Executive Summary / Key Takeaways

• Golar LNG has strategically transformed into a pure-play Floating Liquefied Natural Gas (FLNG) leader, leveraging its proprietary technology and "FLNG as a service" model to capture significant long-term contracts and drive substantial EBITDA growth.
• The company's existing fleet, comprising FLNG Hilli and FLNG Gimi, is fully contracted for 20 years, contributing to a robust $17 billion EBITDA backlog before commodity upside, with the Mark II FLNG poised to significantly expand this upon its 2028 operational start.
• Golar's contracts feature unique commodity-linked upside, particularly in Argentina, offering approximately $100 million in annual EBITDA for every dollar per MMBtu increase in LNG FOB prices above $8, with limited downside exposure.
• Technological differentiation, including a market-leading CapEx of around $600 per ton for new FLNG orders (half the cost of U.S. greenfield developments) and proven operational uptime, underpins Golar's competitive moat and ability to secure attractive growth opportunities.
• With a strong balance sheet, a projected fully delivered net debt-to-EBITDA of 3.4x by 2028, and a clear pipeline for a fourth and fifth FLNG unit, Golar is positioned for sustained accretive growth and increasing shareholder returns.

The Genesis of a Floating LNG Powerhouse

Golar LNG has meticulously sculpted its identity over decades, culminating in its current formidable position as a pure-play Floating Liquefied Natural Gas (FLNG) infrastructure provider. Founded in 1946, the company's journey through LNG shipping and FSRU operations laid the groundwork for a pivotal strategic shift in 2014. This transformation saw Golar divest non-core assets and commit fully to the FLNG concept, a vision that began as early as 2010. The delivery of the FLNG Hilli in 2018 marked a global first, establishing Golar as a pioneer in bringing complex liquefaction technology to a maritime environment. This historical evolution, characterized by strategic focus and innovation, directly underpins its current market leadership and "FLNG as a service" business model.

Golar's overarching strategy is to monetize stranded, associated, and reinjected gas opportunities globally by offering a flexible, cost-effective, and operationally superior liquefaction solution. This model allows charterers to access natural gas liquefaction without requiring ownership of gas reserves, providing advantages such as faster time to market, outsourced engineering, and no capital commitments until production commences. The company's foundational strength lies in its differentiated technology and proven operational track record, which have become critical competitive advantages in a rapidly expanding global LNG market.

Technological Edge: The Core of Golar's Moat

Golar's technological differentiation is central to its investment thesis, rooted in its proprietary FLNG designs and operational expertise. The company employs three key FLNG designs: the Mark I (up to 2.7 million tons per annum, mtpa), Mark II (3.5 mtpa), and Mark III (5.4 mtpa). Both Mark I and Mark II units are vessel conversions, while the Mark III would be a new build. A critical commonality across these designs is the utilization of Black & Veatch topside technology, enabling Golar to harvest vital lessons learned and ensure consistency in liquefaction processes.

The tangible benefits of Golar's technology are significant and quantifiable. New FLNG orders are expected to maintain a market-leading CapEx of approximately $600 per ton of liquefaction capacity, which is roughly half the cost of greenfield land-based developments in the U.S. This cost advantage, combined with shorter shipping distances from gas sources to end-users and access to cheaper source gas, creates a compelling economic proposition. The FLNG Hilli, for instance, has demonstrated a "market leading 100% operational uptime" since its 2018 startup, delivering 137 cargoes and exporting over 9.5 million tons of LNG from Cameroon. This operational reliability is a direct testament to the robustness of Golar's engineering and project execution capabilities.

In terms of R&D and new technological developments, Golar is actively securing slot reservations for long-lead items, particularly gas turbines, which are interchangeable across Mark I, II, and III designs. This proactive approach mitigates risks associated with increasing lead times for critical components and ensures attractive delivery slots. The company's wholly-owned startup, Macaw Energies, is also exploring onshore flare-to-LNG liquefaction (F2X technology), having produced and sold its first ISO containers from flare gas in Texas. While still in the fine-tuning phase to address gas quality variability, Macaw represents Golar's commitment to extending its liquefaction expertise to new, environmentally beneficial applications. These technological advantages contribute directly to Golar's competitive moat, enabling higher returns on capital, stronger market positioning, and a clear path for long-term growth.

