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Golar LNG Ltd (NASDAQ:GLNG)
Q2 2020 Earnings Call
Aug 13, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, welcome to today's Golar LNG Limited Second Quarter 2020 Results Presentation. [Operator Instructions]

I now hand you over to your first speaker, Iain Ross.

Iain Ross -- Chief Executive Officer

Thank you, operator. Good morning. Good afternoon, everyone. Welcome to the Golar LNG Q2 2020 results presentation. My name is Iain Ross, and I'm the CEO of Golar LNG. Today I'm joined on the line by CFO, Callum Mitchell-Thomson; Stuart Buchanan, Head of Investor Relations. We're also pleased to have Eduardo Maranhao, CFO of Golar Power on the line to participate in today's call.

I'd like to draw your attention to the forward-looking statement on Slide 1. And if we turn to Slide 4, let me give you some highlights before Callum takes us through the numbers in more detail. Today we report an adjusted EBITDA of $67 million on revenue of $102 million for the quarter, which is driven by a further solid FLNG performance and better seasonal results in shipping. And again, we commend the effort of our whole team in keeping the business running remotely. And to our officers and ratings onboard who've couped with longer work cycles than normal and dealing with all sorts of restrictions and constraints in doing their jobs. And I am pleased to report further improvements in our ability to crew change with most of our people now having being changed at.

In shipping, our time charter earnings of $45,000 per day for Q2 represents an 88% rise over the same period last year. We continue to derisk our shipping portfolio and ended the quarter with the shipping revenue backlog of $105 million. Our FLNG operations maintained 100% commercial uptime through the quarter, with a further 6% reduction in operating costs compared to the first quarter and stable EBITDA generation. And in downstream, Golar Power received full capacity payments on Sergipe and Nanook with Golar's share of that equating to $19 million of revenue less operating costs. The small-scale rollout was boosted by the signing of a partnership with Galileo and the MoUs signing with Norsk Hydro for the provision of LNG and regas capacity into the Alunorte alumina refinery in Brazil will reduce the refinery's CO2 output by some 600,000 tons per year. That's the equivalent of the carbon capture of around 10 million tree seedlings planted and grown for 10 years, it's a great ESG story.

More details on these segments later. Let me now hand over to Callum to take you through the numbers.

Callum Mitchell-Thomson -- Chief Financial Officer

Thank you, Iain. Good morning, everybody. If you turn to Page 5, second quarter 2020 financial results are shown in more detail here. Iain mentioned the $103 million of operating revenue, you can see that in the blue column. That is a 14% beat on the consensus at $90 million for the quarter and is achieved with the stability of the $55 million of FLNG, as Ian mentioned, given Hilli's stability, that is a very stable and a well performing asset. And then secondly, $48 million of operating revenues from shipping and corporate, which is down due to the typical seasonality that Iain referred to in TCE rates, but is an improvement over Q2 in 2019. That change is largely driven by the reduction in TCE rates, partly offset by some additional improvements on vessel management, which I'll go to in a second.

That produced a net loss for the quarter of $156 million. That net loss is largely driven by the $135.9 million impairment that we took on the shares in Golar Partners. If you remember, we own approximately 33% of that business, and U.S. GAAP requires us that at the point that we feel a drop in the stock price is anything other than temporary then we need to take that impairment. We've written the business down to the current market level, which is again a U.S. GAAP requirement and something we're happy to do.

That revenue performance of $103 million generated the adjusted EBITDA of $67 million, that Iain referred to. That in itself is a 23% beat versus NASDAQ EBITDA consensus for the period. And that 23% beat is based off the 14% improved beat on revenues plus some cost-cutting that we've managed to achieve that I'll go through on the next slide in a second. That $67 million is broken down by the $41 million out of FLNG, again stable over the quarters, the stability that Iain referred to, plus $32 million from shipping, which is down due to the seasonality on Q1, but is an improvement on the same quarter Q2 2019.

Final point to note on this page is our cash position. I think we've committed to you at the start of quarter one to manage -- during quarter one to manage the cash position and to preserve liquidity in keeping with many companies in the COVID-19 crisis. And we're pleased to see -- and we're pleased to show that, broadly speaking, our cash position is stable. And that has largely been achieved, thanks to the cash generation in the business plus the refinancings that we've managed to achieve, one of which ahead of schedule, which we will go into in more detail in a second. So adjusted EBITDA of $67 million, 23% beat on consensus, stability in FLNG and seasonality in shipping, partially offset by cost-cutting.

If you turn the Page 6, adjusted EBITDA development over the last 12 months, you'll see the variation on the quarter Q1 on the left hand side. We've referred to the reduction in TCE rates down to the $45,000 and that is -- the impact of that is set out on page, you can see in red of the $20 million or so. And then working our way down the page, you will see the decreases in expenses that I referred to, to get us back to partially offset that seasonality. It's important to note that that expense reduction is a function of two factors. The first is so good work by the team in terms of cutting expenses, but it also relates to the impact of COVID-19 as with many other businesses. So we're still working our way through how much of once were the global pandemic to ease and business to return more to normal. How much of the expenses will come back. So you should not see all of that expense reduction has been a reduction in through cycle run rate, but partially. It's also important to note on the right hand side of this page that our LTM adjusted EBITDA is broadly stable over the past 12 months.

If you now -- I promised to talk about cash and liquidity in more detail, if you turn your attention to the next page, Page 7, liquidity development for 2020. The bars on the top replay to you what happened in Q1. You'll remember from Q1, our cash balance at the end of 31st of March was $235 million, that is shown in gray in the middle of the page. And then the movements from that going forward to the 30th of June, the $225 million balance that we currently have is Keppel. That's actually operating cash flow positive less than in Q1, reflecting the seasonality we just discussed, partially offset by some capex, debt service is stable, some other movement and then the Bear refinancing.

We've committed in Q1 that by Q3, we would refinance three vessels, and we've achieved the Bear early. That is a refinancing that's given us $40 million of additional liquidity growth, which as you'll see in the bullet below is effectively $38 million of unrestricted cash. The reconciliation between the two we expect to have later, but broadly speaking, there is some of the debt service associated with the Bear included in the $80 million debt service, shown on the bar chart.

What's the outlook for the rest of the year? As no real change given what we said to you in Q1, again reflecting our plans and stability. We're in the process of refinancing the $150 million bilateral loan, which is due in November '20 and the $30 million outstanding margin loan due August/September '20. We had committed to put in place a revolving credit facility with a number of tax discussions are very well advanced and positive. And while we're not finished, we had said that we would aim to have that done in Q3, and we feel that that is very much on track.

