Thank you. Good morning, good afternoon, everyone. I hope you’re all well. Welcome to the Golar LNG Q1 2020 Results Presentation. I’m Iain Ross, I’m CEO of Golar LNG. Today, I’m joined on the line by our new CFO, Callum Mitchell-Thomson; and Stuart Buchanan, Head of Investor Relations. Before we get started, I’d like to acknowledge the huge effort by Golar staff, both field based and of course at sea for their effort in keeping the business running during this unprecedented disruption due to both COVID-19 and depressed commodity prices. Their dedication to Golar, and ultimately, to our shareholders, is quite remarkable and worthy of this mention. The safety of our people remains our first priority. Without a healthy workforce, we can’t deliver for our customers. If we’re not delivering for our customers, we won’t make any money for our shareholders. It’s that simple. I’d like to draw your attention to forward-looking statement on Slide 1. And if we turn to Slide 4, let me give you some highlights before Callum takes you through the numbers in more detail. Today, we report an adjusted EBITDA of $76 million on revenue of $123 million for the quarter, which is driven by a solid FLNG performance and strong seasonal results in shipping. Our time charter for earnings of $62,000 per day for Q1 2020 represents a 58% rise over the same period last year. We continue to derisk our shipping portfolio and ended the quarter with a shipping revenue backlog of $126 million. Our FLNG operation is 100% commercial uptime throughout the quarter, with reduced operating costs and stable EBITDA generation. And in power, we reached commercial operations on Sergipe power station, which sees the commencement of a 25-year PPA based on facility availability and a power plant that can be called to dispatch with 60 days notice, which in turn gives great potential for additional income from merchant power. During the quarter, we had three days of dispatch. More on these segments later. Let me firstly welcome Callum to his first results call for Golar and take us through the numbers. Thanks, Callum.

Thank you. And if you turn to the next page, Page 5, the first quarter 2020 financial results. I’d say, I’d echo what Iain said about the dedication of the staff with these tough times. And normally, one would be able to meet many of you in person on this call. So I apologize that circumstances are such that we have to do it this way, but it should work. Turning your attention to the summary results, you can see at the bottom of the page, the adjusted EBITDA in the Q1 2020 column that Iain referred to, $76 million of adjusted EBITDA, which compares very favorably to the $63 million earned in Q1 2019. As you know, our business is seasonal. The shipping business is seasonal, so Q4 has tended to be a better quarter. Secondly, the $76 million is a small beat versus net back consensus. Where does that $76 million come from? What you can see here, from shipping and corporate, that’s a $34 million figure, which again compares well to the Q1 2019 of $21 million. As you’ll see for those who are familiar with Golar, the U.S. GAAP division split is shipping and corporate together, sometimes about to investment operations. And as we go through for this deck, we’re trying to – we started a trend which we’ll try and continue of splitting out shipping and corporate. And you’ll see more of that later. So that $34 million on for shipping and corporate EBITDA is $43 million of shipping and minus $7 million of corporate. And again, that $43 million of shipping relates to the positive work that the team has done that Iain referred to. The second point to note is the FLNG number at $42 million EBITDA. Adjusted EBITDA is also stable, and…

Thank you, Callum. Turning to Slide 9 on the deck and shipping. Our revised shipping strategy that we’ve been discussing with you now for many quarters is contributing well, we think, to our improving TCE and shipping growth story, resulting in that quarter-on-quarter growth from 39,000 a day in Q1 2019 to 62,000 a day this quarter. And you can see the adjusted EBITDA profile on the graph, together with the utilization wrap up, and that’s clearly part of this strategy. Q1 has had quite a cocktail of pressures on the shipping market. In addition to seasonal downturn, we’ve seen demand destruction caused by COVID-19 and oil price linkage, leading to LNG spot price dropping to around $2 million per MMBTU at the end of the quarter and with some cargoes canceled in the quarter, mostly from the U.S. and more cancellations to follow during Q2 in the summer months. An effect of these items are a reduction of ton miles and less structural lightness in the sector than we originally thought. Spot rates fell from a high of 537,000 in October to low to mid-40s by the end of March. Now offsetting this is some new production coming up from the U.S. and the potential for deferral of non-committed vessel deliveries over the next couple of years. Industry analysts are now forecasting that 2020 LNG production will be between 1% and 3% higher than 2019, so similar profile. And finally, we have the eligible curve, Asian delivery, currently in angle towards the fourth quarter, and that may justify some floating production and an associated pickup in rates. You can see from the graphs on Slide 10 that we continue to grow shipping revenue backlog and lock in utilization for the year. If we compare the current position with 12…

[Operator Instructions] Okay, our first question comes from the line of Ken Hoexter. Your line is now open.

