands of $)
Day 1 gain deferred revenue - current portion (1) (note 24)
Deferred revenue
Current portion of operating lease liability (note 13)
Contract liability (note 7)
Other payables (2)
Other current liabilities
2023
2022
(12,783)
(12,783)
(4,220)
(1,462)
—
(32,485)
(50,950)
(6,080)
(1,328)
(4,177)
(3,077)
(27,445)
(1) Current portion of Day 1 gain deferred on initial recognition of the oil and gas derivative instruments embedded in the LTA (note 7). As of
December 31, 2023, current portion of the deferred revenue relating to FLNG Hilli’s oil and gas derivative instruments is $10.0 million and
$2.8 million, respectively (2022: $10.0 million and $2.8 million).
(2) Included in “Other payables” as of December 31, 2023 and 2022 is pre-commissioning contractual cash flow in relation to the Gimi LOA
of $30.5 million and $nil, respectively (note 18).
24.
OTHER NON-CURRENT LIABILITIES
Other non-current liabilities is comprised of the following:
(in thousands of $)
Pension obligations (note 25)
Day 1 gain deferred revenue (1)
Deferred commissioning period revenue (2)
Non-current portion of operating lease liabilities (note 13)
Underutilization liability (note 7)
Golar Arctic’s contract liability (3)
Other payables (4)
Other non-current liabilities
2023
(23,471)
(19,179)
(6,276)
(5,881)
—
—
(6,793)
2022
(24,269)
(31,720)
(10,396)
(3,587)
(35,806)
(7,816)
(6,834)
(61,600)
(120,428)
(1) Non-current portion of Day 1 gain deferred on initial recognition of the oil and gas derivative instruments embedded in the LTA (note 7).
As of December 31, 2023, the non-current portion of the Day 1 gain deferred revenue relating to FLNG Hilli’s oil and gas derivative
instruments is $14.8 million and $4.4 million, respectively (2022: $24.5 million and $7.2 million).
(2) The Customer’s billing during the commissioning period, prior to vessel acceptance and commencement of the LTA, which is considered
an upfront payment for services. These amounts billed are recognized as part of “Liquefaction services revenue” in the consolidated
statements of operations evenly over the LTA contract term, with this commencing on the Customer’s acceptance of the FLNG Hilli (note 7).
The current portion of deferred commissioning period billing is included in “Other current liabilities” (note 23).
(3) Golar Arctic’s contract liability represents the first advance payment received from Snam in relation to the Arctic SPA. In June 2023,
Snam’s option to issue the notice to proceed lapsed. In accordance with the Arctic SPA, we retain the first advance payment (note 7).
(4) Included in “Other payables” is an asset retirement obligation relating to FLNG Hilli of $6.0 million and $5.7 million for the years ended
December 31, 2023 and 2022, respectively. The corresponding asset of $4.7 million is recorded within “Vessels and equipment, net” (note
19).
25.
PENSIONS
Defined contribution scheme
We operate a defined contribution scheme. The pension cost for the period represents contributions payable by us to the
scheme. The charges to net income for the years ended December 31, 2023, 2022 and 2021 was $1.6 million, $1.7 million and
$2.2 million, respectively.
F-53
Defined benefit schemes
We have two defined benefit pension plans both of which are closed to new entrants but still cover certain of our employees.
Benefits are based on the employees' years of service and compensation. Net periodic pension plan costs are determined using
the Projected Unit Credit Cost method. Our plans are funded by us in conformity with the funding requirements of the
applicable government regulations. Plan assets consist of both fixed income and equity funds managed by professional fund
managers. We use December 31 as the measurement date for our pension plans.
The components of net periodic benefit costs are as follows:
(in thousands of $)
Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Net periodic benefit cost
Year ended December 31,
2023
(33)
2022
(75)
(1,622)
(1,087)
427
(307)
254
(774)
(1,535)
(1,682)
2021
(120)
(879)
214
(1,131)
(1,916)
The components of net periodic benefit costs are recognized in the consolidated statement of operations within "administrative
expenses" and "vessel operating expenses" amounting to $0.2 million, (2022: $0.1 million) and $1.4 million (2022:
$1.6 million), respectively.
The estimated net loss for the defined benefit pension plans that was amortized from accumulated other comprehensive income
into net periodic pension benefit cost during the year ended December 31, 2023 is $0.3 million (2022: $0.8 million).
The change in projected benefit obligation and plan assets and reconciliation of funded status for the years ended December 31,
2023 and 2022 are as follows:
(in thousands of $)
Reconciliation of benefit obligation:
Benefit obligation at January 1
Service cost
Interest cost
Actuarial loss/(gain) (1)
Foreign currency exchange rate changes
Benefit payments
Projected benefit obligation at December 31
2023
2022
34,078
33
1,622
246
383
(2,929)
33,433
47,215
75
1,087
(10,106)
(1,227)
(2,966)
34,078
(1) Actuarial gain is sensitive to changes in key actuarial assumptions specifically discount rates, mortality rates and assumed future salary
increases.
F-54
The accumulated benefit obligation at December 31, 2023 and 2022 was $33.2 million and $33.9 million, respectively.