In addition, we had two routine refinances which we're committed to. The Frost which -- and the Seal. The Seal will not generate any additional liquidity. That as we've said previously, is just the removal of the put option that will occur in January next year and the Frost will generate additional liquidity. And with that vessel I feel we have term sheets broadly agree, but are working our way through due diligence and other items with the lenders. Naturally that refinancing is obviously subject to market conditions, but as we said today, we feel broadly positive about that.

Again we're comfortable and happy to repeat the last bullet point on the page that we mentioned in the previous results where we said based on achieving this -- previously it was called refinancing, we feel between that the anticipated capex, debt service and operating cash flow, we feel that it's sufficient for our needs for the remainder of 2020. Again, no real change. So stable cash balances and the Bear refinancing achieved one quarter early.

With that, let me turn it back to Iain to take you through shipping in more detail.

Iain Ross -- Chief Executive Officer

Thanks, Callum. If we turn to Slide 9 and shipping, the second quarter saw a continued decline in TFDE spot rates to round about $30,000 a day for much of the period before starting a slow recovery post-quarter. These lower rates resulted from a combination of seasonal LNG demand decline and lower overall global economic activity resulting from the COVID pandemic. Further, U.S. cancellations kept ton miles low during the quarter, but we still expect a degree of slow steaming and storage to merge toward the end of the year, boosting rates over the Northern winter before overall volumes pick up again in 2021.

Our shipping strategy continues to contribute well toward the TCE, protecting the downside shoulder season, which is clearly illustrated in the graph on Slide 9. If you compare the last three quarters, so Q4 '19 through to Q2 '20 with the prior corresponding 12-month quarters Q4 '18 through to Q2 '19, we're generating significantly more adjusted EBITDA. And that's largely driven through the commercial shipping strategy and associated increased utilization of the fleet.

On Slide 10, you can see we've offset some of that seasonal decline in rates through decreased cost, as Callum showed you, albeit, some of these operating cost reductions will be incurred later in the year as we implement some deferred maintenance, but we have implemented permanent cost reductions and we will continue to seek more. Despite the burn of the backlog during the quarter, our backlog remains very strong compared to 12 months ago, and you can see that in the picture on the right hand side with around half of the backlog on fixed rates and the other half on some form of market-related or floating rate structure. We're focusing on building backlog and managing our costs. And at this stage, we expect Q3 TCE to be around $35,000 per day.

Whilst these lower LNG prices are not great for the current shipping market, we believe that lower LNG prices will continue to stimulate LNG demand as an alternative and cleaner fuel compared to coal and other more polluting fossil fuels. Lower pricing of LNG now will accelerate the use of LNG as a transition fuel for the next 10 plus years, leading to increased demand for liquefaction. The LNG producers will be looking to develop liquefaction project at a lower cost. And with the associated increase in LNG volumes being produced, this will in turn lead to increased demand for shipping in the future. Golar is unique outside the oil and gas majors and NOCs in participating in both the midstream production of LNG and the downstream distribution of LNG to local gas and electricity customers.

Turning now to the production of LNG, in our case FLNG, on Slide 12. Our FLNG unit Hilli Episeyo, Offshore Cameron has delivered another steady performance in quarterly earnings, as Callum explained. We've also loaded 42 cargos, maintaining 100% commercial uptime and have produced over 2.5 million tons of LNG since the unit came on stream in 2018. We continue to have an ongoing dialog with Perenco, our customer, on the potential for increased throughput on Hilli, but nothing further to report this quarter in terms of concrete agreements. And we continue to receive incoming interest for the use of Hilli post the Perenco contract that runs for the next six years.

Turning to Slide 13. As previously advised, BP, Our customer for the 20-year FLNG give me lease and operating agreement, served Golar with an FM delayed notice as a result of the COVID pandemic and has subsequently maintained its claimed estimate of that delay is being around 12 months. One change over the last quarter has been the impact of the Singapore circuit breaker as the country's COVID-19 responses known. And the extent to which that shutdown has temporarily impacted to Keppel Shipyard, our contractor in Singapore. We are effectively reopened last month and Keppel is now ramping up the workforce in compliance with the government restrictions with around 500 workers currently back on the project in accordance with the restart plan.

So my three brief points to make on Gimi this quarter are; firstly, we continue to be in active and constructive discussion with BP, our partners, our financiers and our contractors on the matter. Secondly, the reschedule program now takes into account the delays caused by the Singapore shutdown. And thirdly, while not finalized, we anticipate satisfactory closure on this in due course and we don't expect to have a material increase in the total project budget. And the overall delay in the project of around 12 months driven by BP's timeline will correspondingly improve our near-term cash flows through delayed equity injections into the project. And I hope you understand the specific details of these discussions do remain confidential at this time.

Briefly on the Viking FSRU conversion project. The project team and contractors are working hard to mitigate any COVID-related challenges. We are now planning for the vessel to depart from China to Europe late September, with vessel delivery upon commissioning and completion by the year end according to the original plan. And on the FLNG pipeline, we've extended our collaboration agreement with one IOC to explore applications for FLNG in their portfolio. And our Mark III new build continues to make progress in both refining the design and identifying real deployment opportunities.

We believe that our simple process configuration combined with a design one build many mindset will serve to keep costs down, schedules short and payment terms achievable. And importantly, we also believe that our energy management system delivers a superior efficiency compared to many onshore facilities, resulting in competitively low carbon emissions on a like-for-like basis.

Turning now to downstream on Golar Power's progress over the quarter. In terms of development, progress was made on a number of fronts, which we can see on Slide 15 with further details on Slide 16. The signing of an MoU with Norsk Hydro will involve Golar Power delivering gas to the Alunorte alumina refinery in Barcarena. This is a fantastic example of Golar Power bringing a cost-effective solution to a customer that will not only pay less money for fuel, but will significantly improve its CO2 emissions.

This commercial customer, together with the previously discussed 605 megawatt PPA award, underpins Golar Power's investment in the FSRU terminal at Barcarena with FID anticipated around the end of the year. The terminal will then be a subsequent foundation for the rollout of small-scale distribution across the State of Para. And FID for the power station is anticipated in the middle of next year.

The signing of an agreement with Galileo, Galileo is a producer of both land-based gas and biomethane from landfills will accelerate the development of the small-scale rollout in the Brazilian states of Bahia and Sao Paulo with operations expected to commence later this year. This agreement links in nicely with the development of the previously announced partnership agreement with BR, and that we can use biomethane-sourced LNG to distribute as a fuel through the BR network across Brazil in addition to the previously described sources from our terminals and FSRUs.