Great, good morning. Iain, Callum, welcome. So Iain, just – obviously, I think the one to start on is your thoughts and progress on the shipping spin, if there’s any update on your thoughts. Is that just off the table in this market and kind of you just proceed as planned? And then your view of the mix now, you’ve improved – you noted the amount that’s contracted versus spot. What’s your thoughts on increasing that in this environment where rates are today? Or do you kind of like the mix of almost 50-50?

So first question, nothing’s happening immediately around the shipping spin. But the fourth – the final point I made in the summary relates to that good old test of group corporate simplification. So we haven’t given up. We continue to explore different ways to make the company comprised of separately investable components as we’ve discussed previously around the difference between shipping FLNG and Golar Power. We continue down that path, and we’ll update you when we’ve got something concrete to discuss on that point. Around shipping, I think from our point of view, we like the structure that we’ve got, we like the profile that we’ve developed. I think we’re building a defensive strategy across the portfolio that we want to protect from leaving that opportunity for the upside, whether that’s through a contract structure or a couple of spot ships just to take advantage of any upside. So in doing that, we are happy to take on more term business as it comes along. Obviously, doing that in a very low-priced environment is more tricky than H1 is on that I think, but I’m just very pleased with the progress that our shipping teams made, particularly with the additional analysis that we’re doing and using this to position. So the short answer to your question is that I would like to see a bit more of contracted term business. And certainly, I think compared to where we were a year ago, we’re great and improved on our reach.

Thanks, Iain. And then just following up on the Gimi, I’m sure you’re limited in what you’re able to talk through, but maybe you can just walk us through the process. Is it something that you move toward arbitration? Is there any court system that you’ve progressed with? Or does it just say at customer discussion levels and proceed from there?

All right. So yes, you’re right. We have a process. Under the term, so that the lease of the agreement, we have a process to follow that determines causing remedy of any close to event. So that process is underway. And importantly, it’s expressly defined in the LOA. It’s a complex process, so I’m sorry, I can’t see anything more on the detail. We will give a full explanation of where we end up when we’ve got it formally agreed with both BP and oil and gases.

All right. I think that’s helpful to know that there is a defined process in the agreement.

Absolutely.

And then my last one is just on Brazil, right? I mean, obviously, so many different parts of – moving parts here. But when you think about the process and the bid, maybe you can just maybe simplify the bid process for the next steps, whether it’s in Barcarena or are there other bids that you’re looking at to expand your capacity there?

Yes. So yes. We already have a 600-megawatt power station that we’ve bid and been awarded in the Barcarena. We continue to develop the terminals and the other locations that I mentioned. And the process is, I mean, Brazil is obviously going to be delayed with any options right now. You don’t want to go down there with COVID-19. The process is quite simple. An option is declared by the government. As we get closer, we understand the number of megawatts, and therefore, how competitive we can be. And we’ve got – it’s a GPA extension. We’ve got – Barcarena is an already awarded [indiscernible] other places. And the idea is that we work out where we can be competitive and embed into that process using the best combination that we can come up with. I think these awards can also be swapped around afterwards. It’s quite a – it’s – in one way, it’s a very, very strict and regimented process. And on the other hand, once you have been awarded, you can move some of these projects around. The key to success here is the fundamental point of having locations ready to bid that are approved and qualified. That’s where all the hard work goes on in the background, getting these locations ready. We’ve got many that we’re working on to be able to do that.

And let me just wrap up, I guess, on the LNG price environment. When – where prices are now, do you expect, as we see the reopening obviously creeping up in the U.S. and Europe, accelerating a little bit more, and clearly, in Asia, I think we’ve seen a bigger ramp up. Are you expecting that pricing just to follow a normal seasonal pattern? Would you expect to see a slow uptick based on the acceleration of the reopenings around the world? Maybe you could just kind of walk through that. And I appreciate the time. Thanks.

My look at LNG pricing and shipping is probably the same as everyone else, is it’s wrong. I mean if you can tell me when the global recovery is going to restart, what the rebound profile will look like, how that has translated to energy demand, what oral demand will be? How will OPEC plus in the U.S. shale will respond? How the coal expect between Australia and China that’s been recently announced to play out. Trade delays in LNG between the U.S. and China, then I have a more informed view, getting delays in defensive strategy in order to create resilience. And with LNG, we’re developing our Mark III, so it’s super competitive and staying engaged with customers. And I think that – it’s all we can really do, we’re trying to forecast this. This is not forecasted to be prepared and be ready to move as soon as the opportunity arises.

Wonderful. Appreciate the time. Thanks, Iain.

Thanks, Ken.

