Shares of Golar LNG (GLNG 2.80%) surged more than 15% by 10 a.m. EST on Wednesday. Fueling the LNG stock was a deal to sell its joint-venture interest in Hygo Energy and stake in Golar LNG Partners (GMLP) to New Fortress Energy (NFE -0.92%).
Golar LNG and its partner Stonepeak Infrastructure Partners have agreed to sell their Hygo Energy Transition joint venture to New Fortress Energy. The two partners each own 50% stakes in Hygo, a gas-to-power and downstream LNG distribution company in Brazil. New Fortress Energy will pay $580 million in cash and 31.4 million shares for Hygo, implying a $3.1 billion enterprise value, with Golar getting 18.6 million shares and $50 million of cash. Golar had previously planned to complete an initial public offering for Hygo but had to pull back following some issues with that entity's former CEO.
Golar LNG has also agreed to sell all of its common units and general partner units in Golar LNG Partners to New Fortress Energy for $3.55 apiece. The company currently holds a 30.8% interest in Golar LNG Partners, which operates LNG ships. The implied price values Golar LNG Partners at $1.9 billion.
These transactions will do a few things for Golar. First, they'll enable the company to realize some value from its portfolio. In addition to that, they'll allow Golar to simplify its corporate structure. Finally, they'll provide the company with some cash and an equity interest in New Fortress Energy to monetize in the future.
Golar LNG has been looking to unlock Hygo Energy's value, which this deal will accomplish. On top of that, it's able to monetize its stake in Golar LNG Partners. These moves will enable it to focus all its attention on floating LNG solutions that could help the energy industry develop smaller offshore natural gas fields. The company currently has nine opportunities in its pipeline to go with its two current development projects. If it can convert more of its potential projects to the backlog, that would further brighten Golar's outlook.