What happened

Shares of Golar LNG Limited (NASDAQ:GLNG) are plunging today, down more than 17% as of 10:45 a.m. EDT, after the company reported lackluster first-quarter results. The company's master limited partnership, Golar LNG Partners (NASDAQ:GMLP), also dropped, falling nearly 10% by midmorning.

So what

Golar LNG Limited reported a net loss of $21 million during the quarter, which is a steep decline from the $3.8 million of net income it pulled in during the fourth quarter of last year. A combination of factors including higher interest expenses and a loss on some financial instruments contributed to the loss. Meanwhile, Golar LNG Partners also reported weaker first-quarter results due in part to materially lower rates and utilization levels for the Golar Mazo and Golar Maria vessels. As a result, Golar LNG Partners only generated $13.3 million of distributable cash flow during the first quarter, which covered its distribution by 0.32 times. That's a dangerously low level and could cause the company to slash its payout in the future if cash flow doesn't improve.

An LNG tanker in a harbor.

Image source: Getty Images.

In addition to the tough first quarter, Golar LNG Limited also announced that oil services giant Schlumberger (NYSE:SLB) has decided to pull out of the OneLNG joint venture with Golar. While the recent spike in LNG prices has enhanced the already solid returns expected from the JV's Fortuna project, Schlumberger decided to end its participation because it has other capital priorities. As a result, Golar isn't sure if it will be able to find acceptable financing to move forward with this project.

Now what

Golar LNG had expected that its joint venture with Schlumberger would help address its financing needs so that it could develop a floating LNG facility to get stranded gas resources to market. However, with the oil services giant bowing out, it makes it less certain that the company can develop these projects, which could hamper its growth prospects. Shares could continue sinking unless Golar can find a new partner for this project.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.