Good day, and welcome to the Golar LNG Limited Q2 2013 results presentation. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brian Tienzo. Please go ahead, sir.

Thank you, and hello, everyone, and welcome to Golar LNG's second quarter 2013 results presentation. As the moderator said, my name is Brian Tienzo. And as per usual, I'll be taking you through the second quarter highlights as well as the financial highlights. I'm joined here by our CEO, Doug Arnell, and, as usual, he will go through the business update and the summary and outlook section. So let's now turn to Page 4 to go through the second quarter highlights. Golar reported second quarter 2013 net income of $59 million, including a noncash gain of $47.9 million on interest rate swaps. With the IPO and the subsequent dropdowns of vessels to Golar LNG Partners, majority of earnings from the fleet is now coming through Golar LNG Partners. And so the EBITDA generated by the remaining vessels in the Golar LNG Limited fleet in the quarter amounted to $8.2 million. However, with the subsequent dropdowns to Golar LNG Partners, the underlying dividends received from partners by Golar LNG Limited has increased to $16 million during the quarter from the first quarter level of $14.4 million. And as we will see later, the Incentive Distribution Rights are starting to play a major role in this level. As previously mentioned, the spot market remains volatile and inefficient. And as a result, the -- both -- 2 of our old first-generation vessels, Hilli and Gandria, entered into layup in Indonesia. But this, of course, saves us on some operating costs and conveniently situates both vessels in the region for potential conversion either in FSRU or in FLNG in the event a decision is taken in the short term. Again, board maintains a dividend of $0.45 for the quarter. This despite a volatile earnings outlook over the next coming quarters. And I think it…

Thank you, Brian, and good day to everybody. I will start off my part of the presentation on Page 12 with a couple of slides talking about the market outlook. The current market is quite strong. It's shown charter rates for modern steam vessels still in excess of $100,000 a day based on recent fixtures, although I think it's fair to say, in our view, that the vessel market over the past few months has been quite illiquid. There are a number of reasons why, despite some supply interruptions, disruptions to normal production levels globally, that the rates continue to be high. Again, the market is -- remains today to be structurally short on shipping. Even with the production disruptions, those shortages on the supply side have only just mitigated that structural shortage. Again, the Asia Pacific price spreads for LNG maintained at a fairly healthy level, which, of course, encourages the arbitrage between the 2 regions and encourages an increase in tonne miles for the fleet, which, as you can see from the graphic on the right, are slightly down from 2012 levels but still at historical highs. Another factor, possibly more minor but relevant to the fleet right now, is that the large number of vessels that came out of the yard in the 2007 to 2009 fleet buildout are currently going through their first drydocking schedule, which also is keeping drydocked levels at historical highs. And, of course, the rest of the fleet has to accommodate and compensate for those vessels coming out of the market. Looking forward, we are hopeful that a couple of the projects that have been a little bit delayed coming on stream, most notably Angola, start to produce cargoes and will likely be supportive of ship demand going forward. And also Algeria,…

[Operator Instructions] We will now take our first question from Michael Webber of Wells Fargo.

Lock one on [ph], and you guys had a number of releases that kind of came out ahead of the quarter on financing FSRUs. So I kind of wanted to zero in on liquefaction to start and maybe start with Douglas Channel. Can you maybe give kind of an updated time frame around FID? And then you mentioned a couple of key commercial and shareholder issues. Can you give a little bit more color there around where that stands? And I think, Doug, you also mentioned you guys had actually looked at a loan intra-quarter and maybe some more color on whether or not that was finalized, if you could make it 25% at once. And then maybe do you -- like where the financing stands for that project.