(in thousands of $)
Reconciliation of fair value of plan assets:
Fair value of plan assets at January 1
Actual return on plan assets
Employer contributions
Foreign currency exchange rate changes
Benefit payments
Fair value of plan assets at December 31
2023
2022
9,809
433
2,175
474
(2,929)
9,962
15,858
(4,392)
2,900
(1,591)
(2,966)
9,809
The amounts recognized in accumulated other comprehensive income, as of December 31, 2023 and 2022, is $4.5 million and
$4.4 million, respectively.
The actuarial loss recognized in other comprehensive income/(loss) is net of tax of $0.4 million, $0.3 million, and $0.7 million
for the years ended December 31, 2023, 2022 and 2021, respectively.
Employer contributions and benefits paid under the pension plans include $2.2 million and $2.9 million paid from employer
assets for the years ended December 31, 2023 and 2022, respectively.
Our defined benefit pension plan is comprised of two schemes as follows:
(in thousands of $)
December 31, 2023
UK
Scheme
Marine
Scheme
Total
December 31, 2022
UK
Scheme
Marine
Scheme
Total
Fair value of benefit obligation
(7,597)
(25,836)
(33,433)
(7,073)
(27,005)
(34,078)
Fair value of plan assets
9,331
631
9,962
8,801
1,008
9,809
Funded (unfunded) status at end of year
1,734
(25,205)
(23,471)
1,728
(25,997)
(24,269)
The fair value of our plan assets, by category, as of December 31, 2023 and 2022 are as follows:
(in thousands of $)
Equity securities
Cash
2023
9,331
631
9,962
2022
8,801
1,008
9,809
The asset allocation for our Marine scheme at December 31, 2023 and 2022, by asset category are as follows:
Marine scheme
Cash
Total
2023 (%)
2022 (%)
100
100
100
100
The asset allocation for our UK scheme at December 31, 2023 and 2022, by asset category are as follows:
UK scheme
Equity
Cash
Total
2023 (%)
2022 (%)
99
1
100
98
2
100
Our investment strategy is to balance risk and reward through the selection of professional investment managers and investing
in pooled funds.
F-55
We are expected to make the following contributions to the schemes during the year ended December 31, 2023, as follows:
(in thousands of $)
Employer contributions
We are expected to make the following pension disbursements as follows:
Year ending December 31,
(in thousands of $)
2024
2025
2026
2027
2028
2029 - 2033
UK scheme
—
UK scheme
410
510
410
420
420
2,400
Marine
scheme
2,175
Marine
scheme
2,600
2,500
2,400
2,300
2,200
9,000
The weighted average assumptions used to determine the benefit obligation for our defined benefit pension plans for the years
ended December 31 are as follows:
Discount rate
Rate of compensation increase
2023
4.63 %
2.47 %
2022
4.94 %
2.61 %
The weighted average assumptions used to determine the net periodic benefit cost for our defined benefit pension plans for the
years ended December 31 are as follows:
Discount rate
Expected return on plan assets
Rate of compensation increase
2023
4.64 %
4.31 %
2.54 %
2022
4.93 %
1.81 %
2.49 %
The overall expected long-term rate of return on assets assumption used to determine the net periodic benefit cost for our plans
for the years ended December 31, 2023 and 2022 is based on the weighted average of various returns on assets using the asset
allocation as of the beginning of 2023 and 2022. For equities and other asset classes, we have applied an equity risk premium
over ten-year governmental bonds.
26.
SHARE CAPITAL AND SHARE BASED COMPENSATION
Our common shares are listed on the Nasdaq Stock Exchange.
As of December 31, 2023 and 2022, our authorized and issued share capital is as follows:
Authorized share capital:
(in thousands of $, except per share data)
150,000,000 (2022: 150,000,000) common shares of $1.00 each
Issued share capital:
2023
150,000
2022
150,000
(in thousands of $, except per share data)
104,578,080 (2022: 107,225,832) outstanding issued common shares of $1.00 each
2023
104,578
2022
107,226
F-56
(number of shares)
As of January 1
Repurchase and cancellation of treasury shares (1)
Vesting of RSUs
Share options exercised
As of December 31
2023
2022
107,225,832
108,222,604
(2,897,034)
(1,189,653)
249,282
186,881
—
6,000
104,578,080
107,225,832
(1) During 2023, we repurchased and cancelled 2.9 million treasury shares for a consideration of $61.7 million inclusive of brokers
commission of $0.1 million. In 2022, we repurchased and cancelled 1.2 million treasury shares for a consideration of $25.5 million inclusive
of brokers commission of $0.04 million.
Contributed surplus
As of December 31, 2023 and 2022, we have a contributed surplus of $200 million. Contributed surplus is capital that can be
returned to stockholders without the need to reduce share capital, thereby giving Golar greater flexibility when it comes to
declaring dividends.
Share options
Our LTIP was adopted by our Board of Directors, effective as of October 24, 2017. The maximum aggregate number of
common shares that may be delivered pursuant to any and all awards under the LTIP shall not exceed 3,000,000 common
shares, subject to adjustment due to recapitalization or reorganization as provided under the LTIP. The LTIP allows for grants
of (i) share options, (ii) share appreciation rights, (iii) restricted share awards (iv) share awards, (v) other share-based awards,
(vi) cash awards, (vii) dividend equivalent rights, (viii) substitute awards and (ix) performance-based awards, or any
combination of the foregoing as determined by the Board of Directors or nominated committee in its sole discretion. Either
authorized unissued shares or treasury shares (if there are any) in the Company may be used to satisfy exercised options.