The permitting process continues for an FSU to be located at the new terminal at Suape in Northeast Brazil. The first ISO containers have been delivered into the region and the terminal FID is expected around the year. Key regulatory and environmental licenses have been obtained for the Santa Catarina Terminal and development planning on that continues to progress. And as we continue to look at a number of international locations that may be suitable to replicate this model, currently -- we're currently examining 15 separate opportunities to internationalize the business.

So some more detail in the small-scale rollout on Slide 17. The volumes available for small-scale distribution can be seen in the graph on the bottom left side of the slide. With the step increase in the size of the gray column in 2022, that's reflecting the increased volumes available for distribution once the Barcarena FSRU is in place. With the power stations and also in this case of Barcarena Alunorte deal, underpinning the development of the terminal and commitment to the FSRU, I think this graph illustrates the upside potential of these vessels we do, and turning volumes into dollars, if we manage to sell half of the spare capacity of these FSRUs and get a margin of say $0.50 per mmbtu that would equate to additional profit of $115 million in 2022.

As a reminder, excess FSRU capacity that we can -- that we have can be utilized for three things. One, power plant expansions in Merchant Power in Sergipe is a good example, and I'll talk a little bit more about that in a sec. Gas marketing, so the sale of natural gas to third-parties, Norsk Hydro and Alunorte is an example of that. And the third is breaking bulk into small-scale, as we've discussed before. So that's using the FSRU as a vessel for LNG storage. We take the gas out as LNG and not as regasified methane. We continue to make progress on converting expressions of interest on the small-scale rollout into committed contracts, with the further two executed in the quarter and two more in the third quarter so far.

On Slide 18 and just detailing the Merchant Power opportunity at Sergipe in some more detail. The graph on the left hand side of the slide shows the average electricity spot prices in reals per megawatt hour from December 2016 to the end of 2019. And it clearly shows the seasonality during each year and that's driven by a combination of demand and rainfall, and the rainfall determines whether the hydro baseload is adequate or whether the fossil fuel plants need to be called to dispatch.

And overlaid on that are two lines. The top line, the blue one is a Sergipe dispatch breakeven cost. And that line implies that plant can be called to dispatch whenever the prevailing spot price is above that line. And the lower green line represents the Merchant breakeven cost of running the plant independently from the PPA. The purchase price of LNG influences the position of this line. And here we have it with an LNG purchase price of $3 per mmbtu, which is conservatively high against today's prices.

The team at Golar Power run a back test of the opportunistic Merchant Power income that could have been made based on the available Merchant dispatch windows over the last three years. And this analysis shows that Golar's share of that additional profit could have been around $70 million. That's the Golar LNG share. This translates to around $16 million to $18 million net profit for burning a full cargo of Nanook over a two week period. And remember that we've got 60 days notice for any dispatch under the PTA. I mentioned at the start, we've got Eduardo on the call today,as I know there are an increasing amount of interest in Golar Power development story, and he is there to answer some questions.

If we turn now to Slide 20, highlighting some of our ESG projects, which cover our five focus areas and includes safety, management engagement campaigns in both the vessels; an active engagement with the engine manufacturers to understand key drivers of methane slip; what we can do about improving performance, mental health support of our people, especially as a result of COVID-19. On the right hand side of the slide, there are some pictures showing the results of placing a Golar designed hydropower turbine into the flow from the seawater discharge in the regas system and using that to generate energy to power the system. This simple design provides the FSRU with a 7% saving in fuel efficiency, and importantly, an estimated saving of 5,000 tons of CO2 per year. So just some examples of what we're doing in the space of ESG.

So summarizing our priorities on Slide 22. We will continue to derisk shipping and focus on backlog growth. In FLNG, our focus is to conclude the position on Gimi and continue to progress discussions for potential expansion and extension of Hilli, and of course, the development of the new build Mark III and future opportunities. In downstream, we'll continue to push the build out of small-scale and develop the terminals at Barcarena and Suape. We're focused on concluding the refinancing activities that Callum discussed. And of course, we will continue to push for a sustainable reduction in G&A and simplification of the Golar Group structure.

With that, I'd like to hand you back to the operator for Q&A.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Your first question comes from the line of Randy Giveans. Please go ahead. Your line is now open.

Iain Ross -- Chief Executive Officer

Hi, Randy.

Operator

[Operator Instructions] I think -- I'm not sure he disconnected, but we'll just take the next question. It's coming from Jon Chappell. Please go ahead.

Jonathan Chappell -- Evercore ISI -- Analyst

Thank you. Good morning or good afternoon, guys.

Iain Ross -- Chief Executive Officer

Hey Jon.

Jonathan Chappell -- Evercore ISI -- Analyst

Hey Iain, first one for you is strategic. So the press release says, the strategic review has been concluded, board's approved the range of specific options. But if I look at this last slide you had, it seems like every kind of near-term priority is maybe blocking and tackling within the silos. So as we think about maybe the imminent breakup of the company and the three different business lines, which do you view is kind of stand-alone at this point with the ability to kind of self-finance themselves and which may be need to be together as they're in different stages of the evolution?

Iain Ross -- Chief Executive Officer

I'll let Callum comment in a second, but rather than commenting specifically on your question, can I really refer you to the overall strategic plan. So the GLNG Board has approved the examination of a range of strategic options, that management that we are now developing. And as these strategic options mature and potentially become actionable, we're going to take them back to the board for consideration. And if approved for execution, we will announce something at that time. But Callum, do you want to add anymore color on for Jon?

Callum Mitchell-Thomson -- Chief Financial Officer

Yeah, sure. I mean, Jon, your point about blocking and tackling is right. That's where we have two jobs. We have the blocking and tackling, which we could set out in real detail, which we've done, which is what we're doing and what you can expect from us. That's very different from the strategic review and the structure of the group. So that's why it's not on the page.

The other reason why it's not on the page is if you remember from Q1, I think we've got broad alignment from the group that they were full -- we've got approval from the board to target four legs, FSRU, FLNG shipping and Golar Power and to simplify and put the group into those four legs and ensure that each one of them withstand the line. So that's what we got board approval for. We then went -- we've been back to the board in this quarter to say here are the routes to achieve that. So not the destination, but the journey to get there. Here are the steps we think we need to take to implement that. And we gave the board a range of options, which we referred to in the press release. And the board has selected some for us to then pursue in more detail to see if we can get them across the line to execute them, and that's what we're doing. Once we've reached to a point where we think they are executable, we would go back to the board to say, this is what we've done, do you approve? And then we'd be in a position to make an announcement.

And then let me go back to your question, there are two bits in your question. One was sort of I think there was a -- there was an assumption in your question, which I think probably takes us a step too far, which is, you said, as you think about the imminent breakup of the group. I don't think -- we don't see it as neither imminent nor a full breakup of the group. So let me sort of pick you up on that, if I might. I mean the broad picture of four stand-alone legs is where we're going.