Okay. Yes. So in terms of timing, I think that the Final Investment Decision will certainly depend on the FEED work being completed for both the production facility and on the onshore facilities. We're running really hard to try and get those done by the end of September. That's our goal. I'd say that there's a bit of a risk if that slips a little bit into the fourth quarter, but that's kind of a timing we're working on now. The issues that we're working around with shareholders and commercial, I -- it's a lot to do with just having to put a lot of details together in a short amount of time, and so the original structures still holding together, but it takes a lot of details. There's a fair number of commercial agreements for gas supply, structuring the shareholder agreements around the various parts of the asset, structuring the offtake sales. So it's just a matter of getting through all that, which is quite a complex set of agreements, nothing more than that, but I just -- we just don't want anybody to get ahead of themselves. There is work to be done and commercial issues to be resolved before the Final Investment Decision can take place. The loan I was referring to was actually the funding that went into the project. I believe this was described in some form in the release we made about -- I believe we included something about Douglas Channel in the first quarter results release. But the loan that I was referring to was the loan that went into the project in order to provide funds to take the project to FID, not beyond. So that was a loan. We probably put around $14 million to $15 million in play on this project both in internal costs and that loan. The loan is the vast majority of those dollars, and that loan's collateralized by the project assets obviously, which include the export license and pipeline capacity and the engineering work, [indiscernible] stuff like that.

Yes, that makes sense. I interpreted that a bit, I thought you're talking about a more [indiscernible] project. That makes sense.

No.

All right. And maybe just kind of switching gears to the Moss tank conversions. I mean, the same kind of question around timetable for that FEED study and then and you guys have been talking about this for a couple of quarters, and it seems like a fair amount of progress is being made. At what point do you start taking more serious indications of interest from potential charters, and maybe kind of how does that conversation kind of overlay itself with the FEED study?

Okay. Well, I would say that we are beyond getting readings from charters on the concept. We have several development discussions underway with counterparties. I would say, 4 to 5 serious ones, not ready for press releases yet or not able to kind of talk about details and things. But I guess we had a -- subject to the FEED results, we had a decent idea how the facility or the vessels should look post conversion in terms of cost and how long it was going to take to the construction timeline. So we've been able to go and have those discussions with potential charters and potential partners because the structure may not be always just a charter for those vessels, but we've been able to go and have those discussions. And with the toll -- with tolling, you can go down to the sides we're talking about, the reserve sides of half a T up to 2, 3 Ts, that kind of size, you get a lot of interest when you can bring a toll of $3 or $4 because that's kind of what the megaprojects are effectively costing. So it's been really successful so far. But again, if you imagine a field in West Africa in a country there and what it takes to kind of get the political interest on board, interest in exporting their gas, all the kind of work they have to go on structuring the whole thing, it's going to take some time. But the economics are so attractive that we just think it's worth putting a good focus on it. What we haven't come out with or completed our plan for yet is how we will structure the financing for when this venture is going to take -- need some serious or more…

Got you. Yes, that's very helpful. 1 or 2 more for me, and I'll turn it over. Around the FSRU market, and you can put up a few releases kind of heading into earnings, and you mentioned that Tundra's and the delivery date pushed back, there's a -- you're fully converting that slot to an FSRU candidate. Is the window to convert additional slots into FSRUs to your existing order book -- is that closed at this point? And how does that, if it is, how does that impact your ability, your tendering ability for forward -- for future FSRU projects? And I guess the question is how long will the runway be to go out and place another FSRU order, if need be, if you're successful in another tender?

Right. The window isn't totally closed to convert those slots into an FSRU, but that's just a theoretical case. Really now, we are still looking at one of the Lake carriers to convert. It's not -- of course, you can always do it, but it becomes a case where having Samsung do it in their yard becomes possibly uneconomic depending on how late you are in the window, and we could just as easily convert -- take delivery of the carrier and convert it ourselves if we wanted to put it into it, into a tender. And so that's actually the strategy we would follow. I would say that looking around, we focused pretty heavily on 3 projects over the last year. We focused heavily on the Medalla [ph] FSRU in Abu Dhabi. We focused hard on Kuwait. We focused hard on Jordan. Because those clearly were the more firm projects, and we felt that it was important to take a good run. Obviously, we lost one of those, and we're successful on the other 2. We are of the view that we aren't in too bad a shape actually with the Tundra being the next newbuild FSRU coming out in 2015. We don't think there's an avalanche of new FSRU awards coming before that time. There could be some, and we might, if it's a real prompt one, we might be caught out on it. But that was the price to pay to get the 2. Kuwait was obviously going to be firm. It's already a project, and Jordan, we just thought, "Oh, it looks really good". So yes, we ended up with a gap that came -- they came together all at the same time. We didn't want to have more than 2 open-spec FSRUs out there. So this is where we ended up, but we don't really believe we're getting in bad shape. We can get a conversion done in 18 months, 16 months if we hustle. So -- and that gives pretty good visibility for us. So we think we'll be competitive and not too concerned with our FSRU delivery schedule at the moment.