In 2023, 650,000 share options were granted to executive officers and certain members of senior management. The options vest
in equal installments over three years and have a four-year term. In 2022, there were no share options granted.
The fair value of each option award is estimated on the grant date or modification date using the Black-Scholes option pricing
model. The weighted average assumptions as of the March 2023 grant date as follows:
Risk free interest rate
Expected volatility of common stock
Expected dividend yield
Expected term of options
2023
4.1 %
70.5 %
0.0 %
4.0 years
The assumption for expected future volatility is based primarily on an analysis of historical volatility of our common shares.
Where the criteria for using the simplified method are met, we have used this method to estimate the expected term of options
based on the vesting period of the award that represents the period options granted are expected to be outstanding. Under the
simplified method, the mid-point between the vesting date and the maximum contractual expiration date is used as the expected
term. Where the criteria for using the simplified method are not met, we used the contractual term of the options.
The dividend yield has been estimated at 0.0% as the exercise price of the options is reduced by the value of dividends, declared
and paid on a per share basis.
As of December 31, 2023, 2022 and 2021, the number of options outstanding in respect of Golar shares was 1.4 million,
1.0 million and 1.5 million, respectively.
F-57
A summary of the share options movements during the year ended December 31, 2023 is presented below:
Options outstanding at December 31, 2022
Granted during the year
Lapsed during the year
Options outstanding at December 31, 2023
Options outstanding and exercisable at:
December 31, 2023
December 31, 2022
December 31, 2021
Shares
(in thousands)
Weighted
average
exercise price
Weighted
average
remaining
contractual
term
(years)
1,037 $
650 $
(287) $
1,400 $
750 $
662 $
755 $
15.37
20.95
26.90
15.20
10.22
17.87
24.28
1.0
3.2
1.7
0.4
0.8
0.8
The exercise price of all options is reduced by the amount of dividends declared and paid up during 2023. The above figures for
options granted, exercised and forfeited show the average of the prices at the time of granting, exercising and forfeiting of the
options, and for options outstanding at the beginning and end of the year, the average of the reduced option prices is shown.
As of December 31, 2023 and 2022 the aggregate intrinsic value of share options that were both outstanding and exercisable
was $10.9 million and $7.7 million respectively. As of December 31, 2021, the aggregate intrinsic value of share options that
were both outstanding and exercisable was $nil as the exercise price was higher than the market value of the share options at
year end.
(in thousands of $)
Total fair value of share options vested in the year
Compensation cost recognized in the consolidated statement of operations
Share options cost capitalized*
Year ended December 31,
2023
1,958
2,706
173
2022
1,958
1,971
—
2021
1,595
1,434
16
*Relates to capitalized costs on share options awarded to employees directly involved in certain vessel conversion projects.
As of December 31, 2023, the total unrecognized compensation cost amounting to $5.9 million relating to options outstanding
is expected to be recognized over a weighted average period of 2.2 years.
Restricted Stock Units
Time-based RSUs
Pursuant to the LTIP, we granted certain individuals 189,400 and 97,215 of RSUs during the years ended December 31, 2023
and 2022, respectively.
March 2023 grant
In March 2023, pursuant to the LTIP, we granted certain individuals RSUs that were not subject to any service or performance
conditions and were fully vested upon grant. The number of RSUs earned under this award was 55,300. In March 2023,
pursuant to the LTIP, we also granted certain individuals RSUs that will vest equally over the requisite service period of three
years from March 2023 to March 2026. The maximum number of RSUs that may be earned under the award is 134,100.
Refer to “Performance-based RSUs” July 2022 grant discussed below for further details on the RSUs granted in 2022.The fair
value of the RSU award was estimated using the market price of our common shares at grant date with the corresponding
expense recognized over the three-year vesting period.
F-58
A summary of time-based RSU activities for the year ended December 31, 2023 is presented below:
Shares
(in thousands)
Weighted
average grant
date fair value
per share
218
189
(207)
(16)
184
14.09
22.21
21.57
22.42
22.30
Weighted
average
remaining
contractual
term
(years)
1.2
2.2
2.0
Non-vested RSUs at December 31, 2022
Granted during the year
Vested during the year
Forfeited during the year
Non-vested RSUs at December 31, 2023
Performance-based RSUs
July 2022 grant
In July 2022, pursuant to the LTIP, we granted certain individuals RSUs that are subject to certain market and performance
conditions within the performance period from January 1 to December 31, 2022. The market and performance conditions are
weighted to determine the maximum number of RSUs that will be awarded. The maximum number of RSUs that may be earned
under the award is 138,878. However, 70% of the total award or 97,215 RSUs will vest over the requisite service period of
three-years from July 2022 to July 2025 regardless of the achievement of market and performance conditions. These are shown
as time-based RSUs in the preceding table and fair value is estimated using the market price of our common shares at grant
date.
