FLEX LNG Posts Q1 Results (UK)

FLEX LNG Posts Q1 Results

FLEX LNG today reported results for the first quarter of 2012.

The Group’s cash balances at 31 March were $11.6m ($6.5m) with $3.2m net outflow ($3.4m) in the quarter.

In the three months in 2012 the operating cash outflow was $3.6m (principally the operating loss and working capital movements); and financing activities inflow $0.4m (deferred payments to Samsung).

The loss before tax was $1.7m ($3.7m) in the quarter, with a year to date retained net loss of $1.7m ($3.8m).

In the quarter there have been Gulf LNG Project related costs, which have been offset by a credit of $1.4m on forfeited share options ($0.8m share option charge).

Outlook

In April 2011 the Group announced that it had signed agreements with IOC, PACLNG and Samsung for a FLNG project in PNG with targeted start of operations in 2014. The Gulf LNG Project was expected to have liquefied and exported gas from the Elk and Antelope gas fields in the Gulf Province of PNG. Samsung undertook the FEED work for the hull portion of the FLNG unit; whilst a Worley Parsons led JV was responsible for the FEED work for the topside under contract with Samsung.

The objective had been for the Gulf LNG Project to have reached FID in December 2011. In December 2011 the multiparty agreements among IOC, PACLNG and Samsung and the framework agreement between FLEX and the sponsors of the Gulf LNG Project were permitted to lapse due to lack of progress by the Gulf LNG Project sponsors. FLEX LNG said it is currently unable to forecast the expected timing of a potential FID for the Gulf LNG Project.

With the FEED work that has been executed, the Company believes it has taken technical preparations necessary, to the extent possible at this stage, to support FID, if and when the project sponsors, the PNG Government and other stakeholders are able to finalise project terms. In the meantime the Company continues to provide ongoing assistance to IOC and PACLNG.

In light of the uncertainty surrounding the timing of FID for the Gulf LNG Project, the 2011 Preliminary Agreement between FLEX LNG and Samsung was allowed to lapse in early 2012 and the Company and Samsung have now expanded the scope of their discussions to include restructuring of existing contracts and negotiations for an alternative deployment, which would include the possibility of the construction of LNG carrier and/or regassification vessels. The Company continues to expect to conclude these negotiations over the coming months.

In the 2011 statutory accounts, the Group recognised an impairment write-down on the new build assets. The Company currently expects to have greater clarity as to the carrying value at the completion of negotiations with Samsung. The amount of capital transferred for Alternative Deployment will depend on a number of factors that are not directly under the control of the Group (including the commercial terms for the restructuring and Alternative Deployment options).

LNG World News Staff, May 25, 2012

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