Okay. Our next question comes from the line of Randy Giveans. Your line is now open.

Hi gentlemen, how is it going?

Hey Randy.

So yes, first, congrats on starting the Sergipe power plant during the first quarter. Just kind of following up on that, what are the expectations for the cash flow ramp up? And how has that Brazilian real depreciation impact of this project? It seemed like initially, the EBITDA contribution was around a $24 million a quarter. It looks like now, it’s closer to $19 million a quarter. Is that a good kind of run rate for the remainder of 2020?

Well, it’s dominated by – it’s influenced by two things. Obviously, the real exchange rate, so all our costs and the majority of our debt’s in reals, so there’s a bit of a natural hedge there. But then the other thing that happens, of course, is it’s linked as all Brazilian contracts are as we go through the year. So you get some degree of offsetting of one against the other. I don’t have in front of me the indexation that we’ve got coming up.

Okay. But the kind of reduction in the debt servicing and interest could offset the reduction in the revenue contribution. Is that fair?

Yes. I mean the debt service and interest is all – or majority of its denominated in Brazilian reals. There’s no impact there. The only pay impact is what comes out the other end as distributable cash, if you like, and how you convert it and where you’re going to spend it.

Okay. And then looking at FLNG, I know you already mentioned a little bit about the process being underway. Do you have some kind of a time line for that? Is that a few weeks? Is it a few months? And then switching over to the Hilli, any updates or kind of ongoing talks with Perenco to either extend the contract on Trains 1 and 2, start utilizing Train 3? And maybe what’s more likely, I guess, in your opinion? An extension or an expansion?

So I don’t know anything else. It’s – there’s no point – I think we’re in a very structured, organized process with BP that we’re progressing, and we’ll update everyone over out the other end of that. I don’t know if you’re referring to the article that popped up yesterday around Hilli. We obviously don’t comment on media speculation. Look, the fact is we’ve got a great operating relationship with Perenco. And we’ve never stopped having commercial discussions with them around potential for both throughput expansion with the existing contract, that’s got six years left to run, and equally for the potential to extend that beyond six years. And I figure out that Perenco is an oil company. In the current environment, we would expect them to be prudent with CapEx and cash conservation. So whilst we understand that the drilling investment to provide more gas into the current contract is relatively small, I’d expect a bit of delay there due to the current environment. About the extension, we maintained the position. It would seem to make sense for both Perenco and SNH to continue with Hilli due to the gas that stands available in Cameroon Waters. And we’ll continue to have commercial dialogue in that regard in the meantime, and importantly, we’ll press on with ensuring that Hilli continues to be the best-performing LNG project in operation today.

Got it. Okay. I just wanted to see if there are any updates there on Perenco. And then I guess one question for Callum. First, welcome to the big show here. And no need to apologize for the detailed financial explanations as you did earlier. We like that. So looking at those multiple refinancings that you were referring to, obviously, you’re diving right in with all this work underway. What is the kind of the possible net liquidity increase you expect after repaying the current debt on these kind of refinancings?

So thanks for the question, Randy. [Indiscernible] which you probably haven’t had a chance. There’s a little bit at the back end, where we talked about what the vessels are. It depends what we do, right? If you look at the field, that is a requirement. We want to be on the front foot and then have that done prior to January. So I think the extra liquidity on that, you should think of that as being low. That’s heading off the potential put option from the counterparty in January next year. So think of that as being low single – mid-single digits in terms of liquidity gain. Then the liquidity gain from the other assets that we referred to, it depends on which ones we choose to do. We’ve got three potential situations that we are looking at. We are in very advanced discussions with the counterparties in terms of term sheets, credit committees, et cetera. I think you should think of that – the liquidity gain, well, all three to – but all three to occur, you should look at the liquidity gain being north of $50 million, 5-0 million, and sub-$100 million. You should think of it in that zone. But I must stress that this is opportunistic. People have approached us and said, we think this is good for you and we think we’re interested in this, and we’re looking at it. We’re in advanced stages, so things should – you never know in the current environment, things should move quickly. But from those, you should be looking at between $50 million, 5-0, and $100 million were they to occur. But please note the – were they to occur.

Yes, that’s fair just trying to see what kind of levers you could pull there. But thank you very much. Good to talking with you.

Sure thanks Randy.

Our next question comes from the line of Michael Webber. Your line is now open.

Hey good morning guys, how are you?

Hey, Mike.

Iain, first one is on the Gimi. And I know there’s an ongoing process with BP. Just thinking from your perspective and the actual conversion work being done in Gimi, is there – what, if any, impact should we expect on the leverage in the syndicated debt associated with that asset as it relates to some degree of schedule relief with the force majeure? I know BP mentioned a year, which is an oddly specific number for someone that’s simply looking to sell the gas. But the – does that have any impact? I know the first piece is syndicated debt in the FLNG market ever, I think. So is there any repercussions or any pockets of concern associated with those overlapping processes?

