Natural Gas Shipper Golar LNG (GLNG) Surges on Narrowing Quarterly Loss

Golar LNG Ltd (NASDAQ:GLNG) rose 12.08 percent, or $2.63 higher before the market close today – finishing the regular trading session at $24.40. The liquefied natural gas shipper released its third-quarter financial results this morning, posting a narrower net loss than it did in the year-ago period.

More than 3.9 million shares of Golar LNG were exchanged today, a sizable increase from the stock’s average volume of about 1.5 million shares per day.

Golar’s revenue during the three-month period, which ended on September 30, was posted at $22.3 million – a 21.2 percent growth from the second quarter. EBITDA was reportedly a loss of $11.3 million, compared to a loss of $17.5 million in the year-ago quarter.

“Subsequent to the quarter end, we of course entered into a transaction with Golar to reset our incentive Distribution Rights in exchange for the issuance of new IDRs and new common and GP units,” said the company’s Chief Executive Officer, Graham Robjohns, in a conference call with investors today.

“With the existing level of distributions, this is approximately cash neutral day one but of course significantly reduces our cost of equity going forward and better positions us to make further acquisitions and grow distributions as we go forward,” he added.

According to the company’s press release announcing its financial results, shipping rates and utilization both improved during the third quarter. Operating revenues grew sequentially from $18.4 million in the second quarter to $22.3 million in the reported period. Additionally, vessel operating expenses decreased by $2.0 million.

Golar also highlighted today that it launched a new joint venture with Schlumberger Ltd (NYSE:SLB) – called OneLNG. The new venture offers an integrated upstream and midstream (industry slang for extraction and transportation of gas, respectively) service. The company is 51 percent owned by Golar, with the remaining 49 percent belonging to Schlumberger.

The company told shareholders that it will be paying a five cent-per-share dividend to investors on January 6, 2017. The record date is slated for December 14 of this year. The annual yield of the dividend is 0.8 percent.

Following today’s earnings release, research analysts at Jefferies Group reiterated a “Buy” rating on Golar’s common stock. The firm currently has a $25.00 12-month price target on the stock, suggesting a potential appreciation of about 15 percent.

Tim is a contributing analyst for and specializes in equities trading and public offerings. He is a graduate of UCLA and began his career doing capital markets research for a top investment banking software provider.