Ladies and gentlemen, thank you for standing by and welcome to today's Golar LNG Limited Q3 2019 results presentation conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I must advise you that this conference is being recorded today, November 26, 2019. I would now like to hand the conference over to your first speaker today, Iain Ross. Thank you. Please go ahead.

Thanks operator. Good morning and good afternoon everyone. Welcome to the Golar LNG third quarter results presentation. My name is Iain Ross and I am the CEO of Golar. Today, I am joined in the ring by Graham Robjohns, CFO and Stuart Buchanan, Head of IR. We also have our Chairman, Tor Olav Trøim, on the line and he would like to make a few comments now. Tor Olav Trøim: Hi. Thank you Iain. The Board of Golar LNG has since about five years worked towards a clear target of making Golar into the leading independent developer of LNG solutions, integrated LNG solutions. We feel we have made certain progress when it comes to the asset base under contract backlog. However the track for your investors is that the stock cannot perform. It could be easy to excuse with the fact that energy in the same period that performed 7% to 8% and then energy has been reduced from 21% to 4.5% of S&P. We are not doing that. We are building a company and we want to make money for you guys. It's clear to understand that both existing and potential investors are critical to the fact that we have not delivered on our targeted five units of FLNG strategy. And they are asking when is this simplifying of the business is going including the shipping spin-off. I am one of the five largest shareholder in Golar myself and I have further responsibility as Chairman. So I am sympathetic and truly aware and working under pretty big pressure towards solving these arguments. The world consumes today approximately 200 million barrels of oil equivalent today. Some 85% of that is hydrocarbon energy. And the total consumption of coal in the world is approximately 80 million barrels of oil equivalent versus…

Thanks Tor Olav. I am following on from our Chairman's comments just revisiting the investment thesis for Golar in a little bit more detail. So yes, there is an undeniable need for the world to transition to cleaner sources of energy in order to combat climate change and reduce pollution in our cities. And whilst renewables feature heavily in the energy mix, we know that there will be a long period of transition that will require the cleanest of fossil fuels. And that of course means LNG. And whether it's LNG replacing heavy fuel oil and the global shipping fleet post IMO 2020 or LNG replacing diesel in remote communities in developing countries, the long term forecast growth in LNG demand is clear. Golar participates in this drive for cleaner energy through three separate channels to market. Firstly, through our unique low-cost floating liquefaction vessels. Secondly, through our fleet of LNG carriers. And thirdly, through our downstream business covering FSRUs, terminals, small-scale distribution and power generation. We have contracted backlog of around $6.6 billion in EBITDA and a growth path to $7 billion over long-term contracts that are independent of commodity pricing and importantly will not require any further funding from Golar shareholders to deliver. We will demonstrate more of this to you later in the presentation. We remain committed to delivering shareholder value and these three areas will focus on monetizing our contracted FLNG assets and maximizing value through project delivery and operational excellence, on spinning out our shipping business to create a separately investable entity and on delivering short payback, high-value downstream projects that can be funded from within our Golar Power downstream venture. We believe that Golar has got a strong role to play in helping to change the world's energy sources, reducing the carbon footprint and…

Thank you Iain and good day everybody. Turn over to slide five and starting with the Q3 financials. Our operating revenues were up this quarter at $99 million from $97 million last quarter. And importantly, our voyage expenses were significantly lower due to an improved shipping market even though the quarter was negatively impacted by vessel positioning and repositioning for five drydockings over the quarter. Fleet utilization was similar to last quarter at 65%. Total fleet TCE increased from $24,400 in Q2 to $35,200 in Q3. Both quarters, as I have said, were negatively impacted by the scheduled dry docking of vessels that spent time in the shipyard and tailing to and from shipyards. TCE for the fourth quarter, as Iain has mentioned, are expected to show significant improvement within expected overall TCE in the range of $70,000 to $75,000 a day and for tri-fuel diesel electric vessels at between $75,000 and $80,000 per day. The increase in shipping revenues and the reduction in voyage expenses was the key driver behind the 48% increase to adjusted EBITDA in Q3, up from $40 million in Q2 to $59 million in Q3. We are reporting a net loss of $62 million in Q3 but this is due in large part to negative non-cash derivative valuation movements totaling $62 million as you can see on the table on the right-hand side of this slide. Turning to the balance sheet. Our unrestricted cash position has increased to $250 million as at September 30, aided by the drawdown of the new $150 million debt facility. Liquidity will be further enhanced by the release of approximately $75 million from the Hilli LC restricted cash as we have agreed with Perenco and SNH to mutually reduce guarantee LC requirements. Subsequent to the quarter-end, we closed the $700…