I’ll let Callum chip in on this to start with.

Yes. So I think the – I think we’ve been delighted with, Mike, on how our lenders have responded. They get the situation. They understand it. We’re keeping them informed. It’s a fast-moving situation. We’re trying to move three, sort of parts of the side of a triangle off to the right. The BP discussions, the contraction discussions and the financing side. As they currently stand, I think it’s fair to say we’re comfortable with where we are. We think the short answer to your question is, no, we don’t think there are any repercussions for the financing by moving the financing to the right in terms of the comfort of the lenders. I think they’ve been very supportive, and we’re appreciative of that. They’re obviously waiting the process there. It’s for us to have a final – for us to be able to take the advanced and positive discussions we have with the contractors. Price will add up, cost all that up, phase it and then go back to the lenders and their engineers and say, here’s where we’re at. Are you okay? And the initial conversations we’ve had with them around is a dynamic, right? We have to be better than the contractors. We keep the lenders informed. The environment is positive. We had said that at the start, right? We haven’t we’ve got a little bit of a way to go to get this finalized, but it’s advanced and positive. So there’s a bit more color around it. But at the moment, we think they’re along with us and are super supportive.

Got you. And without getting too granular, if I think about the 12-month term reference by BP, that doesn’t trip any – there’s no – it don’t trigger anything within the credit documents, the indenture associated with the availability of that capital? I know it doesn’t start amortizing until, I believe, commercial delivery? I’ve got to check. But there’s no – there’s nothing – I don’t think it’s triggered but within – just from the time frame alone. Is there anything?

I’ve asked that question, Mike, and the answer I’ve got is no. It does not. There are other things we care about in terms of quantum and tone and everything else. But in terms of duration, no.

Okay. That’s helpful. I appreciate it. Iain, on the carriers, again, I know this is in the process that’s been going on for close to two years now, I think, maybe more. We’ve kind of gone full circle. It’s a difficult proposition. In fact, I can’t think of another time where you’ve seen that size of – a block of carriers that size, changed hands, maybe the TK deal with Marubeni. But – and even now, it’s probably smaller. Is the most likely scenario – given what we’re looking at now, is it fair to say the most likely scenario is some kind of in-house solution – that doesn’t necessarily involve unrelated third parties?

It could be. We’re considering all options, Mike. I mean first of all, our frustration, this is fairly big in that we had the original spin-off with this three – two other shipping companies thwarted at the end of last year. That spin-off that was thwarted by the global downturn that we have. We’re not giving up. We’ll get it sorted. We just haven’t quite landed in the right solution for this time. And we’re exploring new options. Callum has come in with some great new ideas. And we – and I’m confident we’re going to get that – on it. And I’m so happy that I haven’t been more specific about what it would look like because these things have, in the past, have been wrong. So really, we’re still – on it, and we’ve got it there on our list of priorities. It’s really just to let you know that we’re not giving up. We understand the value of having an investable vehicle that is – and having investable vehicles and other things. And you get different types of people that may want to invest in those different asset classes, but we’re just trying to get it right.

Got you, okay. On the Hilli, and I know you kind of guided this earlier, and I believe, previously, you’ve mentioned the preference to extend relative to expanding. I’m sure both would be preferable. But if you could pick one or the other, extending the term and eliminating rollover risk versus adding a third or fourth train is your preference? Is that the right way to think about it in terms of the most likely outcomes? I know there’s a bit of horse trading going on between Perenco and the government. Anytime we see articles like that, that’s – they’re written for a reason by someone to send a message. But should we think of it as – is the most likely scenario an either or? Or do you think it’s likely that we would see something eventually combined where Perenco has done some more drilling?

Well, they could be step-wise. We might get a bit more production coming in within the six-year contract – sorry, the eight-year contract and we have six years left. So we might get that. But then we have a period of a couple of years to then agree an extension. So if you take the premise that it’s assuming that LNG prices all to somewhere a little bit more attractive than they currently are – and remember that some of this gas is a byproduct, they have condensate-rich fields, so not just the pure gas for Perenco. If you think about the extension opportunity being attractive to Perenco and SNH, then you would then conclude that’s in their interest to talk to us about an extension and try to do something over the next couple of years to nail that debt. But equally, and we shouldn’t forget this, SNH got a fantastic reputation with all that operational knowledge that we’re building up. And it’s – in two years’ time, in four years after that, it will be very good to be deployed sometime – we already got interest coming from other parties to say, can we have a look at setting something up so that we could take that. I don’t think your statement’s right about it’s our preference just to extend it. My preference now is to get additional volume through as much as we possibly can now because it’s cash today for no incremental CapEx. Sure, we want to extend it, assuming we get the right deal from Perenco and SNH. And if we can’t extend it with the right deal, a bit of a grand swell of interest that we can explore over the next couple of years to see if we’ve got something that might be better.