And then secondly to your question about stand-alone financing, in which does one see us being more or less mature. I think everybody would say that the shipping business is a business that is seeing some seasonality right now, but perhaps not as poor. It's not being the same seasonality that we have in previous years, I think we've seen that in the results of our sales and others. But certainly, the shipping business is one of the ones where that is probably less on the spectrum of financing. Whereas, pick any one of the other businesses that's probably equally stand-alone. So I hope -- there was a lot in your question, but hopefully that's covered it.

Jonathan Chappell -- Evercore ISI -- Analyst

Yeah, super helpful. Thank you. So procedural approval maybe not execution approval. So on the follow-up then, clearly you've spent a lot of time and you've made a lot of headway in Brazil and maybe not quite a success story yet, but clearly a path toward that. The interesting commentary about replicating it in other regions, I guess the question there is without even naming regions, are the opportunity sets similar? And are there economies of scale in the procedures that you've taken to penetrate the Brazilian market that you could be much quicker to markets and kind of start to finish in some of these other regions you're contemplating?

Iain Ross -- Chief Executive Officer

I think that's a great question for Eduardo.

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Yeah, sure. Jon, nice to meet you, and happy to answer that. So I think when we look at our global ambitions for Golar Power, we definitely will try to replicate what we have been doing in Brazil, and we really see Brazil as a stepping stone for our global business plan. I think one of the key fundamental strategies of our development will be to try to partner with experienced local players, such as the ones that we have identified in Brazil in the case of Sergipe, in the case of our small scale LNG distribution partnership with BR. So we are actively discussing with a number of potential partners in some other geographies.

If I were to highlight just a few key areas, I would say, Southeast Asia is definitely one region that we definitely see as a potential area for development of our strategy as well as some other countries in West Africa as well as another countries in Latin America. I think those are the areas which we believe we have a very strong position as of today.

Jonathan Chappell -- Evercore ISI -- Analyst

Yeah. Thank you, Eduardo. Thanks, Callum and Iain.

Callum Mitchell-Thomson -- Chief Financial Officer

Thanks, Jon.

Operator

Thank you. Your next question comes from the line of Ben Nolan. Please go ahead. Your line is now open.

Ben Nolan -- Stifel -- Analyst

Yeah. Thank you. And maybe I'll -- Eduardo I'll follow with you, obviously. I think as Jon mentioned, a lot going on with Golar Power at the moment. And what I'm hoping that you might be able to do, just maybe put a bow on it a little bit or take all of those moving pieces and codify them into a few simple numbers, specifically sort of based on what you have line of sight on and including a lot of the smaller things. How much is sort of the capex requirement going forward? And then also, again, maybe not even including any Merchant Power, but sort of as you do include a lot of the smaller scale and incremental developments, what do you see as sort of the potential for cash flow generation on an annual basis out of, let's say, Brazil specifically, but that being a proxy for Golar Power in general?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Okay. Hi, Ben. I think when you look at the future developments of our future projects, I think it's important to highlight the fact that we are yet to take FID on certain projects. So those detailed capex figures as well as full EBITDA projections will be announced by that point in time. But what we can say is that the ability to generate, for example, Merchant Power will not require any further incremental capex from what we have in place today. So the Golar Nanook is fully connected to the power plant, which is able to generate power during the times of the year when it's not generating under the PPA. So this is definitely something that is incremental whenever we are able to run the plant.

Another important point is with regards to the small-scale strategy, which is highly modular in a way that the capex will be proportionate to the number of contracts that we're able to secure. So we are not going to go speculative, spend a substantial amount of money without having the corresponded contracts as offtakes. So I think that that growth goes hand in hand with the commercial developments with regards to the contract, to the offtake contracts that we're able to secure.

When we look at Barcarena, I think we have announced the MoU with Norsk Hydro, which is a very important milestone toward our FID, which we believe we'll be in a position to take a final investment decision in the next four months to six months. So I would say that with regards to the future capex plans, they will be more detailed in the future as soon as we take a firm investment decision on those projects.

Ben Nolan -- Stifel -- Analyst

Okay, all right. And I'll leave it at that, I guess. But another thing that maybe jumping over I guess for my second question over to the FLNG side, obviously, it's been pretty slow going for a while. I'm curious, first of all, if there has been any change in the pace of conversations. Maybe also, I know that you were selected as one of the potential participants for a possible deal in the Mediterranean and Chevron moving in there, whether anything has happened with that? But maybe just a little bit more of a sort of a pace of progress with respect to conversations and discussions on the FLNG side?

Iain Ross -- Chief Executive Officer

So Ben, I've described the pace of conversations is steady. So it hasn't disappeared and it hasn't really accelerated. And I think that's to be expected with all the turmoil in the world that's going on. And I think it's a good thing that despite the fact that we've got low LNG prices, we're still having active dialogues with potential customers. As I mentioned, we had one arrangement with one of the bigger IOCs that expired and they had to extend that for another year to continue looking at possible applications of our technology to their development.

So I think it's there. And as I've said many times before on the call, as the supply demand lines cross in the future and more LNG needs to be built out, we believe we'll be at the front of the queue because we are the cheapest and fastest liquefaction projects that can get to market. And we don't have any of the issues that onshore-based facilities have around land, taking on land and dealing with local labor issues and all that kind of stuff. So we think we're super competitive. And I'm very pleased with the development in the Mark III work that's being done because that's ending up at this stage to look like it's just as competitive in dollars per ton as the Mark I, the smaller facilities and we can do up to 5 million tons in those vessels. So really looking forward to continuing the discussions with potential customers on that.

Ben Nolan -- Stifel -- Analyst

Okay. And on the Mediterranean side?

Iain Ross -- Chief Executive Officer

Nothing has changed. You've said it's in the news, I mean, I don't expect anything will happen to that deal with Chevron closes. I wouldn't imagine any movement on that will happen, but that's really something to ask Noble.

Ben Nolan -- Stifel -- Analyst

Okay, great. I appreciate it.

Operator

Thank you. Your next question comes from the line of Randy Giveans. Please go ahead. Your line is now open.

Randy Giveans -- Jefferies & Company Inc. -- Analyst

Howdy, gentlemen. Yeah, sorry, my call dropped earlier. I think Chappell cut my phone line, but back here. Now first, congrats obviously on the Golar Bear refinancing. Doing what you said you were going to do there, it's good. Now what is the LTV of that $120 million sale and leaseback and what are the terms of the financing? And I guess, following that, if you plan on dropping your debt into each entity, what happens with the converts?