Thanks Graham. I would like to take you now through our operating segments in a little bit more detail, stating with shipping. So I am on slide ten. In shipping, we believe that we are entering a period of structural shortage of ships that's been widely predicted by shipping brokers. We expect the next few years to be strong for the carrier fleet and therefore maintain a view that spinning out the ships remains in the best interest of shareholders. And following the Board's decision to spin the ships back in May, we had been driving towards a spin-off prior to year-end and as mentioned, we were planning to do this in conjunction with some other ship owners in order to create a larger business that can be more responsive to the market. And unfortunately, while that arrangement was ready to go, we had a very late change in the needs of one of the participants that we found unacceptable. And as a result of this, Golar has withdrawn from that arrangement and we will continue to progress alternative mechanisms to complete the spin-off. We have planned to list this month on the Norwegian OTC with the larger group before moving it most probably to the U.S. next year. Our revised plans will now have us look at a direct U.S. listing of Golar-only ships which inevitably means that we will not achieve the spin-off until next year. The delay is disappointing but we do remain committed to the spin-off and believe that, again subject to market conditions, we will get it done this coming year. In the meantime, we are looking forward to the ships making some good money over the coming quarters. Turning to FLNG, slide 11. So Hilli has now offloaded 29 cargos safely and without incident.…

[Operator Instructions]. And the first question comes from the line of Jon Chappell from Evercore. Your line is now open. Please ask your question.

Thank you. Good afternoon everybody.

Hi Jon.

Hi Jon.

Iain, I think the last slide is incredibly important with the backlog and the fully funded and I think it speaks to the strategic developments you guys have made and then really set Golar up good for the long term. However, as Tor alluded to, sometimes the market especially in energy and LNG specifically is very short term. So forgive me for asking two kind of short term focused questions. So first with Hilli. Can you just explain a little bit more about the smaller increase in production that could potentially start in 1Q 2020? And you had in one of Graham's earlier slides, still the $73 million of EBITDA run rate from train three. So what would the "smaller increase in production" really translate into from an EBITDA run rate perspective and how real is that for 1Q 2020?

So we are still in discussions is the first thing and therefore until the deal is signed and delivered, it's not delivered. I think you should consider as a fraction of percentage of that train three and separately we hear from our customers that they are embarking on a drilling program to prove up assets. And I see that as a very positive step forward if in fact they continue to do that and we could be in a very different situation this time next year talking about a much larger commitment to Hilli.

A commitment that would include three and possibly four, an extension of one and two? How sizable could that commitment be for understanding that discussion?

Jon, I think that will depend entirely on what they find and what they are prepared to commit to. So I mean I think the good news is they have actually, we believe they are going to move forward the drilling program which is great.

Okay. And my second question is, you mentioned this huge backlog which is obviously real. When you announced the TRS last quarter, you mentioned suspending the dividend for six months. But if you read the press release and you talk about capital return, you mentioned a focus on further growth investments or share buybacks. So has your view on the dividend kind of changed over the last three months? Do you not view that as a six month suspension but more of a permanent suspension with more of a focus on buybacks given where the share price has been over the last few months?