Competitive Landscape and Strategic Positioning

Golar LNG operates within a dynamic and evolving LNG infrastructure market, where its "FLNG as a service" model provides a distinct competitive advantage. While direct quantitative comparisons with all private competitors are challenging to ascertain, Golar's market leadership in FLNG liquefaction capacity is evident. The company stands out as the only proven provider of FLNG as a service, differentiating it from other FLNG players like ENI (E) and Petronas, which primarily monetize gas they control. This unique business model offers charterers unparalleled flexibility and de-risks their capital commitments, making Golar an attractive partner for gas resource owners.

Compared to traditional LNG shipping companies like Flex LNG (FLNG) and Teekay LNG Partners (TGP), Golar's focus on liquefaction offers a broader service range and greater integration capabilities for complex offshore projects. While Flex LNG excels in the efficiency of modern LNG carriers and TGP has an established shipping network, Golar's technological leadership in FLNG provides a unique value proposition in integrated developments. Golar's CapEx per ton for new FLNG orders, at around $600 million, is significantly lower than the approximately $1 billion per ton for U.S. land-based liquefaction projects, giving it a substantial cost advantage. This translates into a higher return on capital employed and stronger competitive pricing for its services.

Golar's strategic positioning is further bolstered by its contract structuring. All FLNG contracts are under English law, paid in U.S. dollars, and executed offshore, mitigating geopolitical risks. The company partners with strong charter counterparties, such as Perenco for Hilli in Cameroon and BP for Gimi, which act as a buffer against host governments. The Argentina contracts with SESA (a consortium including Pan American Energy, YPF (YPF), Pampa Energia (PAM), Harbour Energy (HBR), and Golar LNG) exemplify this, providing a robust framework for long-term, stable operations. This strategic alignment with major energy players, combined with its technological edge, allows Golar to effectively compete and expand its market share in the growing FLNG sector.

Financial Performance and Growth Trajectory

Golar LNG's financial performance in Q2 2025 reflects the successful execution of its FLNG strategy and the commencement of new contracts. Total operating revenues for the quarter reached $75 million, with FLNG tariffs, which include realized gains from TTF and Brent-linked fees, significantly increasing to $82 million. This notable increase was primarily driven by the FLNG Gimi reaching its Commercial Operations Date (COD) on June 12, 2025. Total EBITDA for Q2 2025 stood at $49 million, contributing to a last twelve months (LTM) EBITDA of $208 million. The company reported a net income of $31 million for the quarter, which included a $30 million gain recognized on day one of Gimi's contract start-up, reflecting the accounting treatment of the Gimi contract as a sales-type lease.

The company's balance sheet demonstrates increasing strength and flexibility to support its ambitious growth plans. Following a $575 million convertible bond issuance in June 2025, Golar's cash position increased to just under $900 million. Approximately $103 million of these proceeds were used to repurchase 2.5 million shares, demonstrating management's confidence in the company's intrinsic value. The net debt position at the end of Q2 2025 was just under $1.2 billion. With a fully delivered net debt-to-EBITDA ratio projected at around 3.4x by 2028, backed by a substantial $17 billion EBITDA backlog, Golar possesses ample capacity to fund incremental FLNG growth units from financing proceeds.