Got you. That's helpful. Last one for me. The -- I guess, the Kuwaiti FSRU contract for the Igloo, it seems that it's a pretty unique in terms of the kind of slot trading window. Obviously, this would be a bit different, but I'm just curious, as to whether or not there's an opportunity to structure similar contract around a carrier maybe with different windows, they're kind of coming at that, from kind of an MLP angle, in terms of maybe an ability to kind of meet some cargo requirements for a kind of [indiscernible] so having some optionality and finding a way to get more coverage in this kind of a volatile and softer environment. Basically, is that a contract structure that's reputable on the carrier side?

Yes. Well, in fact, as you probably know, I mean, there have been some kind of those deals done not with us between order and charter over the past few months, where it's a multiyear contract, but the vessel is only firm on to the charter for a certain number of months per year. Yes, I -- I mean, we have lots of spot exposure on the vessel. So if we're moving to enter into charters, that would be the goal to try and leave some spot. But certainly, I think just because we have the MLP drive there, that's true. But we've also got, I would say, the most flexibility across the fleet in terms of being able to optimize what we get for these vessels because of the financing we've been able to put in place. So if there's a deal like that, that would be great. But as long as it's attractive, we wouldn't do it just at this point just because we feel we have to have an MLP. So we think the MLP deals will come. They could come sooner than we think. There'll be portfolio players that at some point here will start looking out into 2015 and '16 and decide that it's time to pull the trigger. And that's kind of how it went for a lot of the vessels that the original fleet that went into Partners. You've got a perception -- well, the perception was reality that the market was starting to tighten up and usually, it was portfolio players that decided they better put some structural position in place, and we ended up chartering to them and we ended up dropping those vessels down into the MLP. And I think that's how it's going to go again, and I wouldn't be surprised to start seeing some of that in the near term. It could be maybe not in '13, but through '14, I wouldn't be surprised if some of those portfolio players aren't -- start to look to add structure into their portfolios and that's I think where the MLP deals will come on the carriers.

Got it. You mentioned it will be in the next 6 to 12, 18 months?

Yes.

[Operator Instructions] We will now take our next question from Urs Dür of Clarkson Capital Markets. Urs M. Dür - Clarkson Capital Markets, Research Division: Follow-on, on the carrier question and the structure of the market, the new modern 160 cubic tri-fuel ships are doing well, as you guys pointed out in your presentation, and spot rates granted a still a small portion of the market have been stronger than a lot of people had forecast over the course of this summer and ticking up lately, as well as term rates, at least what's quoted and knowing it's not specifically too liquid, have also remained pretty resilient and move -- and ticking up as well. The approach obviously you mentioned is to get some ships on charter for the MLPs. Are you going to need a length of charter there, but what's going to happen with the ships coming in '13, do you want to run them spot or very short term? Or are you going to try to push them back in delivery date or are you going to lock them up for a longer period of time or is it just going to be a mix?