I think, Jon that will be a matter for the Board to decide. But as we sit here before us, certainly if we have any spare cash that's available we will put it to use to maximize its value for shareholders. And within that mix, you have to consider anything that we have, projects that we have to invest in or in fact, buybacks.

Okay. But it sounds like things are fully funded. A lot of cash flows are turning on. So spare cash should accelerate in the early part of next year. And given the timeline that Graham laid out, most of your equity commitments are done. So we should think of more of a capital return unless there's new projects. Is that correct?

That wouldn't be a bad way to look at it.

Okay. Thank you very much Iain.

And your next question comes from the line of Michael Webber from Webber Research. Your line is now open. Please ask your question.

Hi. Good morning guys. How are you?

Hi Mike.

So I wanted to touch on the carrier spin and the breakdown of the process there as they go on for a couple of years. Can you give us a bit more background around kind of what the disagreement was there? And specifically whether it pertained to valuation? And then when we think about 2020 and spinning it in the U.S., should we think about that as maybe as an equity dividend? Or does the high degree of leverage keeps that from being in play and should we expect maybe a more robust process, I guess, when you try to spin it in the U.S.?

Well, the withdrawal from the consortium is quite recent. In fact, we concluded it yesterday. And there's no point going into the detail of it. We just had a structure that didn't work for us. We have got our task list of things to do. And all we are prepared to say at this point is the way that the spin is contemplated now, it will only involve Golar ships. We plan a de-consolidate it. Obviously, it removes the debt from the balance sheet based on the other structure items that are being worked on as we speak.

Got you. I guess within the context of a carrier spin, I guess the sequencing it seemed like it was a play for a carrier spin and then kind of addressing GMLP and then I know you guys also have an option to spin Golar Power. Does dissolving the previous structure and pushing that spin into 2020, is it more likely that we would see a simplification of Golar Partners before we would actually see a Golar carrier spin? Or is that order still in play you think for 2020 in terms of spinning the carriers first and then addressing the rest of the platform?

Well, I think they will they will evolve as a natural solution evolves for each part of the business. The one that's obvious and we have talked about exact plans of what we are trying to do is the shipping spin and obviously we have got a team focused on making that happen. So I think that will be our immediate focus. And how we incorporate bits of the MLP will unfold in the coming months obviously.

Got you. And then just one more, if you will. For Sergipe, in terms of the commercialization progress there on the retail and transportation side, you mentioned some momentum and maybe converting some of those MOUs into firm sales. Is there any update in terms of timeline as when you think you will start to get some of the first ones of those over the line?

No. But I guess the one thing I would say is, it's a very positive process and that we have got pool coming from the customer base because they do see the environmental benefit and they do see the cost benefit. All we have got to do is make sure before we commit to those customers, remember we are committing not only our quality and our price but time, we have got to make sure we have got all our ducks in a row on how we are going to deliver the equipment and get that lined up. And that planning process is happening now. We have got a substantial team working on it. So as that unfolds, we will able to give you more details but it's progressing well.

Do you think we could see the first steps there in Q1 or H1 of 2020 in terms of the first incremental pieces of commercialization there on the retail and transportation side?

I think the reality is, if you take that $100 million, the best way to think about it at this stage with early information is starting in the middle of the year and maybe the middle of the year quarter three start with first income, go all the way out to 2025 when the power station is online, put a straight line between the two. And that's probably not a bad way to look at it and it will illustrate why we demonstrate how we can fund that through cash flows from Sergipe and our other assets. But as this develops, we will obviously provide more information but the focus is on getting the elements of the kit that we have to put in place and the customers signed up and once we have done one customer, we will know how that's going and we can repeat and learn from that and improve on the next one and so on.

Got you. Yes. That's helpful. I appreciate it Thank you guys.

And your next question comes from the line of Craig Shere from Tuohy Brothers. Your line is now open.

