US LNG player New Fortress Energy said it had reached a deal with Tor Olav Troim-led Golar LNG to sell its stake in the FLNG Hilli located offshore Cameroon’s Kribi.
Under the deal, NFE will sell its entire interest in the 2.4 MTPA floating LNG producer to Golar in exchange for the return of 4.1 million NFE shares and $100 million in cash, according to a statement.
Golar will acquire the 50 percent interest in trains 1 and 2 of the FLNG Hilli, currently owned by a subsidiary of NFE.
The acquisition by the US firm of all NFE shares held by Golar reduces the number of NFE shares outstanding to about 204.7 million shares, it said.
As part of the agreement, NFE will also extinguish $323 million in debt obligations associated with its interest in the FLNG.
NFE focusing on its own FLNG portfolio
“With this transaction we will sell our minority interest in the Hilli in exchange for 4.1 million shares of NFE and $100 million in cash,” Wes Edens, chairman and CEO of NFE, said in the statement.
“We believe this is a fair economic result for both ourselves and Golar,” he said.
“Furthermore, from a strategic perspective, it will allow us to focus solely on our own FLNG portfolio that we own 100 percent of as well as buy back NFE stock at an attractive valuation,” Edens said.
Following the transaction Golar will have no remaining shareholding in NFE.
“Golar has been a meaningful partner for the past several years and we have appreciated the opportunities to collaborate with them,” Edens added.
NFE currently plans to install five floating LNG producers in the Gulf of Mexico, including off Louisiana, Altamira, and Lakach.
The firm will use its “Fast LNG” liquefaction design that incorporates modular, midsize liquefaction technology with jack up rigs or similar offshore infrastructure.
Transaction to close in first quarter
Subject to customary conditions, NFE and Golar are expecting the FLNG transaction to close in the first half of 2023.
The floating LNG producer has in total four trains installed onboard.
Golar’s partners in the project are oil and gas company Perenco and Cameroon’s national oil firm Societe Nationale des Hydrocarbures (SNH).
Following closing of the transaction, Golar’s effective interest in currently contracted FLNG Hilli earnings include 94.55 percent of common units that receive tolling related fees relating to trains 1 and 2, and 5 percent of Dutch Title Transfer Facility (TTF) related fees, the firm said in a separate statement.
This also includes 89.1 percent of Series A units that receive Brent oil related fees and 89.1 percent of Series B units that receive 95 percent of TTF related fees.
“Today’s announced transaction increases Golar’s portion of cash flow generation from Hilli’s existing contract until July 2026,” Karl Fredrik Staubo, CEO of Golar, said in the statement.
“Improved market fundamentals for liquefaction capacity and Hilli’s market leading operational track record supports increased utilization and earnings potential of Hilli upon re-contracting. The transaction continues our company simplification, reducing our investments in listed securities whilst unifying the ownership of the FLNG Hilli,” he said.