It's kind of a lawful answer, but I think it's going to be a mix. I mean, to say you want to -- your goal is to trade LNG vessel spot I think would be -- it's a little bit disingenuous. We just have taken the approach. If you look back at the approach that we've taken, the typical mid- to high-70s deal, low-80s deal for term contracts haven't been attractive to us, and we haven't needed to do them. And we prefer to let a lot of the order book go out onto those kind of deals for -- in those ships that have owners who possibly were looking to firm charters in order to raise financing, and that's fine. So we just believe that the fundamentals of their market are more strong than that. And so what we have is the ability to trade the mark -- trade the vessels on a shorter-term basis without having to delay deliveries. Hopefully, do well on earnings. I'm sure we will do fine, but we'd like to make sure our vessels are open and available to respond to what everybody knows is the large wave of new production coming on to the market starting in 2015. And it's a nice broad range of supply. You've got the Australian supply coming on, now you've got U.S. really building up in East Africa with their monster project. So we just think that we would be remiss if we didn't do our best to take advantage of what is the real increase in demand for ships, which is coming, which created by that production increase. Urs M. Dür - Clarkson Capital Markets, Research Division: Great, and what -- to what do you attribute the freight rates where we are heading into the winter season? Can you tell us a little bit about that market? What do you attribute the relative strength of the market compared to say where we were in June? I wasn't saying delay the ships. I'm just wondering that it doesn't seem to make sense in this market to delay a '13 ship when the market is as strong as it is just to get a '14 stamp, but I was just wondering what your thoughts were there, and you answered that. But can you talk a little bit about what this nearer-term market is because whether we like it or not, it does seem like investors do react very positively to improving freight rates, as well as the other positive announcements you've had, like the debt facility and the contracts, but also to just what the general freight market is like. And can you tell us what you expect in the next 2 quarters maybe on a chartering outlook?

Well, I mean, from a few months ago, I guess, the story has been largely about the typical things. Well, maybe not typical. The disruptions that we've seen in the production have not been typical. The delay in Angola, I think has been an interesting dynamic because of that 7 vessels I believe, either get released into the market or not. And when you're talking about a market that's kind of -- with the lack of liquidity that the LNG shipping market to suddenly have 7 new ships that people didn't know were going to be there released into the market in 1 region has a bit of an effect. So with Angola starting to ship cargoes, I don't believe -- I believe all of those vessels aren't trading anymore. I don't know that for sure, of course, but I believe there -- those vessels are standing by, ready to lift Angola cargoes. That's changed things. The state of the market now, I -- we expect the arbitrage to be in good shape through this winter with that new production coming or the Angola production coming on, and maybe Algeria selling more cargoes than they have been. We think it's going to be pretty robust. What -- I guess the characteristics now, it's been -- there's a very few ships around, and I think some cargoes aren't getting lifted because of that because again it's right place, right time, if there isn't a ship available to get to the load port at the right date and the cargo just doesn't get loaded, and I think there's been some of that going on. So I guess the supply-demand balance, which is the only -- is what you really -- over any kind of -- except for very, very short term what…

We'll now take our next question from Fotis Giannakoulis of Morgan Stanley.

Yes. I want to ask a little bit more about the spot market. And you mentioned that the spot market is -- does not have so much depth in the LNG sector. What type -- kind of a utilization can you attribute realistically if you trade spot, and how shall we start thinking the revenue of the vessels, have they hit the water, in the event that it takes a few more months until these vessels get into longer-term contracts?

Well, I don't know if I can get into predicting utilization, Fotis. But just to give kind of our mindset on this, I mean, there's a whole range of answers here. There's true spot voyage charters all the way until like 6 months or 1 year, 8-month deals, which I would include in my description of short-term business for our vessels. Our mindset would be that it's idle time on LNG carriers and keeping them cold and the fuel required is quite damaging. So we will be fairly focused on the utilization figure as opposed to the last dollar on a charter rate because it just doesn't make sense to go idle searching for the highest possible rate. So we -- I can't predict the utilization for you, but it's a huge priority to keep these vessels moving.

I understand. What I would like to ask your help is that, let's say that the market is around $100,000 or $110,000 as it is right now. How can we translate based on what you have seen in the last 6 months into an average rate given the gaps that you have between 1 cargo and another? And if you can also be helpful, you mentioned about the Angola that is going to bring more cargoes. Angola has some vessels that they are already contracted or Algeria, but I understand that there is some excess capacity that provides spot cargoes. How many cargoes are available from these 2 projects?

Well, I don't know if it's so much -- and that those -- the 2 projects are very different in terms of the shipping that's pointed at them. It's not so much new cargoes, although you would expect eventually both those facilities may produce over their nameplate capacity, but it's more where the LNG goes to. I believe that probably the Angola fleet, as it stands today, was designed to go to the -- we're sending that project to go to the U.S. I don't know that for a fact, but that's probably the case. So if you -- I think if you look at diverting -- if you diverted all of that LNG to Asia, which if I was the Angola guys, that's what I'd want to do. That's probably 3 more vessels. I mean, you can do the math on that as well as I can. But Algeria, I'm not sure, to be honest. I mean, they've got the new train capacity now. I actually don't know better than -- more than the assumption that they'll be anything that's not committed to long-term buyers will be sold on an FOB basis and maybe will be sold in strips or one-off. So I don't know. It's a little bit hard to predict the impact of that one on the shipping capacity required.