Okay. That’s fair. And you touched on this – just one more for me. You touched on Brazil quite a bit, but maybe just to kind of put a point on it. The impact of COVID on the pilot programs you’re running in Brazil, I know there’s been a lot of interest, and you’ve got a number of people kind of sign up for MOUs. And is that – to what degree has that appreciably extended the time line for initial commercialization of that kind of, call it, kind of the merchant share of capacity that you have in Brazil? And my apologies if you referenced that in you prepared remarks and I missed it. But to what extent, if you can maybe measure it in quarters, do you think that kind of slides your time line back in terms of how you think about commercializing the process?

Well, it’s a fair question. So – and the answer is I don’t know exactly. But we’ve been talking for a while about converting some of these LOIs that we’ve had into binding agreements, if you like. And we got our first three under, so 115,000 cubic meters of gas per day. I think that starts the ball rolling. It’s giving the team confidence in the economics. We’ve got the deals done, payback in a ready year. EBITDA, CapEx, one, CapEx EBITDA rather than one. I think at the end, we’re trying to report progress. It’s been three customers now, one in negotiation, so they should be converted relatively in short order. Then let’s see how we go against that. And then another 200 have signed up to LOIs, rather, representing 6 million. So if you add all that together, it’s something like 1.5 million tons of LNG per year, so it’s a phenomenal volume. But to answer your question more directly, we’ve got three down. Let’s see where we go through quarter two, and let’s see how that curve starts to ramp up. And I envisage it being a slow start. And then as we get in better and better in rolling these in, we will get more confidence. The customers will have analogs to go by in terms of, yes, other people have done this, and I think it will speed up. But yes, we’ve taken a little bit of hit in time for the delay in Brazil. I don’t think it’s over at Brazil yet as well. So yes, let’s see how we go next quarter.

Okay, perfect. Thanks for the time guys. Appreciate it.

Okay. Our next question comes from the line of Chris Wetherbee. Your line is now open.

Hey guys, James on for Chris. Just wanted to touch on the Sergipe power plant. Exactly how many days so far in 2Q has it actually been on call? And how should we really think about utilization? And then sort of, separately, I was wondering if you could think about the merchant power opportunity there across the balance of this year, just given COVID and basically the broader slowdown. Just want to sort of get a better understanding of the outlook there.

Yes. So remember, we came on in Q1 – so we’re reporting Q1 numbers. Now Q1 came onstream March 21. And in that period, we had last three days of the month that we were called to dispatch. And prior to that, it was commissioning. So the numbers of 400,000 megawatt hours relates to a combination of the hours dispatched under the PPA. So it was basically three days. And the hours is doing commissioning, which, I guess, is a form of merchant power, but it wasn’t done in an economic way. It was done because we had to run the machines. Now whilst Q2 will be the first full period of availability for merchant power, it won’t be truly representative, I don’t think, of the earning capacity of the plant because we’re still performing some additional guarantee and performance test with the contractor as part of the agreed program. So the focus, as I think about it, the focus was getting commercial acceptance, which we’ve done. And that develop that, and we’ve got a few other tests of things to tidy up as we go through. But nevertheless, there should still be some opportunity for merchant power in the quarter as the prices come up. And then I think we’ll see the third quarter being more representative of what we could probably do. And fourth quarter, I would expect there’s a little blip in the year, but I expect that will come off as well. And this is dominated, absolutely, by the availability of hydropower because these plants are recalled us back. Obviously, they turn to thermal plants when hydropower isn’t available due to the reservoir levels. So we’ve got a team in Brazil that are – I think we had a weather forecast. We are so connected into the weather forecasting and a little in the dams to be able to predict ourselves. And we think we might be called for dispatch so that we can obviously line up whatever it is that we’re going to do around LNG shipments and the like.

Okay, that’s helpful. And then also, you mentioned the possibility of pipeline gas. Just wanted to get an understanding of sort of the timing and sort of EBITDA potential from that particular opportunity in Brazil as well.