Good morning or afternoon. On Jon's Hilli question, I want to confirm if this little piece of train three would be additive to the original 500 Bcf contract or simply a quicker drawdown on the 500 Bcf? And what opportunities there are to potentially self contract West African FLNG to supply your downstream resilient operations?

So I mean the additional amount that we would come through, that's part of the original contract. The contract duration is eight years. So as part of this arrangement, it would essentially be additive to that contract.

So it would still because originally if you tapped train three, it might move to like five years because you just draw down quicker. So this would be completely additive and still be eight years?

Yes. That's correct. It's an eight year contract effectively.

Okay. Great. And the self contracting opportunity?

I mean self contracting opportunity is there. You mean in taking cargos from Hilli to move to other locations, of course that's there. And as we look to develop the Golar Power downstream business and put cargoes through Nanook and eventually the FSRU that goes up to Barcarena, that's a further opportunity. And if we can link the two, if we can obviously link taking a cargo with the production of more LNG, subject to our customer being able to provide the gas of course, then that's obviously something we would look at.

And also on another of Jon's questions around liquidity and share buybacks, I understand that you do plan new financing as Gimi is finished but barring that, it seems that you are just about fully funded assuming you cover 78% of $442 million outstanding equity from 3Q 2019 through 2023 and that also assumes Golar Power self-funds Barcarena and Brazilian downstream. But the self-funding equity investments at Golar Power combined with the accelerated debt amortization is kind of going to sap the opportunity for cash dividends up to the JV partners, GLNG and Stonepeak. My question is, when do you think you are really going to materially turn the corner in liquidity in excess of capital project obligations and enjoy material improving free cash flow at GLNG itself such that you could pursue open-market purchases of shares that are priced near nine-year lows?

So what we tried to lay out today, Craig, is that we have got $440 million of EBITDA backlog contracted with upside to $600 million. Now if you think about what we have had to do to get the first $100 million EBITDA in Sergipe, is build a fairly large power station over a number of years with a fairly large capital commitment and large debt amortization. The second $100 million is going to come with not necessarily less hard work but with certainly more capital ease. And I think that's where we should be looking at in Golar Power is the fact that we can take that cash flow that we are developing from Sergipe and other assets in Golar Power and translate that relatively quickly into another $100 million of EBITDA. And that's just from customers that we have already identified. So that's where our focus is. And in terms of the rest of Golar LNG, we remain disciplined from a capital point of view. Let's deliver on our Gimi project. Let's continue with the ships and do to spin for that. And of course, if we get more upside from Hilli next year or the years to come, then of course that goes straight to the bottomline and cash. So I think we go pathways to cash. We are really clear about what we are working on.

So if I hear you, going forward Golar Power has expansion opportunities that are not only lower CapEx to EBITDA but much faster cash payback realization and if I am hearing that correctly plus obviously with Barcarena of growth through 2025. Do you see this teeing up a successful IPO for the JV?

Potentially. But that's something the IPO Board and JV partners will look at in due course. The absolutely focused for Golar Power right now is to build that business and prove that it's sustainable. And I think with the award of the Barcarena contract, the guys have done a great job in making that next step along the line and turning it from a project to a business.

Great. Thank you very much.

And your next question comes from the line of Greg Lewis from BTIG. Your line is now open. Please ask your question.

Yes. Thank you and good afternoon. Iain, I just had some questions looking for some follow-up. You kind of alluded a couple of times in your prepared remarks about potentially selling off pieces of existing projects. And just kind of would like to have a better understanding of what that structure would look like, i.e. is that something where we are going to, is that going to become a JV where we are going to sell half? Is it we are selling a third? Any kind of and realizing that those discussions may be ongoing. So realizing there could be some sensitivity around that. And then also being as you have mentioned that the projects are fully-funded, is the implication there that the opportunities for additional projects are going to be at least at a similar return or higher return? Just trying to wrap my head around the thought about selling these what are already on the books pretty profitable return projects.