Callum Mitchell-Thomson -- Chief Financial Officer

Good question. So we don't want to disclose publicly what the LTV is on the Bear. So no, the terms. You should look -- think of the terms as being broadly similar to previous financing. Maybe a touch longer in -- maybe a bit longer in duration. So when we look at it, we think it's commercially attractive business for us because it both increases leverage, but increase -- and good liquidity, but increases duration. So we think that is good. I'm sorry that I'm not going to answer your LTD question, but that's sort of -- that's really market-sensitive and it's dependent on each lender.

To your question about the restructuring of the business, I'm putting this -- the business is on a stand-alone basis. Yes, we do. Yes, we do want to do that. But that on a through cycle basis will still generate free cash flow to equity up to the group. And one of the things that we feel confident about is that by having these four legs, it increases our financing -- our financial flexibility to match, as we've discussed in the past, investor appetite risk return profile with the risk return profile of the different businesses. And that's something that's very important to us, and I think it's important to our investors as well.

Though I've slightly not answered your question on what are our plans in the convert because we will announce anything were we to have something to announce. And when I've been asked about -- when we've been asked about convert in the past, we said yes. There is a clear, given the state of the convert market. There is a clear and sensible refinancing for ALM route for the converts, but we're prioritizing liquidity at the moment. And that's the sort of commitment we've made, and that's one of the reasons why our cash flows. So forgive me for not giving you all the detail, but hopefully you can see how we think of it.

Randy Giveans -- Jefferies & Company Inc. -- Analyst

Sure. No, no that's understandable. So it sounds like you don't necessarily have to refinance the convert if you do have siloed the other debt into the other entities. But [Speech Overlap] [39:38] Yeah, that's fair. Second question, turning to Golar Power and those contracts and the MoUs, I guess, what specific hurdles may be required to convert some of those contracts and take that positive Barcarena FID in the next, I think, you said four months to six months in the release?

Iain Ross -- Chief Executive Officer

Sure. Eduardo, would you like to comment?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Yeah, sure. Hi, Randy. Happy to answer that one. So I think the final investment decision of Barcarena is not necessarily linked to the rollout of the small-scale contracts. I think, they do in some way, they are complementary in their strategy, but we view them as a separate kind of a business developments. So I think Barcarena, it's much more a matter of progressing with the required permits and regulatory approvals to be in a position to take a final investment decision. We have been awarded the PPA back in the power auction that took place in October last year. And now with the recently announced MoU with Norsk Hydro, we believe that once all of those permits and approvals are met, we will be in a position to take FID for Barcarena.

When it comes to the small-scale contracts, I think as you can see there are a number of contracts in discussions being taken with the number of customers. And those customers, they range from small customers in some cases to very large industrial customers, which despite the relatively small volumes, the conversion to LNG could require some time. So final commercial decision to move ahead to switch to LNG in some cases it does take a bit of the time. But it's just a matter of really those customers really progressing their internal approval processes to be in a position to fully commit under the contract. So I think we have given a breakdown of the status of the different commercial initiatives that we have today in order to provide a sense of how those discussions are progressing.

What we can say is that despite the challenging environments due to COVID, we have been able to secure additional contracts. We have been able to continue to engage with all of the customers in a better way. And we believe that the season is as strong as before the pandemic. So we really believe and we are extremely confident that the business plan will be achievable according to our expectations.

Randy Giveans -- Jefferies & Company Inc. -- Analyst

Excellent. Thanks for all that color. And I guess, finally, just on that. Is there an expiration date where they have to kind of secure, convert those MoUs or contracts or is it just kind of whenever they are ready?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

No, there is no specific deadline on those specific MoUs and LOIs. As I said, it's a matter of in some cases some commercial aspects, in some other some technical requirements that take a little bit longer for the customers to take a decision to commit to LNG.

Randy Giveans -- Jefferies & Company Inc. -- Analyst

Got it. Good deal. Well, that's it for me. Glad to see Golar back above double-digits. So keep it going.

Iain Ross -- Chief Executive Officer

Yeah. Thanks, Randy.

Operator

Thank you. Your next question comes from the line of Mike Webber. Please go ahead. Your line is now open.

Michael Webber -- Webber Research Advisory -- Analyst

Hey, good morning, guys. How are you?

Iain Ross -- Chief Executive Officer

Hi, Mike.

Callum Mitchell-Thomson -- Chief Financial Officer

Hey, Mike.

Michael Webber -- Webber Research Advisory -- Analyst

Okay. So the first question is on the strategic review, and just to kind of follow-up on Jon. So I guess for those of us that have been following Golar for few -- for several years, it can feel -- it feel a little bit like window dressing in terms of the technicalities of completing a strategic review and putting it in the board, I mean, this review in fact has been going on for several years at this point. So I'm curious, as we stand now, what are the major hurdles? And are you any more or less likely to involve third-party capital today than you were say a year, year and half ago toward the earlier innings of this review?

Callum Mitchell-Thomson -- Chief Financial Officer

Let me tackle that. It doesn't feel. Step one is, where do we want to go. We did that last quarter, four legs. That too was to identify the routes to get there. Did that this quarter. Board approved us to move those routes to get them executed. That depends on agreements that needs to be struck and plan put in place that involve other people. And so the board said, yeah, go ahead and have those conversations. Get that organized in some cases, in other cases, it doesn't. And we're getting that all lined up. And then as soon as we've got that lined out, we go back to the board and say, here we go. And then they will either say yes or no. So that's the sort of -- that's the clear path. I can't draw a conclusion from the paths before, certainly at least I got here.

To your question about involving third-party capital. I'd now speak personally. I think the benefit of having -- I think we're still not quite clear of the benefit of having four legs is that it does, as we've said in the past, it allows us to align the business, the risk return of each one of those businesses to the risk return of different sets of investors. So I think there is a benefit there doing that. And one wouldn't seek to get aligned like this if it wasn't to make it easier for third-party investors to come in, right?

So to answer your question, I think that's why we're doing it. So that makes all that's -- that makes all the sense in the world. What I can't do is pre-judge a board decision or market conditions or interact from everybody else because that's outside of my control. But the purpose of getting agreement to line up in those four columns is to make this easier. And the agreement -- and the debate with the board is to identify the path to get that. That's what -- that's a yes.

Michael Webber -- Webber Research Advisory -- Analyst

Sure. Yeah, the angle of my question is, is this in one form or another, let's put it this way. This review has been going on for several years, right? And so there are a number of solutions. It's not an easy equation to solve for, but there are a number of solutions that have been on the table, some of which I'm sure involves third-party or private equity, some of which that don't. And I guess what I'm asking is, as we are now further into I guess this iteration of the strategic review, is it fair to say it's less likely to involve third-party capital? And/or is it something that you think would be done in a series of transactions or maybe as a group of kind of a bundled -- a bundled transaction where we come in one day and we see a release that clearly lays out what the new Golar structure would look?