The remaining 30% of the award contingently vests subject to Golar achieving more than 70% of the market and performance
conditions. The achievement of certain of the performance conditions are subject to the discretion of the Compensation
Committee of our Board of Directors (the “Compensation Committee”), hence no grant date was established until final approval
by the Compensation Committee. The market condition was achieved at December 31, 2022, so no fair value adjustment to our
share price was necessary. This award will also vest over the requisite service period of three years from July 2022 to July
2025.
March 2020 grant
In March 2020, we granted certain individuals RSUs that were subject to the achievement of a total shareholder return (“TSR”)
performance condition relative to the TSR of a predetermined group of peer companies over a three-year performance period
that ended in December 31, 2022. The number of RSUs earned under the award was 159,430. Payouts of the performance-
based RSUs ranged from 0% to 100% of the target awards based on our TSR ranking within the peer group. This award fully
vested in March 2023.
The fair value of this award is estimated on the grant date using the Monte Carlo simulation model. The weighted average
assumptions as of grant date are noted in the table below:
Remaining performance period
Contractual term
Expected dividend yield
Risk free interest rate
Golar volatility
Share price at grant date
2020
2.8 years
3.0 years
0.0 %
0.42 %
84 %
7.49
$
The assumption for expected future volatility is based primarily on an analysis of historical volatility of our common shares
with an implied volatility factored in for the last 0.9 years of the performance period.
F-59
A summary of performance-based RSU activity for the year ended December 31, 2023 is presented below:
Non-vested performance based RSUs at December 31, 2022
Vested during the year
Forfeited during the year
Non-vested performance based RSUs at December 31, 2023
(in thousands of $)
Compensation cost recognized in the consolidated statement of income
RSU cost capitalized *
Shares
(in thousands)
Weighted
average grant
date fair value
per share
Weighted
average
remaining
contractual
term
(years)
69
(51)
(4)
14
16.05
21.68
22.82
22.82
Year ended December 31,
2023
1,473
247
2022
1,522
198
1.6
1.5
2021
1,774
322
*Relates to capitalized costs on RSUs awarded to employees directly involved in certain vessel conversion projects.
As of December 31, 2023, the total unrecognized compensation cost of $3.2 million relating to both time-based and
performance based RSUs outstanding is expected to be recognized over a weighted average period of 2.0 years.
27.
FINANCIAL INSTRUMENTS
Interest rate risk management
We may enter into financial instruments to reduce the risk associated with fluctuations in interest rates. We have entered into
swaps that convert floating rate interest obligations to fixed rates, which from an economic perspective, hedge the interest rate
exposure. The counterparties to such contracts are major banking and financial institutions. Credit risk exists to the extent that
the counterparties are unable to perform under the contracts; however we do not anticipate non-performance by any of our
counterparties. We do not hold or issue instruments for speculative or trading purposes.
We manage our debt portfolio with interest rate swap agreements in U.S. dollars to achieve an overall desired position of fixed
and floating interest rates.
As of December 31, 2023 and 2022, we were party to the following interest rate swap transactions involving the payment of
fixed rates in exchange for LIBOR as summarized below:
Instrument
Interest rate swaps:
Receiving floating, pay fixed
Receiving floating, pay fixed
Foreign currency risk
Year end Notional value Maturity dates Fixed interest rates
2023
2022
709,375
740,000
2024/2029
2024/2029
1.69% to 2.37%
1.69% to 2.37%
The majority of our gross earnings are receivable in U.S. dollars. The majority of our transactions, assets and liabilities are
denominated in U.S. dollars, our functional currency. However, we incur certain expenditure in other currencies. There is a risk
that currency fluctuations will have a negative effect on the value of our cash flows.
Commodity price risk management
Although the LTA bills at a base rate of $60.00 per barrel over the contract term for 1.2 million tonnes out of the base capacity
of 1.44 million tonnes of LNG, we bear no downside risk to the movement of oil prices should the oil price move below $60.00.
F-60
Pursuant to LTA Amendment 3, the remaining 0.22 million tonnes of LNG is linked to the TTF index and the Euro/U.S. Dollar
foreign exchange movements.
We have entered into commodity swaps to economically hedge our exposure to a portion of FLNG Hilli’s tolling fee that is
linked to the TTF index, by swapping variable cash receipts that are linked to the TTF index for anticipated future production
volumes with fixed payments from our TTF swap counterparties. We have entered into master netting agreements with our
counterparties and are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment
grade institutions.