So I guess a couple of questions in there, but if I take the first one first. If you look at the interest in the contracted assets, what we have here is interest largely from infrastructure funds who see a 20, 25 year contract as very attractive because that's how they are setup. And we have talked to a number of different potential participants around slow investment and obviously that investment would do a few things. But most importantly what it would do is, it would probably demonstrate to other people that the value that we have created in building an investment for our CapEx sum and have it sold at an EBITDA multiple that's way in excess of that, that shows that we have delivered value. And I think that's partly what we do. We prove that there's value being created in those assets. So yes, the discussions are ongoing with a number of parties and we continue to evaluate that. And we will only proceed if we think it's going to be the right thing to do for shareholders. In terms of your other point, the FLNG portfolio, if you want to stick on FLNG, remains robust. Not only have we had people talk to us about investing in our existing portfolio, there's a potential for people to invest in future portfolios. But these projects do take time. And I think the message today is that we are not rushing out and trying to desperately find another FID to satisfy a notion of five FIDs in years. What we are doing is, we are focusing on delivering what's in front of us. And I am confident if the right project comes along with the right financing solution, then we will consider taking head in the right manner. And if we do that, it will have returns commensurate with where we expect our FLNG returns to be which is kind of mid-teens return on equity.

Okay. Perfect. Thank you gentlemen. Thank you very much for the time.

Thank you.

And your next question comes from the line of Ben Nolan from Stifel. Your line is now open.

Hi. Thanks. So I had a couple of FSRU, really Golar Power questions. The first is just sort of more broadly, the focus seems to be pretty clearly on quite a number of opportunities in Brazil. Obviously, there's the Croatia one that have been done in the past. But is it fair to assume that for now Brazil is sort of where we should expect things to happen going forward maybe less so other areas of the world?

I think Brazil for us is more in our control. So to answer your question directly, we are still looking at other areas of the world where we see value in combining an FSRU with some downstream infrastructure which would be a terminal pipeline or ultimately a power station. So we are still scouting the world and looking to develop those projects. The difference that we have got in Brazil is that we are creating those projects. So in getting permitting for terminal outlined and winning a power station, we are creating our own market through the end product that we supply which is either gas to consumers in the form of LNG or electrons from our power station. And that's different to say submitting a bid for a tender to simply supply an FSRU. So what we are doing is, as the business grows and as Golar Power grows, we look to internationalize what we are doing in Brazil with the formula is to be around creating our own market with the FSRU being the strategic asset whose capacity we could use for all those downstream things as opposed to going out and just trying to get a return on a bareboat charter rate for an FSRU.

Okay. That's helpful. And then sort of following on that theme, I will throw to squeeze two questions into one here. As we look at Brazil specifically, some of the other projects that you sort of have outlined as potential things, the Santa Catalina project. How did those compare on size? Are they a little bit smaller relative to say Sergipe? And then as it relates to Sergipe specifically, I know over the past you have talked about the opportunity to expand that and have sort of been waiting on winning power contract to be able to do that. Is there any update on where the status of the expansion stands for Sergipe?

So I mean there's a couple of elements to how you should look at the Brazilian market. Remember when we started this journey, it was on the back of the Sergipe power station and we felt that we had to have power stations as the reason that we move forward with FSRUs and terminals. And what we have learned over the last few years, is that's not necessarily the case. First of all, the power contracts that come up are varied. There are two or three a year and the demand is set by the various states or power entities that are looking for the power and you bid against those power contracts. And what we have got is in Golar Power a series of locations that are approved or can easily be approved for power projects. So that's the first differentiator there is. It takes time and energy to get environmental and other approvals in place just to bid for the power projects. The second point is, because we are working on a number of locations, we have flexibility in where we can try and win that power project from. Sergipe expansion is a great example of a power project that we think eventually will be competitive but it just so happens in this instance our offering out of Barcarena was a better offering when you combine all the different elements. And then the third thing is that what we have learned is that the downstream aspects, the ability to sell gas to other users through either direct pipeline into local facilities or importantly a small-scale moving it down the river, that is also an extremely important and lucrative part of the business that we are developing. So it's much more than, let's just get the next power station out there. It's more about getting a strategic locations for a terminal and having the justification to underpin of FID of that terminal, get an FSRU there and start moving gas around and from that power stations and other things will come. So the business has changed a lot over the last couple of years to the good, I would say.