Callum Mitchell-Thomson -- Chief Financial Officer

It's clear in my mind, Mike, what it needs to be. I'm one of -- I'm part of the team line, and so it's about getting that organized. So it's not a lack -- certainly on my side at least, it's not a lack of certainty, but it's -- one have to build all the pieces together and get everything ready and there's a lot of bits and pieces that needs to -- moving parts that need to work. So that's how I see it.

To your question about, is it a series of steps, is it a bundle. That depends on the path that the board chooses and different sets. So it's sort of been both, would be my view. But...

Michael Webber -- Webber Research Advisory -- Analyst

Right. So I'm asking whether -- I'm just asking whether one is more likely or not now at this -- than they were a few years into it I guess a multiple iterations of this. Just trying to think have that process has changed and what we should expect without holding you to a specific answer. There is a bit more color on that in terms of what the most likely scenario is getting a bit more?

Callum Mitchell-Thomson -- Chief Financial Officer

Yeah. I'm going to pass that one if I can, Mike, I'm sorry because it does -- it requires agreement to be struck with other people and it requires board's approval and all kinds of different stats, right? And it would be wrong of me to give you guidance on that now when those pieces are not in place. I'm clear where the pieces need to move. But until they've moved, I really shouldn't -- I shouldn't -- I wouldn't be doing my job right if I gave you the detail that I have in my head about what I think is going to happen, right? So I'm sorry, but we need to wait for that sort of agreement to be struck and the board to approve or not is we will see.

Michael Webber -- Webber Research Advisory -- Analyst

Yeah. No, we've been waiting. I guess, I'm just looking for like any indication of what -- how it's progressing, but I can take that offline. Eduardo, on the downstream, the -- part of what makes Golar Power so unique and what has made it so successful relative to its peers have been really kind of thoughtful and deliberate strategy to kind of surround Brazil. So when you've got a lot of competitors kind of swinging and missing and feeling like they're stretched a bit on the global -- on a like a global scale, you guys have had success really kind of being all in on Brazil. So within the context of expanding that elsewhere, I'm curious, if that -- to what degree is that a function of maybe having picked the majority of the low-hanging fruit you think are there -- is there in Brazil? And to what degree is that a function of looking at markets with maybe more amicable power auctions or -- just trying to get a bit of context around how realistic it would be for you to go all in on another geography, I guess, and why considering the degree of success you're having there?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Okay. Hi, Mike. How are you doing? So I think when we look into Brazil, I think it's important to note that we have been developing this opportunity for over the past five years now. That was when we were awarded the PPA in Sergipe back in April 2015. So I wouldn't say that we have gone all in from day one. I think that our exposure to Brazil, it has grown over time. I think it's -- the more we have been getting to know the market and being exposed to the opportunity, I think we increased our presence in the country.

I think what was actually extremely important to our current status of -- in the market was the fact that we were able to identify very strategic partners. In the case of Sergipe, we teamed up with -- in Brazil. In the case of other small-scale developments, we teamed up with the Argus and [Indecipherable] Golar has been working with Petrobras for a number of years since 2007. So I think that will help to position ourselves to where we are today in the Brazilian market. I think that particularly to that market, everything that is going on with regards to the opening up of the gas market is extremely positive to our thesis and this will help to accelerate the development of our strategy across the whole country. But when we go and when we look at the global growth strategy, I think it's important to highlight that one of the key pillars of our strategy is to build the strategic hubs from which we are able to not only sell power, we're able not only to sell gas, we're able not only to sell LNG, we're able to do a number of different activities, which as we build up those incremental revenues, they become extremely attractive.

So in some cases, we'll be able to underpin investments in a given terminal with a relatively low rate of return. But as we grow and as we established a presence, I think that the most would become extremely attractive. We used to say that in certain countries whoever comes first will be the last one to come because it takes a long time to establish an LNG terminal from a regulatory point of view, from an environmental point of view and from a commercial point of view as well. So I would say that the different countries will require different strategies. One of the key ways that we believe that we'll be able to be successful in that will be to find the right partner in the right markets.

Michael Webber -- Webber Research Advisory -- Analyst

Sure. Would it be fair to assume -- and the last one, and I'll turn it over. But in terms of kind of laying the groundwork for one of the strategic hubs. Is that something where you don't have boots on the ground and kind of deliver or kind of develop some degree of local expertise, while you're sourcing that partner and is that something you -- do we see noticable capex, if you will, even if it's on the smaller side as you look to kind of build out that presence in a specific hub?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Absolutely. I would not say a very relevant capex in the beginning. But for sure, we intend to increase our presence in those strategic markets by having boots on the ground and having a dedicated team in certain strategic locations. I think that's a key fundamental strategy to achieve that goal.

Michael Webber -- Webber Research Advisory -- Analyst

Got you. Okay. I'll turn it over. Thanks for your time, guys.

Operator

Thank you. Your next question comes from the line of Jo Ringheim. Please go ahead. Your line is now open.

Jo Ringheim -- Arctic Securities AS -- Analyst

Hi, gentlemen. How are you?

Iain Ross -- Chief Executive Officer

Hey, Joe. Good.

Jo Ringheim -- Arctic Securities AS -- Analyst

So Callum, first on financing and liquidity. You've refinanced the Bear and said that you expect within the coming quarters to refinance Frost and Seal as well as the loan secured against the equity in Power and the margin loan. And can you provide any details around how much cash you expect to release on these refinancings?

Callum Mitchell-Thomson -- Chief Financial Officer

Yes, nothing. Zero cash release on the Seal. That's about removing the put that occurs in January or at least addressing the put that occurs in January. For the Frost, I think we had guided previously in the last quarter, we've said that, we are expecting to generate between $50 million and $90 million of additional liquidity across all the vessels. And you'll note that we've just generated $40 million. So I think for the Frost, you should expect us to make good on that commitment and generate something in the region of the balance needed to achieve that. So probably around another $30 million or $40 million. That is -- that takes care of the vessels.

When it comes to the RCF [Phonetic], I think it will be additional liquidity from that will be minimal. We would expect that we are refinancing $30 million and $150 million and we said that we were looking at an RCF in the region of $200 million. So you should assume that the additional liquidity from that is small.

