Golar LNG (NASDAQ:GLNG) Q2 2024 Earnings Call

0:00 Welcome to the GOLAR LNG Limited Q2 2024 presentation. After the slide presentation by CEO Karl Fredrik Staubo and CFO Eduardo Maranhao, there will be a question and answer session. Information on how to ask a question will be provided then. At this time, all participants are in listen-only mode. I will now pass you over to Karl Fredrik Staubo. Karl, please go ahead.

0:26 Thank you, operator, and welcome to GOLAR's second quarter 2024 results. My name is Karl Fredrik Staubo, CEO of GOLAR LNG, and I'm accompanied today by our CFO, Mr. Eduardo Maranhao, to present this quarter's results. Before we get into the presentation, please note the forward-looking statements on slide two. We start at slide three and the overview of GOLAR today. We have two existing FLNG assets, Dehilly, which is the world's first FLNG with a market-leading operational track record, and the GIMI about to commence a 20-year charter for BP offshore Senegal and Mauritania. We are closing in on ordering our third FLNG, a Mark II with an annual liquefaction capacity of 3.5 million tons per annum.

1:18 The Mark II FLNG will utilize the LNG carrier Fuji as its donor vessel for the FLNG conversion. Our financial investments include a 23.5% shareholding in Avenir LNG and the fully owned subsidiary Macao Energies, which is a startup focused on onshore FLIR II LNG liquefaction. We're encouraged by the development in both of these companies. Avenir is a leading small-scale LNG shipping company, and we see favorable supply-demand characteristics of small-scale LNG shipping translate into strong charter rates with up to five-year durations to very solid counterparts.

2:03 We're very encouraged on the outlook for this business. On Macau, we have now deployed the first F2X, which is the FLIR-2 LNG liquefaction unit, at the Lai Well in Texas, U.S. Macau are currently working on tuning the operations to facilitate for fluctuations in the gas composition from the flare gas well. Other key statistics highlighted on the page includes our market cap, currently standing at around 3.5 billion, net debt of just under 600 million, and an EBITDA backlog of around $11 billion, inclusive of the Pan American Energy Contemporary. LNG Contract in Argentina, which we announced in July.

2:50 Turning to slide four, Golar is the world's largest owner and operator of FLNGs and the only proven provider of FLNG as a service. Our two existing units are at par with ENI and Petronas in number of units, but market leading measured by liquefaction capacity. Our focus on designing standardized designs that can be redeployed at moderate capex have enabled us to construct the units at market leading construction costs measured by capex per ton and obtain market leading operational track record. The other existing FLNG players are focused on utilizing their floating units for gas they control or where they target to be the off-taker of the gas for their downstream LNG portfolio.

3:42 Hence, the only proven provider of FLNG as a service is Golar, and this position allows us to offer gas resource owners a monetization venue whilst maintaining meaningful ownership and exposure to their resources. Turning to slide five, we have laid out our growth ambition based on our existing asset base and secured yard slots. We have inbuilt cash generation growth from our existing assets through the startup of GIMMI expected to commence commissioning within this quarter and full operations next year. We see further earnings growth from increased capacity utilization on Hilly when redeploying from her existing charter, which ends in July 26, to the announced 20-year charter in Argentina with an estimated startup in Q1 2027.

4:40 Once on their 20-year charters, these two existing assets are estimated to generate an aggregate annual EBITDA of approximately $515 million before commodity exposure. On the back of our focused business model, strong balance sheet and demand for our FLNG services, we're now looking to grow our fleet with a target to more than double our operating FLNG capacity by 2030 to just over 12 million tons per annum. We have secured a yard slot for a Mark 2 3.5 MTPA conversion with delivery in 2027 and the further yard option for a second MKII 3.5 MTPA FLNG with delivery within 2028.

5:29 We are targeting to order the first of these MKII FLNGs within this quarter. Each MKII FLNG has a capacity of 3.5 million tons or about 180 TBTU per annum. Assuming a tariff in line with the recently announced FLNG project in Argentina, and Mark T could generate an EBITDA of approximately $500 million before commodity exposure. Hence, based on our existing assets and the identified growth ambitions, Golar may be in a position to generate an annual EBITDA of around $1.5 billion once the expansion program has expanded from two to four units and the liquefaction capacity has increased from five to 12 MTPA This is all expected to be fully operational within 2030.

6:25 On slide 6, we see continued need for further LNG supplied projects to come online. Due to depletion of existing gas fields and strong underlying growth in natural gas and LNG demand, mainly driven by the Far East and Europe, incremental gas supply is needed to balance the market. Based on market research, the incremental supply required to meet the forecasted demand has a landed cost of more than $10 per MMBTU, supporting long-term pricing of LNG. Golar's FLNG technology enables monetization of stranded or associated gas fields with a significantly lower cash break-even compared to the majority of these incremental LNG gas export projects.