Okay. And just to clarify, again sort of on the size aspect and as it relates to FSRUs. Are many of these things projects that might lend themselves to smaller FSRUs as opposed to the traditional bigger purpose-built [indiscernible]?

Yes. I mean some of the smaller FSRUs are possible maybe as a stop gap. But they tend to be less efficient than the newer ones. And so you have got to look at the whole economic story whether how long you keep the gas there, the quantities of gas and the customer base for drawing it off. So it's obviously something that we have got quite a lot of flexibility versus some of the older FSRUs we have. But also then we have got new FSRUs such as Tundra and conversion candidates and Celsius and Penguin which already sit in Golar Power. So we don't have a shortage of FSRUs that we can deploy to these opportunities.

Okay. Great. I appreciate it. Thanks.

And your next question comes from the line of Randy Giveans from Jefferies. Your line is now open. Please ask your question.

Hi gentlemen. How is it going?

Hi Randy.

Hi Randy.

So first on the LNG shipping side. Now that all your drydockings are complete, are your spot vessels currently employed? And do you expect to lock away more ships on maybe some index-linked charters? We saw that a few months ago. And then separately, any updates on the Golar Viking? Is that still expected to be converted to an FSRU starting, I guess, in January?

Yes. So taking the last one first, Randy. Viking, I think is on charter till February then going into yard. That project is progressing well. Obviously, the ships in the yard but the yards proceeding with fabrication of the re-gas skids and that sort of thing. So yes, that's happening. I think she comes out at yard at the end of next year and then will be transacted through a purchase arrangement to LNG Croatia. And then we will operate and maintain it for the next ten years. So that's firm and fixed and happening. Coming back to the fleet. The strategy that we deployed is, if as you look a year ago when the market was going up and then a month from that, the market was coming down, we had all of our fleet in the spot market, trading on spot with simple cargoes. A couple of them, I think, were index-linked. We have taken that time and put a lot of work in with the chartering department to try and maximize utilization. So we have several of our ships on index-related charter parties so that they take benefit of a rising market. And we also have some protection to support around a falling market where it's not only the rate coming down, there is actually is the lack of utilization. So we have got a got a number of ships on full utilization. We also have a number of ships. So something like, I can't remember the exact number, it is something like four on index-related deals, four on fixed-charter related deals of more than one voyage and two that are enjoying playing in the spot market out of the ten ships that are in the trading through the Cool Pool. And I think that mix is about right. We do want to have a couple that are there to take opportunistic upside on very short voyages that can have higher rates. But largely, we want to get the utilization up in the fleet and continue to have more predictability on the earnings for the ships. And then obviously that's important as they go out on their own next year.

Perfect. Okay. That's fair. And then did you say, going back to the LNG spin, that it will now likely only include Golar ships? And what is the updated timeline for the spin or hurdles or milestones for this to happen in the next few months?

So yes, you are right. It will only include Golar ships. So we are going to do this on our own. We are just regrouping and working through the timelines. And assuming that we do decide to go direct listing to the U.S., it's going to be sometime next year. I guess in the middle of next year by the time we get through all the listing requirements.

But the announcement for the decision would be earlier? Maybe first quarter?

Well, the Board has announced it intends to spin-off the ships. I don't think the Board's intention around the ships has changed. The mechanism and specific arrangement on how we do that is something we are finessing.

