Golar LNG (GLNG) Just Locked In The World’s Scarcest LNG Capacity

Golar LNG (NASDAQ: GLNG) ended its second-quarter earnings call on August 13 with an announcement that had come together hours earlier. The company had just signed an order for a fourth floating LNG unit, a Mark II vessel to be built at CIMC Raffles Shipyard in China with delivery planned within 2029. That slot makes it the earliest available liquefaction capacity anywhere in the world, management said. Combined with an EBITDA backlog of $17 billion already locked in through the Hilli, Gimi, and FLNG Esperanza units, the order reframes Golar as a company still adding capacity rather than one running down its existing fleet.

The new unit lifts Golar's controlled liquefaction capacity by 41%, from 8.6 million tonnes to more than 12 million tonnes once fully delivered. If the vessel is chartered on terms similar to the Esperanza deal signed last year, annual earnings capacity could rise 50%, pushing run-rate EBITDA past $1.2 billion by 2030, management said. That target depends on a shipyard bottleneck that is not easing.

Samsung, the industry's biggest builder, is not expected to have open capacity until 2031. Wison in China is on track to book its next two large units, committing it well into the next decade. Seatrium and CIMC, the only two yards actively converting FLNG units, have built exclusively for Golar. The operating record backs up the pitch. Hilli completed its eight-year Cameroon contract with 100% economic uptime and 156 cargoes delivered. Gimi produced 15% above its contracted volume in the quarter. The Esperanza conversion is 74% complete and still on budget. Commodity-linked income is already showing up. Hilli's contribution jumped to $37 million in the quarter from $10 million in the first quarter, helping push EBITDA up 20% sequentially to $127 million.

Growth at this pace does not come cheap. The capital expenditure budget for the fourth FLNG unit came in around $2.45 billion, roughly 10% above the $2.2 billion spent on Esperanza. Management tied the increase to inflation in long-lead equipment like turbines and dual-fuel engines, parts now being bid up by AI data center operators and aircraft manufacturers. The new unit also has no charter yet, so the 50% earnings boost is a target, not a locked-in number.

Golar is still equity-funding Esperanza, having put in $1.3 billion of its $2.2 billion budget, while carrying net interest-bearing debt of about $1.8 billion. Executives are counting on refinancing Hilli and locking in long-term financing for Esperanza to free up roughly $2.3 billion in liquidity. Both transactions are still in progress rather than done. The commodity exposure that flatters earnings when LNG prices are high works the same way in reverse. Management's own sensitivity table shows EBITDA falling back toward $1.2 billion if prices settle near $8 per million BTU, well below the $1.9 billion implied by today's $15 forward price. The disruption at Qatar's Ras Laffan facility, which knocked out an estimated 17 million tonnes of capacity for three to five years, is a reminder of how exposed single-location LNG projects can be.

Hedge fund ownership climbed from 57 funds to 61 in the last quarter, pointing to building institutional interest. Short interest stands at 7.82% of float, enough to show real skepticism without looking like a crowded bearish bet. Shares trade at a forward P/E of 42.02 as of August 21, a multiple that already bakes in a substantial jump in earnings from today's contracted base. AlphaScala assigns GLNG a Mixed rating with a score of 49 out of 100, reflecting the balanced risk-reward profile.

Golar's fourth FLNG order gives it a foothold in a market where shipyard slots and critical equipment are both running scarce. The numbers back up the argument: a $17 billion backlog, a fleet pushing past 12 million tonnes, and commodity exposure that could carry EBITDA toward $1.9 billion at current LNG prices. None of that is locked in without a charter for the new unit and financing still being arranged around Esperanza. For the growth case to hold, Golar needs both of those to close roughly on the terms management is describing.