Leverage our affiliation with Golar Partners to monetise long-term midstream contracts
We believe that our affiliation with Golar LNG Partners LP (Golar Partners) positions us to pursue a broader array of opportunities.
How the master limited partnership works
Golar LNG Partners LP is a master limited partnership (MLP), listed on NASDAQ and structured to offer a stable yield to its unitholders. Steady and predictable cash flows backed by long-term contracted assets are what enable Golar Partners to offer this. Golar Partners, has, to date, acquired all of its long-term contracted LNG infrastructure assets from us. A long-term contract is defined as five years or more. The acquisition of additional assets and their associated long-term contracted cash flows enables Golar Partners to protect and grow its distributions to its unitholders, spread counterparty risk and maintain a lower cost of capital as a result. A lower cost of capital makes it possible for Golar Partners to cost-effectively raise new equity to part-finance future acquisitions. The sale of assets to Golar Partners allows Golar LNG Limited to monetise the value of an assets contracted cash flows upfront. Golar LNG Limited can then redeploy sale proceeds as equity in new, high-return projects and pay dividends to its own shareholders.
Golar LNG Partners LP listed on NASDAQ in April 2011 with four contracted assets. Golar LNG Limited has subsequently sold (“dropped down”) a further seven vessels to the MLP raising $1.2 billion cash net of novated debt. These proceeds were substantially reinvested by Golar LNG Limited into a recent newbuilding programme. Once contracted, many of these newbuild assets will also become future candidates for sale to the Partnership. We expect that Golar Partners will also be a significant source of equity funding for future FLNG projects.
Currently Golar LNG Limited has a 32% interest (including a 2% general partner stake) in Golar Partners. Ownership of the 2% General Partner interest enables Golar LNG limited to control the MLP without owning a majority stake.
Increased dividend income from our investment
Since its 2011 IPO, the quarterly distributions of Golar Partners have increased from $0.385 pro-rated per unit to $0.5775 per unit for the most recent quarter. This represents a 50% increase since IPO. Golar Partners’ long-term charters provide stable cash flows which allow Golar Partners to meet its quarterly distribution obligations to its unit holders, including us.
Golar Partners website