Jo Ringheim -- Arctic Securities AS -- Analyst

Thanks. And then regarding Power, you've announced several partnerships and downstream developments in Power recently. And in my opinion, clearly capitalizing on the presence in Brazil, and that Eduardo is pointing out, you could also be able to replicate the business in other regions. My question is, New Fortress Energy, a company involved in terminal and downstream operations in other regions, do you consider that company to be a relevant peer for Golar Power? And given the metrics and also that the stuff is out 70% this year, is that something you're monitoring in order to consider a potential listing of Power?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Hi, Joe. Good talking to you again. I would say that if you look at our businesses, we do have some complementary and some similar activities and business lines as New Fortress Energy. I think that we view the market on which we are most exposed, which is Brazil, as a market that's big enough for us to dedicate most of our time as we have been doing over the past four years since the foundation of Golar Power. We believe that as we have said earlier today that it was really the stepping stone for our global foundations. If we get it right in Brazil, we're extremely confident that we'll be able to replicate in some ways, not necessarily with the same strategy, but we'll be able to replicate the hub strategy in other countries.

When you look at the -- all the work that New Fortress is doing in the countries they operate, I think in a way there are some similarities to what they're doing, but we believe that our businesses and the activities that we're pursuing in Brazil, they are in a way broader in the sense that we are able to generate power, we're able to capture the upside and the incremental revenues from Merchant Power. We are in the downstream sector. We are positioned with our small-scale LNG distributions. And we are positioning ourselves in a way to capture the spreads between the substitution of more expensive and more pollutant fuels, such as diesel, LPG, heavy fuel oil for LNG. So I would say that the range of activities that we are developing and we are currently operating are in a way wider than what they are currently doing.

Jo Ringheim -- Arctic Securities AS -- Analyst

Thanks for explaining. I think that's it for me until I have a new one.

Iain Ross -- Chief Executive Officer

Thanks, Joe.

Callum Mitchell-Thomson -- Chief Financial Officer

Thanks, Joe. You too.

Operator

Thank you. Your next question is coming from the line of Chris Wetherbee. Please go ahead. Your line is now open.

James Monigan -- Citi -- Analyst

Hey guys, good morning. Good afternoon. This is James on for Chris. I just wanted to touch on the small-scale distribution detail you provided. How should we really think about sort of -- or what should we really expect from the LOIs and then conversions to executing contracts and that sort of like EBITDA per contract on average? Just trying to get a sense of like what we should expect from that here in the near-term or maybe a few years out?

Iain Ross -- Chief Executive Officer

Eduardo?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Sure. Hi. Nice talking to you. I think that when we look at the pace of development of our small-scale strategy, as I said, despite of the COVID environment, we have been able to continue to execute and to continue to engage with customers. We believe that we'll be able to accelerate the pace of conversion from LOIs to actually firm contracts over the past -- over the next few quarters. I think it's important that we bring online the other terminals that we are developing, such as the Suape Terminal, which is one initiative that we are extremely excited with. And we believe that we'll be in a position to, in some point next year, to commence operations of that terminal.

And I think there is always a bit of a chicken and egg situation in which some customers they want to see the commencement in the real part of the activities to really engage. So as you imagine, if you sizable industrial operation, it's something that is -- the energy supply is a critical component of your operation. So it's not something that we can switch from one day to be order without having 100% sure that what we are promising will be delivered to them in accordance to all the specs and to the -- with the level of reliability that is required. So we believe that once operations start, the pace of conversion from LOIs to actual contracts will accelerate.

James Monigan -- Citi -- Analyst

Got it. And then any color on how to think about the average EBITDA or maybe range as per these executed contracts?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Well, currently, I think we are just disclosing the number of actual contracts. As you can imagine, those contracts, they vary quite a bit in terms of volume and also in terms of margin. I don't think it will be appropriate to give a specific margin or specific average volume as of today. I think as soon as we commence operations, we'll be able to disclose a bit further those informations.

James Monigan -- Citi -- Analyst

Got it. Actually just before I hand it over -- just maybe to follow-up on that. Can you just maybe give a sense of the direction possibly? Will you imagine to stay relatively stable or should just move -- take a step function higher at some point as the project ramps further?

Iain Ross -- Chief Executive Officer

Eduardo, that's the question on the small-scale ramp up.

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Yeah. So as I was saying, we believe that once operations start, we'll be able to further accelerate the pace of conversions. Another point on which we are extremely hopeful that we're going to have a great development is with regards to our partnership with BR Distribuidora as it was announced -- we introduced a commercial partnership with BR which can expand its a scope into the form of a proper partnership. And we continue a very close dialog in a very close engagement with BR in order to try to develop opportunities, which we believe it's the greatest opportunity that we have when we look into the Brazilian market. I think Brazil is a market with over 2.7 million trucks with the consumption of LNG equivalent volume of close to 35 million tons of LNG. And if we're able to tap into that market, it's a market which is substantially big and attractive for us to pursue. So we are very excited with the prospects of that opportunity. And we believe that BR is the right partner in the right country.

James Monigan -- Citi -- Analyst

Got it. Thanks. I'll turn it over.

Iain Ross -- Chief Executive Officer

Thanks, James.

Operator

Thank you. Your next question comes from the line of [Indecipherable]. Please go ahead. Your line is now open. Hello, [Indecipherable]. Your line is now open.

Sanjay Gautam -- Bank of America Merrill Lynch -- Analyst

Sorry. Okay, yes. Hi guys. I think the operator got my name wrong there. It's Sanjay Gautam [Phonetic] Bank of America. Maybe just some color on the state of the capacity in the LNG market. I think, Iain, you probably mentioned that there were about 27 vessels scheduled in '20 to be delivered and about 75 in '21 and '22. So maybe just your expectations on that and whether that's changed in a pre-COVID, post-COVID? Some color on that would be helpful.

Iain Ross -- Chief Executive Officer

I think that the -- there is two things happening. One is, of course, we've got new capacity coming on stream, particularly out of the U.S. Some of that's been delayed, in fact, the whole pilot cargo is delayed. And as we've got vessels planned for delivery, there is an anticipation or an expectation that some of these will be put back by a number of months to try and align themselves. And most -- and forgive me, I forget the exact number, but most, the majority of those vessels, so certainly over half are already linked into some of these new contracts coming on. So you've got a sort of linkage there. And then obviously there are some vessels coming into the spot market.

What's also interesting is that we have a number of steam turbines in the fleet, in the global fleet that are due to come off charter over the next two, three, four, five years, and they're coming off in a regular number per year. And the interesting thing for those vessels is while some of them may be completely debt-free and they have a very relatively high -- I'm sorry, low operating efficiency and for that a high operational cost. And it will be interesting to see just how many of those can survive in the spot market. And therefore, do we see the start of the first wave of LNG carriers being scrapped.