7:12 The spread between where we can generate gas exports and other incremental supply provides for an attractive price spread to be shared between gas resource owners and Golar as the FLNG provider. Forward pricing of LNG still supports oil to gas substitution in addition to the favorable environmental savings. We see this market balance as a very supportive to our mentioned growth ambitions. Turning to business update at slide 8. Hille continued her market leading operational track record during the quarter and is currently in the midst of offloading cargo 117 or more than 8 million tons of LNG exports since contract startup in 2018.

8:03 A key milestone for the quarter was to conclude a commercial reset with BP resolving all contract disagreements and aligning economic compensation from GIMI's arrival in country on January 10th until COD. This commercial reset also unlocks our target to refinance GIMI at improved terms versus the existing facility and to provide a liquidity release that we intend to utilize for our mentioned FLNG growth ambitions. Significant progress has been made on Mark 2 during the quarter, and we're now targeting contracting within the quarter as mentioned. And we've also secured the slot for the option. The key milestone of the quarter was signing a 20-year definitive agreement for deployment of an FLNG in Argentina.

8:55 The contract envisaged to utilize HILI at the end of our current charter, but GOLAR has for a period pre-final investment decision, and a Mark 2 FLNG. We will elaborate on this later in the presentation. We see continued strong development of our FLNG growth pipeline and we've increased our FLNG commercial team with two senior resources to assist in evaluating and developing project opportunities. We're currently in discussion for FLNG deployment opportunities in West Africa, South America, Middle East and Southeast Asia. Q2 financial highlights include an adjusted EBITDA for the quarter of 59 million and the liquidity position of just around 600 million.

9:47 Eduardo will provide further insight into this quarter's financial performance later in the presentation. Turning to slide nine, we've laid out some of the contract highlights on the Pan American FLNG Charter in Argentina. We have entered into agreements for a 20-year LNG export project in Argentina. The project, as explained several times now, intends to utilize HILI. However, we have swapping rights to instead utilize a Mark II FLNG before final FID is made, which is expected to occur later this year. The annual adjusted EBITDA based on utilization of the HILI is approximately 300 million before commodity exposure.

10:35 The project will utilize gas from the Vaca Muerte field onshore Argentina. Vaca Muerte is the second largest shale gas discovery in the world, with estimated resources of around 300 TCF. Target startup of the project is in Q127, enabling potential redeployment, upgrades, and hookup of Hilly after the end of her current charter in July 26. As part of the transaction, Golar will become a 10% shareholder in South American logistics. This will provide further commodity exposure in addition to the commodity element of the FLNG tariff.

11:21 The charter is subject to customary closing condition, including regulatory and environmental approvals. As alluded to, this is expected to be satisfied within year-end. Further information on the project can be found on slide 10. Site selection for the FLNG has been selected as San Matias Gulf in the Rio Negro province in Argentina. The project intends to utilize spare capacity in the existing pipeline system and therefore requires very limited incremental infrastructure to be operational. However, the project aims to secure a dedicated pipeline of about 600 kilometers in order to expand beyond one FLNG unit.

12:11 The counterpart to the agreement are Pan American Energy, one of South America's leading energy companies. Pan American is owned 50% by BP and 50% by Breda's Energy Corp. which in turn is a 50-50 joint venture between CNOC of China and Bridas Energy, which is an Argentinian holding company on behalf of an Argentinian family. Pan American employs around 21,000 employees. They're Argentina's second largest oil and gas producer, and at year-end 23, the company controlled total assets of around 17 billion with book equity of around 12 billion. We're extremely pleased with the mutual benefits the project enables, both to Pan American as a gas resource owner and reestablishing Argentina as a gas exporter, creating an outlet for the vast resources of the vacuum variety field to benefit global gas demand.

13:13 Turning to slide 11, we continue to see strong developments for further FLNG deployments, already as mentioned further potential deployments in Argentina but also elsewhere. We're currently in discussion for potential deployment opportunities in West Africa, South America, Middle East and Southeast Asia and these projects are at various stages of development. We continue to develop projects in Nigeria and in June we signed a project development agreement with NMPC. to further expand on the existing agreements between GOLAR and NNPC. As mentioned, we have recently further strengthened our commercial team with two senior resources to assist in the development of these growth projects.