Got it. And then, Tor, if you are still on the call, knowing you are around when I ask you some questions, you mentioned you are top five holder of GLNG. You are also disappointed that the share price is down 50% over the past year, like the rest of us are. That said, have you or kind of will you look to purchase additional shares at this steep kind of sale price? And then as Chairman of the Board, Iain mentioned it's kind of up to the Board in terms of dividends or share repurchases at the corporate level going forward. What would be your recommendation?

So Randy, I don't believe Tor is still on the call. Sorry about the big speech you had to make.

All right then, well, I will ask him offline. Thanks so much.

Thank you.

Happy Thanksgiving too.

And to you.

And your next question comes from the line of Chris Snyder from Deutsche Bank. Your line is now open. Please ask your question.

I would be interested to hear the feedback you received as you have been marketing the proposed LNG spin-off over the last couple of months. And I ask because sentiment around LNG shipping is not great. And now the plan is to spin-off an even smaller fleet with not a ton of equity value. I am just curious around the confidence levels you guys have that you can get a deal done in 2020?

We will have to wait and see that how the markets hold up. But I mean our view is it's something that we want to do and we are working on structures so that we can make it happen.

Okay. Fair enough. And I am sure you guys have given this some level of thought but is there any opportunity to sell the LNG shipping fleet? The time charter market appears pretty healthy at the moment. So proposed buyers could put the vessels on cash flow accretive contracts. So even if you just take a haircut on asset prices, it could drive a pretty significant valuation uplift for the broader Golar group.

Everything is at sale for the right price, of course.

That is true. Okay. And then just I guess one more. You guys have clearly made progress on the downstream Brazil opportunity. So you have the $100 million contracted EBITDA over the next 25 years from the Sergipe and the Nanook. But can you provide any color about how we should think about the EBITDA upside opportunity here from the downstream? And how quickly could we see EBITDA go above the $100 million run rate? I am just trying to boil down all the moving parts around the separate projects, all of which have different timings. Any color there to how to think about it or can model it would be appreciated?

So Chris, actually I have done on a previous question. I think at this stage with early information, the best way to think about it is, start EBITDA stream coming in middle of next year, maybe Q3 next year and running in a straight line until we build the power station up at 2025. And doing that, we get confidence that we can fund it from cash flows from the existing business and other debt facilities. And of course, if we get opportunities to accelerate that, we will do so. But I mean realistically, at this time when we are still planning out the data, it's probably the best way to think about it.

Okay. I appreciate the color and thanks for the time guys.

Thank you.

And your next question comes from the line of Chris Wetherbee from Citi. Your line is now open.

Hi guys. James Yoon, on for Chris. I just wanted to actually follow up on Greg's question about simplifying the business and selling potential cash flows. If the LNG market continues to face some headwinds, how would that impact to the simplification and some of the asset sales? Just kind of wanted to get a sense of, if you are getting the valuations you wanted right now? Or if we are going to have to like wait a little bit before you might see something on that might be sold to an infrastructure fund or a similar deal along those lines?

Are you talking about the low cost LNG pricing environment?

Correct. No, just the broader LNG market. Like essentially, are you seeing some of the valuations that you are seeing in sort of the public market feed into some of your other assets and being a potential headwind to any deal that you might do in the private market?

No. We are not seeing any headwinds. I think we got a different structure. I mean if you if you think about LNG, first of all, our EBITDA backlog that we have discussed is unaffected by commodity price. It's locked in as an infrastructure play. And the growth in the downstream business gets even more compelling in a lower LNG price environment. And if you think about it, as that lower LNG price prevails, it is only going to serve to drive that demand higher. More LNG demand requires more production. More production requires more shipping to move it. And our low-cost FLNG solution can cost effectively monetize the gas assets. So low gas prices aren't a headwind to us achieving our targets. And we haven't not done things around simplification because of headwinds around pricing. We have chosen a more complex route by trying to deal with a tripartite situation that hasn't worked for us. So we are going to do it ourselves with the spinning ship off for example. And as it relates to an interest in our FLNG assets, as I said, the contracted backlog is unrelated to commodity pricing and so has no bearing on how an infrastructure fund would view it. So no, I don't think it's causing a problem at all.

