On Friday, Golar LNG Ltd . (NASDAQ:GLNG) received a reaffirmed Buy rating and a $55.00 stock price target from Stifel, following the announcement of a significant 20-year contract with Pan American Energy for the Hilli vessel in Argentina. The contract, which is set to commence in 2027, will utilize 90% of the vessel's 2.45 million tons per annum (mtpa) capacity.
The deal is expected to generate fixed toll and commodity-linked profit sharing exceeding $400 million. Moreover, the contract includes an option that could see the Hilli replaced by the Mk II vessel, potentially increasing the value to more than $500 million if the Hilli is deployed to a more lucrative project.
Golar LNG has also secured a 10% stake in Southern Energy, a joint venture with Pan American Energy. This partnership opens the possibility for more than one Floating Liquefied Natural Gas (OTC:LNGLF) (FLNG (OL:FLNG)) unit at the Argentina site.
While the full details of the cash flow and contract specifics are yet to be fully detailed and the agreement awaits final approvals, the analyst anticipates that this development will likely prompt an order for an Mk II FLNG unit and expects further contract announcements in the near future.
The announcement is seen as a significant positive for Golar LNG's shares, signaling a strong outlook for the company's operational capacity and financial prospects.
In other recent news, Golar LNG Ltd. has made significant strides in its operations, securing a 20-year agreement with Pan American Energy to deploy a Floating Liquefied Natural Gas (FLNG) vessel in Argentina. This project, expected to export liquefied natural gas by 2027, will tap into the Vaca Muerta shale formation, positioning Argentina in the global LNG market.
In addition, Golar reported strong Q1 2024 financial results, with operating revenues of $65 million, net income of $66 million, and an adjusted EBITDA of $64 million.
The company also reinstated dividends and a share buyback program, demonstrating its commitment to shareholder returns. Analyst firms BTIG and Stifel have shown confidence in Golar, raising their share price targets to $45.00 and $55.00 respectively, amid progress in the re-contracting of Golar's Hilli FLNG unit and the final investment decision on its first Mark II FLNG.
Golar's strong liquidity position, with $700 million in cash and $550 million in net debt, supports these strategic initiatives. The company anticipates an additional $150 million EBITDA from the Gimi charter with BP (NYSE:BP). These are just a few of the recent developments that highlight Golar LNG's strategic advancements in the global LNG market.
InvestingPro Insights
As Golar LNG Ltd. (NASDAQ:GLNG) secures a promising future with its 20-year contract for the Hilli vessel, the company's financial health and market performance provide additional insights. With a market capitalization of $3.44 billion and a P/E ratio of 31.02, reflecting a slight adjustment to 30.26 on a last twelve months basis as of Q1 2024, investors are watching the company's valuation closely. The PEG ratio during this period stands at -0.45, suggesting potential concerns over future earnings growth relative to the P/E ratio.
InvestingPro Tips highlight that management's active share buyback strategy and expectations for net income growth this year could signal confidence in the company's prospects. Still, it is worth noting that three analysts have revised their earnings downwards for the upcoming period, which may warrant investor caution. Moreover, the company's performance has been robust, with a strong return over the last year and a price that is currently near its 52-week high.
For investors seeking deeper analysis and additional InvestingPro Tips, there are 15 more tips available on Golar LNG, which could provide further guidance on investment decisions. To access these tips and enhance your investment strategy, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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