14:02 We remain encouraged by the relative attractiveness of our FLNG growth projects, both when comparing them to alternative monetization solutions for the gas resource owners and the cost competitiveness for these projects versus other LNG export projects. Turning to slide 12 to give some further detail on the commercial reset agreement reached with BP. The commercial reset resolves all previous disputes related to payment mechanisms for pre-COD contractual cash flows between GOLA and BP. Golar is now contractually entitled to receive daily payments from January 10th this year until commercial operations date.

14:52 The daily payments have step-up mechanisms based on project milestones up to COD and are also secured by long stop dates. Golar will also be entitled to certain lump sum bonus payments subject to achievement of certain project milestones. In sum, these new arrangements and based on the operator's latest timeline, Goal are expected to receive approximately $220 million in payments across 2024 and 2025, pre-COD compensation, inclusive of milestone bonuses, of which approximately $130 million will be invoiced in 2024 and the reminder in 2025. The $110 million that Golar has paid BP up until January 10th this year in liquidated damages will remain with BP.

15:52 In addition, an accelerated commissioning plan has been agreed where the operators BP and Cosmos have procured an LNG cargo expected to deliver to the hub later this month. The commissioning cargo enable parallel commissioning activities of both the hub FPSO and the GIMI FLNG. Together, this will shorten or target to shorten the time to COD. The commercial reset is also an important milestone that enables refinancing of GIMI. We are targeting a debt facility with significantly better terms on interest and amortization compared to the existing facility and right sized for the strong cash flow visibility of the project.

16:41 And we expect to release up to $500 million of liquidity of this refinancing alone. Turning to slide 13 and an operational overview of our two existing assets. As explained, Hyli continued its market-leading operational track record, and we're now offloading cargo number 117. The existing contract runs until July 26, and the vessel is thereafter intended to be moved to Pan American and the contract in Argentina at an increased capacity utilization. Hyli is on-site. on the hub offshore Senegal and Mauritania and preparing to start commissioning activities to the mentioned accelerated commissioning plan later this month.

17:28 First gas from the FPSO is expected in Q4 and full COD in 25. The COD will start the 20-year contract duration, unlocking Golar's share of the 3 billion EBITDA backlog. Turning to slide 11. and our Mark II growth plans. We are now the final stages of the Yard EPC contract. Confirmed delivery of the first contemplated Mark II FLNG will be within 2027 at an all-in FLNG price at an industry-leading $600 million per ton. We have spent to date, including the acquisition of the intended donor vessel Fuji LNG, around $277 million on the project, which are all equity funded.

18:25 The long lead items ordered to date are now 63% complete, and you can see some of those examples on the bottom right of the slide. We target to order the first Mark II within Q3 this year, so this quarter. and as part of the art agreements we've secured an option for a second chip with delivery within 28. On slide 15 we turn again to Macau. Our pilot unit was completed in early Q2 this year. The unit has proven that the technology works both through nitrogen leak testing and proven LNG production from pipeline quality gas entering the facility near its construction factory.

19:17 The unit has now been deployed to a live well in Texas, US. We are currently working on tuning the operations to facilitate for fluctuation in the gas composition from flare gas. which is obviously different to a stable gas quality stream from a pipeline quality gas inlet. As previously announced, we will consider strategic alternatives for the Macau growth phase once the unit has proven stable operations on live well production. I'll now hand the call over to Eduardo to present our Q2 results.

19:53 Good morning everyone and thanks Karl. I'm very happy to share an overview on Goaler's financial performance during Q2 2024. Turning over to slide 17, I wanted to go through some of the highlights of this quarter. Total operating revenues amounted to $65 million, with total FLNG tariffs reaching $88 million, up from $86 million recorded in Q1. This increase can be attributed to higher realized Brent and TTF linked earnings when compared to the previous quarter. We always look at FLNG tariff as the appropriate metric which reflects all realized liquefaction revenues, including gains on our oil and gas linked fees from HILI. We report a total net income of $35 million in Q1.

20:38 When adjusting for other non-controlling interests, the net income attributable to GOLAR was $26 million. This figure represents a significant improvement on a year-on-year basis when compared to Q2 2023. Adjusted EBITDA came in at $59 million, slightly down when compared to last quarter, mainly because of the recognition of pre-operational expenses associated to pre-commissioning activities of FLNG gaming. Our liquidity position remains strong, with approximately $630 million of cash on hand and expected receivables from our TTF hedges. Based on that, our net debt position at quarter end stood at $569 million, As alluded by Karl, we reached a significant milestone with PP with the execution of the commercial reset for our FLNG GIME. We are now able to refinance our existing debt facility of $700 million, out of which only $630 million has been drawn to date. We are in advanced discussions with potential lenders, and a new facility is now in the credit approval process.