So you are getting a level of interest right now where you actually where a deal could be possible?

On infrastructure funds, yes.

Got it. All right. Thank you.

And your next question comes from the line of Jason Gabelman from Cowen. Your line is now open.

Hi. How is it going? If I could just ask a question on the LNG carrier market. You are forecasting a shortage over the next couple of years. But I wonder how you think about that on a seasonal basis? And if it's kind of dependent on the U.S. to East arb being open? You mentioned that the LNG oversupply globally cause that arb to be closed. And I wonder if there's a potential for ton-mile demand to be depressed in the shoulder seasons because that arb would be closed because of an LNG oversupply? I was just wondering if you could comment on kind of how you see the market on a seasonal basis over the next couple of years?

So we still think it will be seasonal. But if you believe the broker reports and you follow-up and you look at our own analysis, we are thoughtful and hopeful that the shoulders won't be as steep as they have been in previous years. So yes, there will still be a seasonal adjustment as cargoes tend to follow but we think the seasons will be lower. In addition to the East-West arb that you have mentioned and yes it's remained closed, but we are still seeing cargoes have got to find destinations. The U.S. cargoes have been going to Europe. Europe's full. So they then slow steam to Southeast Asia and to China. And an interesting fact that I maybe leave you with is, this whole coal for reducing our carbon footprint around the world, one of the easiest ways that shipping companies can do that is to reduce the shipping speed towards boil-off. So you marry boil-off with shipping speed, you take a few knots of the speed and all of a sudden you have combined and improved carbon footprint with slow steaming and effective partial storage so that they can take opportunities of arb as and when they open. I think we will see an awful lot more of that in the coming years.

All right. That's an interesting point. And then just on the Perenco drilling program. When do you expect next year to get an update on what that drilling program has found?

I don't have any firm information on that. Obviously, we are still in discussions. That part of this business is outside of our control. The bit that we can control is making sure that Hilli performs safely and effectively for our customers. So that's what we are doing.

All right. Thanks for the time.

Operator, just to let everyone know, we only have time for one more question.

And we have one more question on the line, sir.

Thank you. Please go ahead.

That comes from the line of Liam Burke from B. Riley FBR. Your line is now open.

Yes. Thank you. Good afternoon. I know you are selective, both from a capital and project basis on the FLNGs, potential FLNGs. Has your success on Hilli provided you with any favorable negotiating leverage, either on the type of projects or the financing or the type of financing partners you can attract?

I think what Hilli has done is prove that the concept works. You can marinize and flow LNG and sell it on a converted ship around the world and have it operate with 100% commercial uptime. I think the BP contract award with Gimi has proven that a top multinational, mega-national oil company can approve that as part of an entrance into their operational environment, which is no small undertaking. So our position on FLNG is to find opportunities that we can deploy these units on. I am not worried about the negotiating position. We believe that going forward we will get a good commercial rate for these units because it adds value to customers. The bigger challenge and there's plenty of opportunities out there. I mentioned we have got the top five that we look at. That's on a long list of maybe 20. The bigger challenge is making sure we can get the operator's requirement to converge directly with the ability to fund and finance these projects and wrap it all in one, under one large buyer. And what we are finding is that by focusing on the bigger companies with stronger balance sheets that can give us more support, that's the way forward. So what we are doing? We are pushing forward to try and get nonbinding term sheets developed for these companies and build a portfolio that eventually will deliver some fruits from that labor.

Great. Thank you.

Thank you.

We have no more questions on the line. You may continue.

Well, thank you everyone for tuning into the Q3 results. Happy Thanksgiving for those of you in the U.S. and who celebrate it and we look forward to catching up with you next time. Good bye.

And this concludes our conference for today. Thank you all for participating. You may now disconnect.