So the timing of the product stage, like stock on pilot. I’m thinking from memory, it’s about 20 kilometers or something like that. So the timing would probably – we might be able to take FID on that later this year or early next year. It just depends on how quickly we can get these permits processed. That’s the thing that’s probably been slowed down the most through the COVID-19 issues, that permitting process. So we’ll happily give you an update on that a little bit later after we’ve got through that. And EBITDA, we know that it’s a relatively low CapEx, potentially a good EBITDA generator. We’ve just hired a team, and we’ve just started that commercial acquisition process of getting industrial customers on. So – and it’s okay. Let us go through this quarter and press through an update on that next time in terms of where we are and the actual EBITDA. Unless, Callum, you’ve got any insight into the EBITDA numbers that’s potential from that pipeline. Obviously, we wouldn’t be doing it if it wasn’t a low-CapEx, fast-return opportunity.

I think that’s right. That’s unique, team that’s working, they tend to sign up customers on a sort of with a base guaranteed fee and upside share. So you should think of it as the revenue split being between a base and then have to depending on commodity price differentials. But in fact also, here and you respect that and value it before that translates into giving you guys, we’d like to present see how it works. But it looks – it looks very exciting. But we do need to feel confident we can – we have a good handle on it. At this stage, it’s positive, but let’s see.

Fair enough. I’ll leave it there.

Thanks, James.

Okay. Our next question comes from the line of Craig Shere. Your line is now open.

Good afternoon, and welcome to Callum.

Hi, Craig.

Iain, you noted Golar’s low-cost FLNG development strategy. We certainly agree with that. But the primary challenge has been not engineering or construction, but really financings that are matched the underlying contract duration. Previously, you’ve cited financing improvement opportunities in terms of better shipyard terms, infrastructure equity partners and better debt financings. Can you provide an update on these efforts?

We’re still going, Craig, in the same direction. So obviously, there are opportunities for the new build. They’re bigger. They’re more expensive. But they’re competitive in terms of capital cost per ton. And we will be targeting those customers that – they obviously have a good security around any potential deal that would result in financing, or they can actually be part of the project. There would be such – there’ll be fairly large projects. But I think it’s early days, Craig. I mean we’re very much positioning. Nothing is happening, specifically, around anything close to FID on FLNG projects. What we are doing is we’ve made very good progress on our Mark III design. This whole economic turmoil that we’re going through has put everything on pause a little bit. But I guess the message I want to give out is that we’re not – we’re continuing to develop our Mark III design. We’re continuing to stay in touch with customers. In fact, we’re having virtual meetings all the time through our FLNG development team to keep these opportunities in the room. My final point on is it when the market’s ready to address – it’s in surplus at the moment, but when we go into deficit and people can see demand pooling, requirement for more supply, we will definitely be in the front of the queue.

Very good. And speaking of FLNG, I apologize, I know there’s a lot already been asked. On the BP Gimi force majeure, would it be fair to say that there’s no reason to think that this could extend beyond the initially claimed one year delay. It could well result in probably less than a one year delay? And could we get better color on this – the extent of the delay potentially by the 2Q call? And would any cost overruns that are associated with the delay necessarily be 100% equity funded? And do you have any rough range of how much those cost overruns could be?

They are all perfectly sensible questions, but I’m not going to answer any of those. The – we’re going through the process. Obviously, we’ll give an update where we are in Q2. If we sold things by the end of that, then we’ll do so. But as much as I’d like to explain more, our confidentiality agreement precludes us from even talking about any – on where we’re going. That’s just the way and we respect, fine, and we continue our discussions as we go through the process.

Fair enough. Sticking with – last question, sticking with FLNG. I just want to clarify. I believe your Perenco-Hilli contract was specifically 500 Bcf, that with two trains would run eight years, but they could tap a third train and do it more quickly. My question is if they don’t tap Hilli at all for a time, would they then be able to tap that third train under the existing contract to stay within the eight-year time line?

So we’ve had a few backwards and forwards on this with Perenco. I think we all have a common desire to have that contract, an eight-year contract and less about the 500 just because we’ve got a little bit more – we’ve had 1.5 years of experience of working on the this project, working up to two years experience now of working on the project. So you should think about it as an eight-year contract, and whatever volume we can put through that, it’s up to Perenco and SNH to put the necessary changes to any trade agreements to allow that to happen. But I think the desire is to have an eight-year contract. And let’s not worry so much of about 500, if that makes sense.

I see. So back to your point before, you’d rather maximize volume today, so to speak, understanding that it won’t be maximized in the next couple of quarters. They could start tapping the third train. And if eventually, we get better markets and they want to upsize their oil production and associated gas. Then you can discuss about tapping the fourth train down the road?

Yes. All of the above is possible. And I’m talking about Hilli, once something’s signed, we’ll talk about it publicly.

Okay. Thank you very much.

Thanks, Craig.

Okay. Our next question comes from the line of Greg Lewis. Your line is now open.

Yes. Thank you and good afternoon everybody.