Instrument
Commodity swap derivatives:
Receiving fixed, pay floating
Receiving floating, pay fixed
Receiving fixed, pay floating
Fair values of financial instruments
Notional
quantity
(MMBtu)
Year end
Maturity date
Fixed price/
MMBtu
2023
2023
2022
1,613,004
1,613,004
4,839,000
2024
2024
$51.20
$20.55
2023/2024
$49.50 to $51.20
We recognize our fair value estimates using a fair value hierarchy based on the inputs used to measure fair value. The fair value
hierarchy has three levels based on reliability of inputs used to determine fair value as follows:
Level 1: Quoted market prices in active markets for identical assets and liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The carrying values and estimated fair values of our financial instruments at December 31, 2023 and 2022 are as follows:
(in thousands of $)
Non-Derivatives:
Cash and cash equivalents (1) (2)
Restricted cash and short-term deposits (1) (3)
Trade accounts receivable (3)
Interest receivable from money-market deposits and bank
accounts (3)
Receivable from TTF linked commodity swap derivatives (3)
Receivable from IRS derivatives (3)
Investment in listed equity securities (4)
Trade accounts payable (3)
Assets held for sale
Liabilities held for sale
Current portion of long-term debt and short-term debt (3) (5) (6)
Long-term debt (5) (6)
Long-term debt - Unsecured Bonds (5) (7)
Derivatives:
Oil and gas derivative instruments (8)
Asset on IRS derivatives (9)
Asset on TTF linked commodity swap derivatives (9)
Fair value
hierarchy
2023
Carrying
2023
2022
Carrying
2022
value Fair value
value Fair value
Level 1
Level 1
Level 1
Level 1
Level 1
Level 1
Level 1
Level 1
Level 2
Level 2
Level 2
Level 2
679,225 679,225 878,838 878,838
92,245
92,245 134,043 134,043
38,915
38,915
41,545
41,545
3,929
3,929
3,617
3,617
7,581
2,461
—
7,581
2,461
4,638
4,638
1,923
1,923
— 224,788 224,788
(7,454)
(7,454)
(8,983)
(8,983)
—
—
—
—
721
(373)
721
(373)
(343,781) (343,781) (344,960) (344,960)
(696,933) (696,933) (706,290) (706,290)
Level 1
(199,869) (197,906) (159,029) (158,092)
Level 2
Level 2
Level 2
159,611 159,611 378,979 378,979
39,387
39,387
54,970
54,970
48,079
48,079 113,368 113,368
(1) These instruments carrying value is highly liquid and is a reasonable estimate of fair value.
F-61
(2) Included within cash and cash equivalents of $679.2 million and $878.8 million are $481.7 million and $634.2 million cash held in short-
term money-market deposits as of December 31, 2023 and 2022, respectively. During year December 31, 2023 and 2022, we earned interest
income on short-term money-market deposits of $33.8 million and $7.6 million, respectively.
(3) These instruments are considered to be equal to their estimated fair value because of their near term maturity.
(4) Investment in listed equity securities refers to our former NFE Shares (note 16) wherein fair value was based on the NFE closing share
price as of the balance sheet date.
(5) Our debt obligations are recorded at amortized cost in the consolidated balance sheets. The amounts presented in the table are gross of the
deferred charges amounting to $23.9 million and $21.0 million at December 31, 2023 and 2022, respectively.
(6) The estimated fair values for both the floating long-term debt and short-term debt are considered to be equal to the carrying value since
they bear variable interest rates, which are adjusted on a quarterly basis.
(7) The estimated fair values of our Unsecured Bonds are based on their quoted market prices as of the balance sheet.
(8) The fair value of the oil and gas derivative instruments is determined using the estimated discounted cash flows of the additional payments
due to us as a result of oil and gas prices moving above the contractual floor price over the remaining term of the LTA. Significant inputs used
in the valuation of the oil and gas derivative instruments include the Euro/U.S. Dollar exchange rates based on the forex forward curve for the
gas derivative instrument and management’s estimate of an appropriate discount rate and the length of time necessary to blend the long-term
and short-term oil and gas prices obtained from quoted prices in active markets.
(9) The fair value of certain derivative instruments is the estimated amount that we would receive or pay to terminate the agreements at the
balance sheet date, taking into account current interest rates, foreign exchange rates, closing quoted market prices and our creditworthiness
and that of our counterparties. The credit exposure of certain derivative instruments is represented by the fair value of contracts with a
positive value at the end of each period, reduced by the effects of master netting arrangements.
The following methods and assumptions were used to estimate the fair value of our other classes of financial instruments:
•
•
The carrying values of loan receivables and working capital facilities approximate fair values because of the near-term
maturity of these instruments (note 16, 23 and 28). These instruments are classified within Level 1 of the fair value
hierarchy.
Our pension plan assets are primarily invested in funds holding equity and debt securities, which are valued at quoted
market price (note 25). These plan assets are classified within Level 1 of the fair value hierarchy.
The following table summarizes the fair value of our derivative instruments on a gross basis (none of which have been
designated as hedges) recorded in our consolidated balance sheets as of December 31, 2023 and 2022:
(in thousands of $)
Asset derivatives
Oil derivative instrument
Gas derivative instrument
Commodity swaps
Interest rate swaps
Total asset derivatives
Concentrations of risk
Balance sheet classification
2023
2022
Other non-current assets (note 20)
Other non-current assets (note 20)
Other current assets and other non-current
assets (note 16 and note 20)
Other current assets and other non-current
assets (note 16 and note 20)
105,948
53,663
182,795
196,184
48,079
113,368
39,387
247,077
54,970
547,317
There is a concentration of credit risk with respect to cash and cash equivalents and restricted cash to the extent that
substantially all of the amounts are carried with Nordea Bank ABP, DNB Bank ASA, Citibank NA, SCB, DBS Bank Ltd, ABN
Amro Bank NV, Internationale Nederlanden Groep Bank (“ING Bank N.V”) and Danske Bank A/S. However, we believe this
risk is remote, as they are established and reputable financial institutions with no prior history of default and with investment
grade credit ratings.
