Golar LNG Charts Profitable Course With Argentina Backlog
Golar LNG Limited ((GLNG)) has held its Q4 earnings call. Read on for the main highlights of the call.
Claim 70% Off TipRanks Premium
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
Golar LNG’s latest earnings call struck an upbeat tone, with management emphasizing record commercial wins, strong operational execution and a clearer path to significantly higher long‑term earnings. While acknowledging near‑term cash‑flow gaps, cost inflation and financing costs, executives argued that a growing $17 billion EBITDA backlog and reliable assets support a more robust long‑term value story.
Record Backlog Underpins Long-Term Earnings Power
Golar secured roughly $14 billion of EBITDA backlog in 2025 from two 20‑year Argentina contracts, lifting total adjusted EBITDA backlog to about $17 billion before commodity and inflation effects. Management now sees a line of sight to around $800 million in annual adjusted EBITDA once the fleet is fully delivered and locked into long‑term contracts.
Revenue And Earnings Step Up Sharply
Total operating revenues reached $133 million in the fourth quarter and $394 million for full‑year 2025, up more than 52% versus 2024. Net income climbed to $23 million in Q4 and $113 million for the year, while adjusted EBITDA hit $91 million in Q4 and $265 million for the full year.
Balance Sheet Strengthened By Major Financings
Year‑end cash stood at about $1.2 billion against $2.7 billion of gross debt, implying net debt of $1.5 billion. The company executed $1.7 billion of new financings, including a $1.2 billion bank refinancing and a $500 million U.S. bond, releasing roughly $400 million of extra liquidity.
Hilli And Gimi Deliver Operational Outperformance
FLNG Hilli achieved 100% economic uptime, produced its 10 millionth tonne of LNG since 2018 and generated $2.5 million of excess earnings above contracted volumes. Gimi, which reached commercial operations in June 2025, is also producing above its contracted volumes and invoiced a day rate about 3% above its Q4 contractual level.
Mark II Conversion On Budget And On Schedule
The Mark II FLNG conversion is about 50% complete, with $1.1 billion of the $2.2 billion scope already spent and funded entirely with equity so far. Construction remains on budget and on track for delivery by year‑end 2027, with more than 6 million man‑hours logged without a lost‑time injury.
Shareholder Returns Remain A Core Priority
In 2025 Golar returned roughly $250 million to shareholders through $103 million in dividends and $144 million in buybacks. The company repurchased and canceled 3.6 million shares, including 1.1 million in Q4 at an average price of $37.76, and declared a further dividend of $0.25 per share.
Commercial And Infrastructure Build-Out In Argentina
The company signed a letter of intent for an eight‑year offtake covering the first 2 million tonnes from Argentina with SEFE, split between Brent‑linked and Henry Hub plus premium pricing. Project partner SESA has awarded about $500 million of investments for pipelines, support vessels and land‑based infrastructure, with key pipeline contracts already placed.
Yard Slots And Growth Designs De-Risk Expansion
Golar confirmed yard availability and pricing in the fourth quarter for three new FLNG growth designs in the 2–5 mtpa range. Mark I and Mark II style conversions retain attractive capital costs per tonne and roughly three‑year conversion timelines, while a larger Mark III concept remains under review despite a longer delivery schedule.
Managing Cash-Flow Lull And Project Phasing
Management cautioned that 2026–2027 will bring limited cash flow as Hilli leaves Cameroon for upgrades and Mark II remains under construction. To protect the balance sheet, the board plans to delay speculative spending on potential fourth and fifth units until expected strong cash flows arrive from 2028 onward.
Cost Inflation Hits Key Equipment Packages
The company is seeing notable cost inflation and longer lead times for topside long‑lead items such as gas turbines, partly due to competing demand from sectors like data centers. Inflationary pressure is most pronounced for the Mark III concept and some yard and supply‑chain elements, prompting tighter capital discipline on newbuild options.
Execution Risks Around Mark II And Hilli Move
Mark II must be delivered by year‑end 2027 to support the EBITDA ramp, leaving little room for construction delays. Hilli’s redeployment budget stands at about $350 million, and any overruns in disconnecting, yard work or commissioning could squeeze near‑term cash flows and delay Argentina revenues.
Debt Load And Financing Costs In Focus
With $2.7 billion of gross debt and $1.5 billion of net debt, leverage remains meaningful until new assets are fully earning. The recent $500 million unsecured bond priced at a 7.5% coupon, and together with a $575 million convertible bond and other notes, underscores that higher funding costs are a key variable for equity holders.
Commodity Exposure Drives Earnings Volatility
Golar’s earnings remain highly sensitive to LNG prices, particularly from Argentina. Management estimates about $100 million of extra EBITDA for every $1 per MMBtu above $8 FOB and roughly $28 million of downside for each $1 below project breakeven, leaving substantial upside but also volatility tied to the commodity cycle.
Strategic Review Targets Undervaluation
The board believes the market undervalues Golar’s contracted cash flows and has launched a strategic review with external advisers to assess options. While the process underscores a commitment to shareholder returns, it also introduces a period of uncertainty around governance and potential structural changes.
Guidance: EBITDA Ramp From 2028 Anchored By Backlog
Management guided that once Hilli, Gimi and Mark II are all fully deployed on long‑term charters, adjusted EBITDA should reach about $800 million annually and free cash flow roughly $500 million, or around $5 per share. Hilli’s Argentina charter is expected to contribute about $285 million per year, Mark II about $400 million per year from 2028 and Gimi around $150 million per year, with substantial additional upside if LNG prices stay above base assumptions.
Golar’s latest call paints the picture of a company in transition from a construction and financing phase toward a high‑cash‑flow, contract‑backed model. Execution on Mark II, Hilli’s redeployment and cost control will be closely watched, but the sizable backlog, strengthened balance sheet and active capital returns leave investors with a compelling, if still cyclical, LNG infrastructure story.