Is there a way you can share with us your view how many vessels there right now that are trading spot? I understand that some of the older vessels, they are still trading in the spot market, but there are also some vessels like the Viking, which are out of contracts and some vessels, have they -- sub-chartered by the charters. How big is this spot market? And we heard about some idled, some vessels -- older vessels that they got idle, and that helped a lot the rates in the spot market for modern vessels. Is that the case?

There certainly has been some older vessels coming off charter and assumably going idle, if not directly into lay up, if not people trying to sell them even for scrap. In terms of what portion of the fleets operating in a short term or unattached to projects, I don't know. Long run, historically, that -- you probably have better statistics than me, but my own view of it, it's generally around 20% of the vessels or so. That's not spot. That will be what I would call nonproject vessels. So you tend to get the portfolio guys in that count as well. But right now, I don't know. There's probably -- at any one time at the moment, there's only 2 or 3 vessels in each of the regions available for spot cargoes.

One more question about the chartering. We read in some of the industry newspapers about the Douglas Channel Project and the potential of providing employment for a couple of vessels. Is that in line with your expectations? Do you think that Douglas Channel fleet at first phase will need 2 ships? And have there been any discussion between you and your partners of providing this capacity in terms of shipping availability?

Well, it's -- I'm not trying to be -- it'll be either 1 or 2 vessels for that first phase of that project. And certainly, it's amongst the issues being discussed, but it would be our intention that if we invest in a liquefaction project, the base case is that it would be Golar vessels lifting the cargo from the project.

One question for -- a couple of questions for Brian. Brian, I want to ask about your operating expenses. How shall we think of operating expenses given the fact that you have 5 vessels, out of which 2 are idle. Do these vessels pay operating expenses while they are sitting idle, and how shall we calculate them?

Yes. So I think 4 of the vessels that are in layup. It's safe to say that the operating expenses is much reduced. So typically in the past, we've seen daily operating cost of somewhere between $2,500 to $3,000 per day. Of course, when you put them into layup there is an initial expense, but once they're in layup then, that would be the typical run rate. On the modern carriers, they're currently in the region of 12.5 to 13 days of Viking and Arctic would be in that region. And for the Gimi, which was in operation during the quarter, for most of the quarter, then her operating cost is around 13.5 to 14. So the one thing that skewed the operating cost in the quarter is the costs incurred in respect of the crew, newbuild crew buildup. And of course, that will continue to be the case for this year and probably for the first quarter of 2014. But otherwise, the underlying vessel operating cost will be along the lines I just mentioned.

So I understand that the difference from a range that you gave me for each vessel is this newbuilding crew costs. Is that correct?

Yes, yes.

Okay. And my last question is about the credit facility. You managed to secure a very attractive credit facility without even having any contracts. But I understand the terms they are around 12-year profile. Are the terms going to change from the time that you will have a contract in place for each of these vessels?

That's very unlikely, and the reason it's a 12-year profile is because of the involvement of the Korean ECAs in there. Under OECD guidelines, they can only lend up to 12 years. However, what can be done obviously is once those vessels have got long term charters and drop to LNG Partners, then LNG Partners could layer up on top of those, and that layer could potentially, not necessarily be amortizing. But the underlying debt that was signed up for has a 12-year profile, and that's in terms of stretching that, it's pretty limited. But as I said that you can structure. So you could stretch a little bit of that where the Korean ECAs are not involved.

Our next question comes from Jon Chappell of Evercore Partners.

Doug, first thing on the timing of the MLP dropdowns. Just curious how it works. With the contract for the Igloo, not starting really until March of '14, but then talking about something being done by the end of this year, does the ship not have to be generating revenue before it's dropped down to the MLP to kind of offset the dilution from any financing the MLP would have to take down to buy that ship?