Hey, Greg.

Iain, could you talk a little bit about Golar Power? I mean, clearly, as you look at this opportunity in the small-scale distribution, there’s a lot happening. And maybe it pushes out a quarter or two, depending on issues surrounding that country on COVID-19. But as we think about the opportunities, and in the slides you talked about, I saw tanker trucks, some pipeline, other small-scale opportunities. Is there any way to think about maybe the CapEx around this to meet this growing demand as it kind of plays out? Just kind of – I mean, it seems like a great opportunity. I mean is this just really free money, given that the infrastructure is in place? Or are there going to be any calls on additional capital to kind of build out this smaller scale network?

So there’s no such thing as free money. This was us managing the across it. But in terms of how Golar Power will build this out, we have a very detailed plan. Obviously, it has a number of fronts. They weren’t all addressed in accordance with plan, so that’s – we’ll push ahead on the ones that we get the breakthrough as we can. The important point is that as far as we know and as far as the plans that we’ve seen going forward, all of the CapEx will be funded from within Golar Power. So there’s no additional equity requirement to come in that we’re aware of. And that CapEx will come from a combination of income from Sergipe. And obviously, there’s a – owned by Golar Power and the potential for additional debt facilities that they have. So Golar Power is essentially at this stage in the development phase, self-sufficient for what has got in front of it.

Okay, great. And then just a question around on Slide 17, you have that interesting chart where you talk about the spot prices for power. I guess two questions around that. One is, clearly, we can see the price. Is there any way to kind of quantify realizing that it is going to be different on an annual basis? Is there – but is there any way to think about the call on that demand, like in terms of megawatts, in terms of – as we look at – it looks like we’re moving into a strong part of the year in Q2, Q3, whether spot prices move higher. Is there any way to think about what that potential capacity call could be to something like Sergipe?

So the table on the bottom of that Slide 17 is kind of our – the easy way to think about it. So noting that we’ve got 60 days notice for dispatches, basically two months. If we’re not dispatched, we know that we have two months’ worth of opportunity. And if you think about a cargo being burnt full cargo, so – of LNG being burned over around 50 days, maybe 60 days. So if you have a think about how many 30 days in a 60-day period, between now and the end of the year, you feel that we might have the opportunity to burn LNG at a profitable rate. And look at the – the table basically shows, so if you look at the graph, you’ve got a peaking at 500 last year, we get 300 this year. Choose a number, R$200 per megawatt hour, and we buy LNG at $2 per MMBTU. We’ve got $12.7 million of EBITDA in profit. So it’s really a case of having – how many times that sort of thing can occur. The point that we’re trying to make is there is a spread between the spot price that’s called in the region and the fact that we were the most competitive plant that’s out there. And therefore, if anyone has the opportunity to make margin on that merchant part of Sergipe.

Okay, great. And then just one more for me. You kind of mentioned the global opportunity landscape for Golar Power. I mean, clearly, there’s a lot for the company to be doing in Brazil, and you’re gaining a lot of traction there. But as we think about maybe the broader global opportunity set, I mean, how should we think about it? Clearly, Brazil is an emerging global economy with tons of access to support on a port access. Is that – I mean, is that how we should be thinking about where the other opportunities could be? Just trying to understand, I mean, how we should be thinking about that opportunity set globally.

Look, I’m not going to name the countries, obviously. We want to have – if you think about countries, locations within countries where there’s a population that doesn’t have access to electricity or doesn’t have access to clean energy, so it’s currently burning dirty energy, and where an FSRU would be a fast solution and this model hub and spoke would work, then we have about 15 countries that we’re working on right now. The focus is on Brazil. We’ve got to get that working. So Sergipe is working. We start the rollout of the small scale, proving the economics of the model. And then we can work out how we transfer that. And I mentioned in the past that we’ve had a bit of – so a strategic interest, if you like, and people that – they may want to partner with us to accelerate that. And the advantage we get with that is obviously, due to some of the – some of those locations. Brazilian presence is very strong, and we’re not naïve to think that you can do everything out of one location. You’ve got to be kind of meta national about it. You’ve got to have people on the ground. Now whether that’s with a local partner or teaming up with somebody that’s already there, so that’s the kind of process. So the focus is, firstly, to get Brazil up and running. Sergipe takes small scale, we started, but getting Barcarena done and look at how we’re going to expand that and taking in partnerships as we go.

Okay, perfect. Thank you for answering all my questions.

Okay. Our next question comes from the line of Jason Gabelman. Your line is now open.

Yes. Hi, how is it going? Just going back to the Brazil opportunity, you mentioned, I think a couple of quarters ago, you saw the potential to grow EBITDA in Brazil within Golar Power, your share by $100 million between now and 2025 in kind of a ratable fashion. Is that in line with the opportunity set that you still see? Or has that changed a bit?