F-62
There is a concentration of financing risk with respect to our long-term debt to the extent that a substantial amount of our long-
term debt is carried with ABN Amro Bank NV, Clifford Capital, ING Bank N.V, DBS Bank Ltd, Intesa Sanpaolo, Oversea-
Chinese Banking Corp, SCB as well as with the CSSC entity in regards to our sale and leaseback arrangement on the FLNG
Hilli (note 5). We believe these counterparties to be sound financial institutions, with investment grade credit ratings. Therefore,
we believe this risk of default is remote.
We also have equity method investment in Avenir, as of December 31, 2023, with carrying values recorded in our balance sheet
of $35.7 million (note 17). Accordingly, the value of our investment and our share of the net results generated from Avenir are
subject to specific risks associated with their business. In the event the fair value of the investments falls below the carrying
values and they are determined to be other-than-temporary, we would be required to recognize an impairment loss.
A concentration of supplier risk exists with Scanrise Marine Pte Ltd and Nuovo Pignone International S.R.L (“Nuovo”) in
relation to the FLNG Gimi, moored at the GTA field offshore Mauritania and Senegal, ready for connection. A further
concentration of supplier risk exists in relation to the Mark II project conversion with Kanfa AS, B&V, Nuovo, Siemens Energy
AG, Chart Energy, Howden Turbo UK Ltd., and Meggitt PLC (Heatric). We believe this risk is remote as they are all globally
reputable engineering, procurement and construction companies.
28.
RELATED PARTY TRANSACTIONS
a) Transactions with existing related parties:
Net revenues/(expenses): The transactions with related parties for the years ended December 31, 2023, 2022 and 2021
consisted of the following:
(in thousands of $)
Avenir (1)
Magni Partners (2)
ECGS (3)
Total
2023
339
(10)
—
329
2022
246
(32)
—
214
2021
468
(189)
1,482
1,761
Receivables: The balances with related parties as of December 31, 2023 and 2022 consisted of the following:
(in thousands of $)
Avenir (1)
Magni Partners (2)
Total
2023
7,312
—
7,312
2022
3,472
81
3,553
(1) Avenir - Amounts due from Avenir comprised primarily of unpaid debt guarantee fees, revolving shareholder loan and related interest and
fees. In 2021, we advanced a one year revolving shareholder loan of $1.8 million to Avenir. In October 2022, the revolving shareholder loan
was extended to three years. The facility bears a fixed interest rate of 5% per annum which was amended to 7% in May 2023. Concurrently,
we loaned a further $3.5 million to Avenir, totaling to $5.3 million. As of December 31, 2023, the shareholder loan is fully drawn. The
combined interest and commitment fee receivables on the undrawn portion of the loan amounted to $0.3 million, $0.1 million and $28.0
thousand for the years ended December 31, 2023, 2022 and 2021, respectively. Avenir also entered into agreements to compensate Golar in
relation to the provision of certain debt guarantees relating to Avenir and its subsidiaries, amounting to $0.1 million, $0.1 million and
$0.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.
(2) Magni Partners - Tor Olav Trøim is the founder of, and partner in, Magni Partners (Bermuda) Limited (“Magni Partners”), a privately
held Bermuda company, and is the ultimate beneficial owner of the company. Receivables and payables from Magni Partners comprise
primarily of the cost (without mark-up) or part cost of personnel employed by Magni Partners who have provided advisory and management
services to Golar. These costs do not include any payment for any services provided by Tor Olav Trøim himself.
(3) We chartered our former LNG carrier, the Golar Ice to ECGS during the year ended December 31, 2021. There was no comparable
transaction for the years ended December 31, 2023 and 2022.
F-63
b) Transactions with former related parties
Net revenues: The following tables represents the transactions before these companies ceased to be our related parties for the
years ended December 31, 2023, 2022 and 2021 consisted of the following:
(in thousands of $)
Transactions
Coolco and subsidiaries
Golar Partners and subsidiaries
Hygo and subsidiaries
Borr Drilling
2020 Bulkers
OneLNG
Total
2023
2022
2021
451
(486)
—
—
—
—
—
—
—
—
—
—
—
3,986
3,631
348
111
64
451
(486)
8,140
Receivables: The balances before these companies ceased to be our related parties as of December 31, 2022 consisted of the
following:
(in thousands of $)
Balances
CoolCo and subsidiaries
Total
b.1) Transactions with CoolCo:
2022
394
394
Following the sale of our CoolCo shares in March 2023, CoolCo ceased to be a related party and subsequent transactions with
CoolCo and its subsidiaries were treated as third party transactions and settled under normal payment terms.