Yes. Obviously, it has to -- it goes without saying, it has to be earning revenue from somewhere in order to -- for the MLP to kind of add it into the dividend mix. The option there that what we can do is -- and what we're thinking possibly is that if the dropdown were to happen before the end of the year, in the interim period, in between then and March, the parent would charter back the vessel and use her as a carrier probably to take a cargo into Kuwait with the -- and arrive with the FSRU ready for the contract with a cargo already on board. So we see potentially to use the FSRU as a carrier coming into that contract. And as such goal that the parent may charter the FSRU from the MLP until the FSRU charter begins at March.

Okay, that makes sense. Just another quick clarification for me, FLNG commentary you're making before that the toll of $3 to $4, is that a net number or is that a gross toll?

Gross meaning OpEx?

Yes.

Yes, it includes OpEx.

Includes OpEx, okay. Great. Two...

Yes, it would not include shrinkage, that's going there, I should point about that. The units use a certain amount of fuel and that wouldn't be included.

Got it.

The cost [indiscernible] coming from the pre-gas supply cost.

Two quick ones for Brian because I know there's another call in 15 minutes. Just on the interest expense when does that start to show up again? when does the deemed interest kind of get lower than the actual interest expense number that the [indiscernible].

Yes. We're getting used to not showing any interest expense, but I think obviously when the vessels -- we take delivery of the vessels and therefore draw down in the facility, perhaps, not necessarily on the first 2 but maybe in the third one, we may -- I think that's when the breakeven for interest expense come through. So obviously, it will ramp up pretty quickly given that the delivery of the vessels are pretty close to each other.

Okay. So that would put us into the first quarter though of next year? We can assume 0 net interest on the P&L through the rest of this year?

Yes, I think that's about right.

Okay, that's helpful. And then finally, obviously the new CapEx relatively small to Tundra. Can just you just update us on the CapEx budget, the timing of the capital outlays?

So this -- well, actually the majority of that is pretty much back ended. So although we've signed up for it, the delivery cost -- sorry, the timing of deliveries where majority of the additional cost is incurred.

Mostly like 70%, 80% on delivery?

Yes, well, closer to 75%, yes.

Our last question comes from Erik Stavseth of Arctic Securities.

Two quick ones for me. The first one regards FLNG. You're talking about clean gas, without CO2, but I was curious if you're also looking at taking out LPG from the gas stream or is it purely going to be LNG that you're looking at?

Well, the facility -- well, that's a bit hard to answer. With the facility that we're looking at, it is not designed to take out significant LPGs. So it's relatively lean gas, although but I wouldn't call it -- I wouldn't classify it as lean but relatively. If there's an LPG opportunity in association with an LNG monetization plan, then obviously, that could be extremely additive to a project, and we wouldn't shy away from it. We aren't LPG traders nor are we builders of processing plants. So depending on where it was and if it could be done economically, it could be a big boost to LNG project. But this particular facility is not designed to deal with LPG.

Okay, cool. Second question is regarding actually the number of traders in the market. We just saw a Coke supply in trading take your vessel for a year. They haven't really had any cargoes before. We're seeing Gunvor in the market, Travis [ph] in the market. Is there something that you see -- I mean, how do you interpret the traders that hasn't been there before appearing?

I interpret it as good news. We like to see traders coming into the market especially ones like Coke. It's a serious organization. Certainly, if they decide to, can be a big participant in LNG. Gunvor obviously has been already kind of doing some things. No secret, Glencore's going to start up LNG trading desk here shortly. We are all in favor of more players into this market as a ship owner. The LNG industry still has a long way to go in terms of becoming a properly traded product, which we would look forward to that day and more traders getting into the space is an encouraging thing for us. Brian?

Sure.

That will conclude the question-and-answer session for today's call. I'd like to hand back to the speaker for any additional or closing remarks.

Thank you, everyone, for your participation in our quarterly presentation. As always, we look forward to talking to you again in the third quarter presentation in November. Thank you, and goodbye.

That will conclude today's conference call, ladies and gentlemen. Thank you for your participation. You may now disconnect.