Golar's growth trajectory is underpinned by its fully contracted fleet. The FLNG Hilli's 20-year redeployment charter in Argentina adds $5.7 billion to the EBITDA backlog, with an annual EBITDA of $285 million. The FLNG Gimi's 20-year charter with BP (BP) contributes $151 million in annual contractual EBITDA (Golar's 70% share) based on 90% utilization, with upside for higher utilization. The Mark II FLNG, currently under conversion and scheduled for delivery in Q4 2027, has secured a definitive 20-year charter in Argentina, adding $8 billion to the EBITDA backlog with an annual net charter hire of $400 million. This collective contracting is expected to grow Golar's fully delivered contracted EBITDA by more than fourfold compared to the last 12 months' figure, before commodity upside. By 2028, with the Mark II online, contracted free cash flow generation is projected to exceed $600 million annually, or approximately $6 per share, before commodity upside.

Outlook, Guidance, and Risk Assessment

Golar's outlook is characterized by robust growth expectations and strategic expansion in the FLNG sector. Management anticipates increased newbuilding activity in the FLNG market, with up to five additional units planned by existing owners. Golar believes its contemplated fourth FLNG unit will likely be the only available open FLNG capacity for delivery within this decade, highlighting a significant time-to-market advantage. The company plans to order its next unit before securing an associated charter, a strategy successfully employed for the Hilli and Mark II, aiming to secure attractive delivery slots and maximize value. Due to increasing long lead times for critical components, Golar plans to secure slot reservations within Q3 2025, particularly for gas turbines. Upon securing a long-term contract for the fourth unit, Golar expects to rapidly order a fifth unit, demonstrating a clear growth pipeline.

The company's guidance includes a projected fully delivered adjusted EBITDA growth of more than fourfold versus the last 12 months' EBITDA, before commodity upside. This significant increase is expected to provide a pathway for substantially higher dividend distributions to shareholders. Furthermore, Golar's 10% equity stake in Southern Energy S.A. (SESA) in Argentina offers substantial commodity upside. For every dollar FOB prices are above $8 per MMBtu, Golar expects approximately $100 million in excess annual earnings, combining a $70 million upside tariff and a $28 million impact from its equity ownership. This highly skewed risk-reward profile, with a maximum downside of $210 million over two years, offers uncapped upside potential. Assuming FOB LNG prices of $10 per MMBtu, estimated annual EBITDA could exceed $1 billion, potentially rising to $1.5 billion at $15 per MMBtu.

Despite this optimistic outlook, Golar faces certain risks. The Mark II FLNG charter remains subject to regulatory approvals and customary conditions precedent, though these are expected to be met within 2025. The refinancing of the Gimi's $1.2 billion Chinese sale leaseback facility has been delayed by external stakeholders, necessitating the exploration of alternative financing structures. While Golar's contracts are structured to mitigate risks (English law, U.S. dollar payments, strong counterparties), the historical volatility of contracting in Argentina is acknowledged, though regulatory protections like the 30-year non-interruptible LNG export license for Hilli and RIGI protection aim to provide stability. Project execution risks for new FLNG units and potential prolonged declines in LNG prices are also factors to monitor, although these are currently outweighed by strong growth catalysts and the company's robust contract structure.

Conclusion

Golar LNG stands as a compelling investment proposition, having successfully transformed into a focused FLNG leader with a clear vision for sustained, accretive growth. The company's strategic pivot, underpinned by its proprietary FLNG technology and "FLNG as a service" model, has yielded a robust $17 billion EBITDA backlog from its fully contracted Hilli and Gimi units, with the Mark II poised to significantly expand this. Golar's unique commodity-linked contracts, particularly in Argentina, offer substantial uncapped upside potential, providing a powerful lever for future earnings growth in a strengthening global LNG market.

The company's technological advantages, including market-leading CapEx efficiency and proven operational reliability, create a formidable competitive moat, enabling it to secure attractive new projects and maintain its leadership position. With a strong balance sheet, ample liquidity, and a disciplined approach to capital allocation, Golar is well-positioned to fund its ambitious growth pipeline, including the ordering of a fourth and fifth FLNG unit. While project execution and market volatility present inherent risks, Golar's strategic framework, technological leadership, and long-term contract visibility suggest a path toward increasing shareholder returns and continued dominance in the evolving FLNG industry.