So I think the dynamic is changing over the next few years. Yes, there is new builds, and I think there is some deferral of new builds happening. But equally, we've got some long-term charters coming to the end and question about what will happen to those vessels and then what does that do is a knock-on effect in consequence to the rest of the fleet.

Sanjay Gautam -- Bank of America Merrill Lynch -- Analyst

Got it. That's helpful. In terms of percentages, would you be able to talk maybe about the percentage of those long-term charters coming to the end of the duration? Is there a split there?

Iain Ross -- Chief Executive Officer

In terms of the number of vessels, I'll be making it up. I can get that afterwards. You can contact afterwards, we'll give you the detail.

Sanjay Gautam -- Bank of America Merrill Lynch -- Analyst

Sure. That's helpful. And maybe just to talk through the development of the Mark III. Maybe just provide some color on the timeline there and perhaps the different cost economics versus the Hilli? I think in the release it was mentioned that it will be one of the lowest cost per ton LNG solutions that is greenfield. So maybe just some color on that would be helpful?

Iain Ross -- Chief Executive Officer

There's two ways to look at it. There is the cost per ton, and we've been public in stating that we can do Hilli cost per ton all in for less than $500 per ton and that compares extremely favorably with even the brownfield LNG developments around the world. So that's a kind of a finger in the air number. And what we're seeing is with the new build coming through, the cost to us is of a similar nature. And what that means as you translate it through is that the tolling agreement that we can offer customers on our lease arrangements is very competitive in terms of dollars per mmbtu to give us a required return on the project over the lifetime of that project.

So what we're seeing is as we've gone through the Mark III design, and I think surprisingly to some of our people is that the costs that we're able to come up within keeping the design simple, and I keep saying simple design, I think it's a very, very important part of what we're trying to do here, keep the design simple, repeatable and the smarts have gone into what's the sort of the basic design to start with of both the haul and the topsides. And as we start to push the envelope on capacity, we see the economy of scale kicking in per -- and cost per ton and those vessels looking like they're going to be very competitive. And then I did mention in the prepared remarks, we're also seeing our carbon footprint of those on a like-for-like basis being globally competitive as well. So we're pleased with the progress and still pushing.

Sanjay Gautam -- Bank of America Merrill Lynch -- Analyst

Sure. That's helpful. And maybe the timeline on the Mark III? In terms of...

Iain Ross -- Chief Executive Officer

Timeline on the Mark III, we've completed our feed. So client-specific activities, we're already -- we're in advanced discussions with the yard around what EPC cost would be. What we need is a customer that's prepared to stand up and do this with us and we'll be ready to go. And I think you're talking about four year cycle from start to finish from the point we take FID.

Sanjay Gautam -- Bank of America Merrill Lynch -- Analyst

Got it. That's all from me. Thanks.

Iain Ross -- Chief Executive Officer

Operator, just in the interest of time, can we make this the last question, please?

Operator

Sure. Your next question it's -- your last question comes from the line of Jason Gabelman. Please go ahead. Your line is now open.

Jason Gabelman -- Cowen and Company -- Analyst

Yeah. Hey, thanks for squeezing me in and taking my question. I wanted to ask on Golar Power and the cash flow that it's kicking back up to Golar right now. Following the Sergipe start-up, are you getting any distributions from Golar Power? And how do you see that evolving over the next few years given the projects that you've laid out to execute within Golar Power? Thanks.

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Hi, James. Good morning. I think when we look at the future cash flow distributions from Golar Power, we stated before that we intend to use that excess cash flows to fund our existing growth plans. So in a way we are self-funding our growth strategy. And we believe that with the cash flow from Sergipe and from the Nanook, we will be able to be in a position to fully fund the development of our operations in the small-scale and other projects.

Jason Gabelman -- Cowen and Company -- Analyst

Okay. So is that to suggest no cash flow coming up to the parent right now or in the next couple of years?

Eduardo Maranhao -- Chief Financial Officer, Golar Power

In the near-term, we don't expect to -- we believe that we'll be in a better position to fund the existing growth opportunities that we have in our portfolio than to distribute the excess cash flows to the shareholders.

Jason Gabelman -- Cowen and Company -- Analyst

Got it. And if I could just ask a quick question on the restructuring efforts. You're talking about entering new territories and building out storage hubs that could do multiple activities. And I wonder if you do go forward breaking up the company, do you get into a scenario where you're now bidding against competitors for some of those other activities that you're trying to build out from the hub? For example, if you're building a power project and you want to do it with an FSRU, but the FSRU is in a separate company than the power projects in, are you then opening yourself up to potential competitors to bid on that project as well? Thanks.

Iain Ross -- Chief Executive Officer

Now let me take that one guys. So the beauty of the exercise that Callum has explained I think very well that it creates the opportunity for investable companies to split by asset classes. So shipping par the FSRU and the FLNG companies. The beauty of working across the group is that we have the opportunity to collaborate. And I think if you talk about the FSRU Power example, I think there's a big difference between responding to a tender in the market to do a bareboat charter for an FSRU. And taking of an FSRU, and as Eduardo has described, putting that through a development into a hub to create a very strategic asset that multiple downstream businesses can develop from. And I think having that structure, having the assets in one particular part of the group of companies, if you want to call it that, it actually makes it easier for us to do inter-company deals and arrangements. And I don't see that an FSRU alone company will have the ability to do what, for example, Golar Power is doing and vice versa. I don't think Golar Power has the appetite to simply respond to tenders for the provision of an FSRU when it can make so much more business out of taking that FSRU and putting it to work.

So to the contrary, we actually see great synergies between the groups. And the restructuring that we've talked about as we try to make that go forward will create simplicity in the business and facilitate that collaboration in a far easier way.

Jason Gabelman -- Cowen and Company -- Analyst

Great. Thanks for the path.

Iain Ross -- Chief Executive Officer

Thank you, operator. Thanks to everyone for your participation and your interest in Golar. Please stay safe in these COVID times. And we look forward to sharing our progress with you next quarter. And with that, goodbye.

Operator

[Operator Closing Remarks]

Duration: 74 minutes

Call participants:

Iain Ross -- Chief Executive Officer

Callum Mitchell-Thomson -- Chief Financial Officer

Eduardo Maranhao -- Chief Financial Officer, Golar Power

Jonathan Chappell -- Evercore ISI -- Analyst

Ben Nolan -- Stifel -- Analyst

Randy Giveans -- Jefferies & Company Inc. -- Analyst

Michael Webber -- Webber Research Advisory -- Analyst

Jo Ringheim -- Arctic Securities AS -- Analyst

James Monigan -- Citi -- Analyst

Sanjay Gautam -- Bank of America Merrill Lynch -- Analyst

Jason Gabelman -- Cowen and Company -- Analyst

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