Net revenues: Summarized below are the transactions with CoolCo and its subsidiaries for the period from January 1, 2023 to
March 2, 2023 and for the year ended December 31, 2022 consists of the following:
(in thousands of $)
Management and administrative services revenue (1)
Ship management fees revenue (2)
Ship management fees expense (3)
Debt guarantee fees (4)
Commitment fees (5)
Total
Period ended January
1, 2023 to March 2,
2023
588
—
(333)
175
21
451
Year Ended
December 31, 2022
3,124
1,249
(5,811)
837
115
(486)
(1) Management and administrative services revenue – Golar Management Limited (“Golar Management”), a wholly-owned subsidiary of
Golar, and Golar Management (Bermuda) Ltd, entered into the transition services agreement with CoolCo (the "CoolCo TSA" which was
subsequently replaced with the CoolCo ASA), pursuant to which we provided corporate administrative services to CoolCo, with a fee.
(2) Ship management fee revenue – We provided commercial and technical management services to the LNG carriers subsequent to their
disposal to CoolCo under the existing management agreements, however the CoolCo TSA revised the annual management fee payable to us
per vessel. On June 30, 2022, upon completion of the CoolCo Disposal, the ship management agreements were terminated.
(3) Ship management fee expense – Following completion of the CoolCo Disposal in June 2022, we entered into ship management agreements
with CoolCo, for CoolCo to manage our LNG carriers, the Golar Arctic and Golar Tundra, amounting to $0.2 million and $0.6 million and
provision of FLNG crew services, amounting to $nil and $0.1 million fees for the period from January 1, 2023 to March 2, 2023 and for the
year ended December 31, 2022, respectively.
F-64
We also entered into an agreement to sub-contract our contractual vessel management obligations for LNG Croatia and NFE’s fleet of vessels
to CoolCo, amounting to $0.1 million and $5.1 million for the period from January 1, 2023 to March 2, 2023 and for the year ended
December 31, 2022, respectively. The ship management fee revenue of $nil and $4.8 million received for the period from January 1, 2023 to
March 2, 2023 and for the year ended December 31, 2022, respectively, in relation to NFE’s fleet of vessels, is passed on at cost to CoolCo as
our subcontracting ship management expenses presented on “Administrative expenses” in the consolidated statements of operations.
(4) Debt guarantee fees – We agreed to remain as the guarantor of the payment obligations for the sale and lease-back obligations of two of
the disposed subsidiaries, which are the disponent owners of the Golar Ice and the Golar Kelvin, in exchange for a guarantee fee of 0.5% on
the outstanding principal balances of $176.7 million. The compensation amounted to $0.2 million to $0.8 million for the period from January
1, 2023 to March 2, 2023 and for the year ended December 31, 2022, respectively.
(5) Commitment fees – We advanced a 2-year revolving credit facility of $25.0 million to CoolCo which bears a fixed interest rate and
commitment fee on the undrawn loan of 5% and 0.5% per annum, respectively. The commitment fee amounted to $21.0 thousand and
$0.1 million for the period from January 1, 2023 to March 2, 2023 and for the year ended December 31, 2022, respectively. CoolCo
terminated the revolving credit facility on May 28, 2023.
Receivables: The balances with CoolCo and its subsidiaries as of December 31, 2022 consisted of the following:
(in thousands of $)
Balance due from CoolCo and subsidiaries (6)
December 31, 2022
394
(6) Balances due from CoolCo and its subsidiaries - Amounts due to/from CoolCo and its subsidiaries are comprised primarily of unpaid
management services fees, amounts arising from the results of CoolCo’s vessels participating in the Cool Pool, revolving credit facility,
commitment fees and other related arrangements. Payables and receivables are generally settled quarterly in arrears. Balances owing to or due
from CoolCo and its subsidiaries are unsecured, interest-free and intended to be settled in the ordinary course of business.
Other transactions:
Net Cool Pool expenses - The eight TFDE vessels sold in the CoolCo Disposal were previously managed by Golar under the
terms of the Cool Pool. The net expenses relating to the CoolCo’s vessels participation in the pool amounted to $4.8 million for
the year ended December 31, 2022. There was no comparable expense for the period from January 1, 2023 to March 2, 2023.
This is presented in our consolidated statement of operations in the line item “Net (loss)/income from discontinued operations”.
Subleases with CoolCo - Following the completion of the CoolCo Disposal, we entered into subleases to share office space with
CoolCo which amounted to an income of $0.1 million and $0.4 million income for the period from January 1, 2023 to March 2,
2023 and for the year ended December 31, 2022, respectively (note 13).
Share-based payment to CoolCo employees - Following the completion of the CoolCo Disposal, we agreed to honor the
restricted stock units granted to the officers and employees in the shipping and FSRU management business that CoolCo
acquired. The net expenses relating to these share-based payments amounted to $0.1 million and $0.1 million for the period
from January 1, 2023 to March 2, 2023 and for the year ended December 31, 2022, respectively, and is included in our equity
method investment in CoolCo the line item “Net income/(losses) from equity method investments.”
b.2) Golar Partners and subsidiaries:
Following the completion of the GMLP Merger on April 15, 2021, Golar Partners ceased to be a related party and subsequent
transactions with Golar Partners and its subsidiaries are treated as a third party and settled under normal payment terms. For the
balances with Golar Partners and its subsidiaries prior to the completion of the GMLP Merger, we retrospectively adjusted the
comparative period and classified them as held for sale. Furthermore, the management and administrative services agreement
and ship management fee agreement were terminated and replaced with the transition services agreement, Bermuda services
agreement and ship management agreements.
