Golar LNG(GLNG 0.10%) reported fiscal Q2 2025 earnings on August 14, 2025, highlighting a transformational quarter driven by a $13.7 billion increase in EBITDA backlog, a projected fourfold increase in adjusted EBITDA upon full fleet delivery compared to the last twelve months as of fiscal Q2 2025, before commodity upside, and the execution of new twenty-year charters. Management confirmed a reinforced balance sheet with nearly $900 million in cash and detailed progress on both current FLNG operations and future growth initiatives.
Golar LNG delivers $13.7 billion EBITDA backlog and full fleet chartering
This quarter saw Golar LNG finalize a twenty-year redeployment charter for the Hilli FLNG unit in Argentina, sign definitive agreements for Mark II FLNG, and achieve commercial operations for the Gimi vessel, collectively bringing the total EBITDA backlog to approximately $17 billion before commodity upside, spanning the next twenty years. Notably, these milestones lock in twenty-year visibility across Golar LNG's three operational or under-conversion FLNG units, all under fully contracted charters, with $5.7 billion in EBITDA backlog specifically tied to the redeployment of Hilli.
"This quarter, we've added $13.7 billion of EBITDA backlog, now giving our total backlog at around $17 billion. Our adjusted fully delivered adjusted EBITDA is set to grow four times versus the last twelve months EBITDA before commodity upside. This provides a pathway to increase our dividend distributions to shareholders by more than or significantly more than four times as fully delivered adjusted EBITDA is far greater than the debt service increase. Our balance sheet with a fully delivered net debt to EBITDA standing at 3.4x provides capacity to fund additional FLNG growth while maintaining an attractive and increasing free cash flow to equity. Our focus is now on ordering an accretive fourth FLNG unit,"
-- Karl Fredrik Staubo, CEO
Securing long-term fleet commitments and unprecedented EBITDA backlog materially strengthens free cash flow visibility and provides a robust foundation for both expanded shareholder distributions and disciplined FLNG growth.
Convertible bond issuance and strategic buybacks fortify financial position
Golar LNG raised $575 million through a convertible bond offering in June 2025, using approximately $103 million to repurchase just under 2.5% of shares and bolstering cash reserves to nearly $900 million. The bond was priced with a fixed 2.75% coupon and an 87% premium to the post-buyback reference price of $41.90, with net proceeds of approximately $464 million, providing flexibility to fund additional FLNG expansion without near-term equity dilution.
"In June, we raised $575 million of convertible bonds. As part of this transaction, we also bought back 2.5 million shares for just under $103 million at an average share price of $41.09 per share during Q2 2025. The notes were priced with a fixed coupon of 2.75 and a 40% premium. One important point to note is the effect of the buyback. When considering them, the notes are net dilutive to our share count prior to the notes offering only when our share price exceeds $76.7 at maturity in December 2030 before adjusting any dividends paid in the period. This represents a premium of close to 87% above the reference price of $41.9."
-- Eduardo Maranhão, CFO
By executing accretive buybacks alongside low-cost debt issuance, management demonstrates effective capital allocation while preserving ample optionality to pursue high-return FLNG investments underpinned by long-term contracts.
Commodity-linkage in contracts offers asymmetric upside for Golar LNG
Across new and existing FLNG charters, Golar LNG secured unique profit-sharing mechanisms indexed to Brent oil, TTF (Dutch Title Transfer Facility) gas, and LNG Free On Board (FOB) prices, with the CESA contract offering approximately $100 million in EBITDA uplift per $1/MMBtu above $8, with minimal downside exposure. The company's platform is differentiated as the only independent FLNG-as-a-service provider, enabling exposure to a structurally favorable supply-demand landscape as traditional land-based liquefaction faces cost inflation and U.S. LNG market share is expected to rise to approximately 37% of the global market by 2030.
"Some of our contracts have meaningful upside through commodity links. For the case of Hilli in Cameroon, Golar earns $3.1 million in excess cash earnings for every dollar Brent is above $60. We also make $3.7 million of annual free cash flow for every incremental dollar per MMBtu of the TTF gas price with no ceiling. In the case of Gimi, we do not have a commodity-linked upside, but we have a utilization-linked upside if we achieve commercial utilization north of 90% of nameplate. In the case of the CESA contracts for Hilli, Mark II, and our ownership in Southern Energy, we make approximately $100 million in excess annual earnings for every dollar offtake is above $8 per MMBtu. The total downside is around 28. So we have a $28 million downside of less than $7.5 per FOB, and we have $100 million upside. So it's a highly skewed risk-reward and one that we think could provide significant excess value to Golar."
-- Karl Fredrik Staubo, CEO
These contractual structures embed substantial long-term leverage to global LNG price upside, positioning Golar LNG to capture outsized returns if commodity markets tighten or pricing remains elevated, while downside is quantitatively capped.
Looking Ahead
Management expects to conclude regulatory conditions precedent for the Mark II FLNG charter and finalize shipyard agreements for a fourth unit within 2025, with financing initiatives for Mark II FLNG progressing and full delivery of the unit targeted for Q4 2027. With full operations of the contracted fleet expected in 2028, projected annual free cash flow could exceed $600 million, with each $1/MMBtu increase in LNG FOB driving an incremental $100 million in annual free cash flow under the CESA charters. There was no formal update to long-term dividend guidance, though management signaled intent to meaningfully scale shareholder distributions in line with EBITDA growth, with plans to significantly increase returns as fully contracted EBITDA grows (as discussed on the fiscal Q2 2025 earnings call).