It’s probably – what we talked about there was a very slow start-up, and I think we’ve proven that it’s a very slow start-up, which has been hampered, obviously by the COVID-19 situation. But as I said previously, let us get a bit of progress through Q2 and Q3 on the run rate in converting these small-scale LOIs and demanding agreements, and we’ll be able to update you on how fast that we’re going. Obviously, when we get the Barcarena terminal FID done around by the end of the year, that will have an impact. So we can model all we want, but this is going to be determined by physical progress.

Got it. Okay. Thanks for that color. And then just switching gears to the MLP a little bit. Clearly, you made some moves to shore up liquidity there as well, but the debt payments that you had to, you were able to push out. Do you see a risk to the structure? Or I guess, a better way to phrase it is, how are you thinking about the MLP within the current structure? Is there an opportunity to restructure that subsidiary? And I believe there’s some recourse debt at the MLP recourse to Golar, the C-Corp. Is that something that you’re planning to potentially have to deal with down the road?

I guess there are two comments to make. One is, most of the questions, you’d be better off asking Callum at the MLP call on the half hour. But Callum, do you want to comment on any of the points?

I’ll just make the point, Jason, that – I mean, certainly, I’m a month into this job, and I think a couple of your colleagues referred to the structure of the group and the MLP spend. I think what we intend to do, and Iain mentioned it, I’ll just reinforce the point, is sort of sit down and look at the group as a whole and say, right, what’s the right structure? What gives us the maximum flexibility? What’s the right structure that gives us the maximum financing flexibility? And what’s the right structure that meets the needs of equity holders and bondholders? And we’re doing that. And then we layer in, I think, one of your other colleagues talked about the carrier environment. We need to layer that in. That stuff that we’re doing, we’re doing a lot of thinking. We’re doing a lot of modeling and a lot of work, and that will continue. I think it’s premature to say which direction we’d go and what we would do, but it’s something that we’re absolutely looking at. And maybe the decision is status quo, I’m not sure. It’s too soon to say, at least from my perspective, but it really is. If you think of the strategic questions, we’ve cut a lot about Brazil, but this is also one of them that’s very important. So we noticed that there’s a situation that we need to think hard about and we’re thinking hard about it. And I wouldn’t say anything more than that at this stage. So apologies that I can’t. But when the time comes, where we have a plan and we think it works, we’ll be very specific with you. But right now, we can’t.

Okay. Understood. Thanks for the color.

Okay. Our next question comes from the line of Liam Burke. Your line is now open.

Thank you, good afternoon. Iain, could you give me a little clarification on the discussion of the build-out of the small-scale LNG customers? You mentioned incremental CapEx on the project would be $8 million, and that would generate $7 million in annualized EBITDA. Is that the type of return you can expect from the entire project based on additional CapEx and then the additional 200 LOIs?

The short answer is we don’t know, because we haven’t done those deals yet. But think about it as ranging from maybe – if you look at CapEx to EBITDA at 1 times to maybe 3 times, something like that. And I spread across the 2 million customers, it’s a very small CapEx, fast payback business. But each customer is different, and obviously, dependent on where that customer is, how they’re getting their analogy and what kit needs to be provided in order to get it there? That influences the cost of putting that sort of supply chain in. So I would suggest, think about it between 1 times and 3 times as a range across those customers. That’s what we feel at this time. And what we – what I think we’ll do is we’ll update you as you go – so as we go through the quarter. So quarter one, three customers; 21, negotiating, 200 and equating to 113,000 cubic meters of LNG, 600,000 and then up to amongst to 6 million, if we ever get there. And we’ll – and then we’ll probably update you on the sort of the CapEx multiple and payback arrangement that we can come up with.

Okay. Great. And on Golar Viking, is that project still on schedule?

Yes, we had a bit of delay in the first part of the year. So it’s a big converted yard in Hudong. And of course, China was hit pretty hard with the early stages of coronavirus. This – back to Sergipe. So there may be a delay there. If there is, it’s going to be relatively short. So there’s – and everything else on the project is on track. We lifted the main compressor module onto the ship last week or the week before. So it’s going well and everyone is doing a great job.

Great. Thank you, Iain.

Operator, we are going to have to wind up in the interest of time, I’m afraid.

Okay. That is it, sir.

Okay. So in closing, so for me, I’d like to thank everyone for their participation and interest in Golar. We’re certainly weathering this storm, and we think we’ve got exciting prospects for the future. So please stay safe. We look forward to talking to you next time. Thank you, and goodbye.

Thank you.