The following table represents the transactions with Golar Partners and its subsidiaries for the period from January 1, 2021 to
April 15, 2021:
(in thousands of $)
Management and administrative services revenue
Ship management fees revenue
Interest income on short-term loan
Total
F-65
Period January 1,
2021 to April 15, 2021
1,717
2,251
18
3,986
Other transactions:
During the period from January 1, 2021 to April 15, 2021, we received total distributions from Golar Partners of $0.5 million
with respect to common units and general partners units owned by us at that time.
During the period from January 1, 2021 to April 15, 2021, Hilli LLC declared distributions totaling $7.2 million with respect to
the common units owned by Golar Partners. In connection with the Hilli disposal, we agreed to indemnify Golar Partners for
certain costs incurred in FLNG Hilli operations when these costs exceed a contractual ceiling, capped at $20 million. Costs
indemnified include vessel operating expenses, taxes, maintenance expenses, employee compensation and benefits, and capital
expenditures. Included within the FLNG Hilli distributions for the period from January 1, 2021 to April 15, 2021 is $0.1 million
with respect to FLNG Hilli’s indemnification cost.
b.3) Hygo and subsidiaries:
Following the completion of the Hygo Merger on April 15, 2021, Hygo ceased to be a related party and subsequent transactions
with Hygo and its subsidiaries are treated as third-party transactions and settled under normal payment terms. For the balances
with Hygo and its subsidiaries prior to the completion of the Hygo Merger, we retrospectively adjusted the comparative period
and classified them as held for sale. Furthermore, the management and administrative services agreement and ship management
fee agreement were terminated and replaced with the transition services agreement, Bermuda services agreement and ship
management agreements.
The following table represent the transactions with Hygo and its subsidiaries for the period from January 1, 2021 to April 15,
2021:
(in thousands of $)
Management and administrative services revenue
Ship management fees income
Debt guarantee compensation
Total
Other transactions:
Period January 1,
2021 to April 15, 2021
2,051
904
676
3,631
Net Cool Pool expenses - Net expenses relating to the other pool participants are presented in our consolidated statement of
operation in the line item “Voyage, charterhire and commission expenses” for the period from January 1, 2021 to April 15,
2021 amounted to $2.9 million.
b.4) Borr Drilling:
Tor Olav Trøim is the founder and director of Borr Drilling Limited (“Borr Drilling”), a Bermuda company listed on the Oslo
and New York Stock Exchange. Transactions with Borr Drilling include management and administrative services provided by
our Bermuda corporate office. Effective from January 2022, Borr Drilling ceased to be a related party.
b.5) 2020 Bulkers:
Transactions with 2020 Bulkers Ltd. (“2020 Bulkers”) include management and administrative services provided by our
Bermuda corporate office. Effective from January 2022, 2020 Bulkers ceased to be a related party.
b.6) OneLNG and subsidiaries:
Subsequent to the decision to dissolve OneLNG, we wrote off $0.1 million of the trading balance with OneLNG for the year
ended December 31, 2021, to “Other operating income/(losses)” in our consolidated statements of operations as we deemed it to
be no longer recoverable.
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29.
COMMITMENTS AND CONTINGENCIES
Assets pledged
(in thousands of $)
Book value of vessels secured against long-term loans(1)
Year ended December 31,
2023
2022
1,075,018
1,115,500
(1) This excludes the FLNG Gimi which is classified as “Asset under development” (note 18) and secured against the Gimi debt facility (note
21).
Capital Commitments
•
FLNG conversion
In June 2023, we agreed to replace the Gandria as a specific donor vessel with a generic LNG carrier for conversion to a
FLNG which is subject to certain payments and lodging of a full notice to proceed. We also provided a guarantee to cover
the sub-contractor’s obligations in connection with the conversion of the vessel. If we do not proceed with the conversion,
we may be liable for certain termination payments.
• Mark II
In 2022, our Board of Directors approved up to $328.5 million of capital expenditure for a Mark II, excluding the purchase
of the donor vessel, Fuji LNG, of $77.5 million. As of December 31, 2023, we entered into agreements for engineering
services and long lead items amounting to $149.2 million (note 20).
In May 2023, we exercised our option to purchase Fuji LNG, a donor vessel for a prospective Mark II project, with the
balance of the purchase price of $62.0 million due on delivery of the vessel in March 2024 (see note 30).
30.
SUBSEQUENT EVENTS
•
Dividends
In February 2024, we declared a dividend of $0.25 per share in respect of the three months ended December 31, 2023 to
shareholders of record on March 12, 2024, which was paid on March 20, 2024.
•
Delivery of Fuji LNG
On March 4, 2024, we completed the acquisition of the Fuji LNG, a donor vessel for a prospective MKII FLNG project for
total consideration of $77.5 million.
•
Gimi LOA Dispute
We are in continued discussions with BP to identify alternative contractual arrangements to replace parts of the existing
pre-COD contractual arrangements, including parts of the disputed contract mechanisms. There is no guarantee that we can
reach alignment around a potential alternative contractual and commercial arrangement.
•
Share buyback
In March 2024, we repurchased and cancelled 0.7 million treasury shares for a consideration of $14.2 million.
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