21:46 This potential new facility offers improved terms with lower financing costs and improved repayment profile versus the current one. We expect to release up to $500 million of additional liquidity net to us upon closing of this new facility. And lastly, this quarter we are declaring a dividend of $0.25 a share with a record date on the 26th of August and payment on or around the 3rd of September. Now moving to slide 18. So Healy maintained 100% economic uptime and its market leading operational track record. Here we can see the evolution of Healy's EBITDA contribution over the last quarter. When looking on a quarterly basis, Healy generated $64 million in Q2.

22:32 This number is inclusive of $29 million from base tolling fees and around $35 million from Brent and TTF linked fees. We have recently seen higher Brent and TTF prices, so it's important to reiterate that we continue to be exposed to Brent and TTF. So should prices continue to improve in the coming quarters, we should expect increased distributions from Healy until the end of its current contract. Moving on to slide 19. So based on current forward prices, Heal is expected to generate an adjusted EBITDA net to us of approximately $275 million this year. I wanted to highlight that this figure is higher than the amount seen in 2022, when we had higher contributions from Brent and TTF because of higher global energy prices.

23:22 The 2024 asset level debt service, including principal amortization, is expected to come down to $88 million this year, resulting in total free cash flow net to Golar of approximately $190 million in 2024. At the end of Q2, the total debt outstanding for Healy stood at $577 million. Another great feature from the announcement of our contract with Pan American is that it could also enable refinancing of this existing facility, which could release significant liquidity to us and provide even more flexibility for our balance sheet. Let me now hand the call over to Karl for some closing remarks.

24:05 Thanks, Eduardo. That brings us to slide 21, which is summary and next steps. So in Gili, we maintain the market leading operational track record, and we're very pleased to have entered into definitive agreements for a 20-year redeployment in Argentina, starting at the end of the existing charter. On GIMMI, another milestone in concluding the new pre-COD commercial arrangements and accelerated commissioning. Our focus now is to get the unit into COD and to refinance the existing debt facility at improved terms. As explained, we are closing in on ordering our third unit, the first Mark II FLNG conversion, expected to be ordered later this quarter with delivery within 27.

24:55 We're also pleased with the development of our FLNG growth ambitions, and we see strong prospective client interest for additional FLNG projects. As explained by Eduardo, we have a very healthy financial performance and a balance sheet to support our growth ambitions. With a liquidity of just around 600 million, continued focus on shareholder returns, and strong cash flow generation potential in new FLNG contracts. All in all, we're very pleased with the progress made in the quarter, in particular on our existing assets, business development, and interaction with both existing and prospective FLNG clients. We're excited about the next phase of the company development and our focused growth ambitions to more than double our FLNG capacity by 2030.

25:47 That concludes the quarterly presentation and we'll now hand the call over to the operator for any questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To answer your question, please press star 1 1 again. We kindly advise participants to limit themselves to two questions per person. We will now take the first question. From the line of Chris Robertson from Deutsche Bank, please go ahead.

26:25 Good morning, Karl and Eduardo. Thanks for taking my questions. Karl, I just wanted to circle back on your comments around the potential swap option for a Mark II in Argentina. Should we think about the expected annual EBITDA contribution then on a pro forma basis for a larger asset of being over $400 million if you decide to do that?

26:47 Yes, that would then be pro rata for the size, yes.

26:51 Okay, got it. And then just with regards to the conversations you're having, you've obviously laid out several regions which you're looking at now, including South America, Africa, Middle East and Southeast Asia. Could you give us an idea of just how many potential counterparties you're in discussions with? I mean, the regions help, but maybe the scope of discussions that you're having.

27:17 I think it's fair to say that the number of counterparts is still concentrated around both West Africa and South America. There are fewer number of clients both on the Middle East and the Southeast Asia opportunities, but we're still very happy with the quality of those discussions that we're having in both those locations. But the concentration of magnitude is West Africa and South America.

27:44 Got it. All right. I'll turn it over. Thank you. Thank you. Thank you. We will now take the next question from the line of Ben Nolan from CISL. Please go ahead.

27:57 Thank you. Good morning, Karl and Eduardo. So I wanted to ask a little bit more on Argentina. You gave some good color there about the potential for multiple units effectively dependent, I suppose, on that new pipeline coming in, but obviously there's multiple There's multiple companies, groups pursuing SLNGs. How do you think about sort of what the overall opportunity set looks like in Argentina and how you think GOLOR will end up playing in that development?

28:32 That's a good question. First and foremost, gas resources are plentiful. If you compare this to what's deemed to be very large gas discoveries, for example, like the Greater Tortue area where GIMI operates, that's a 25 TCF reservoir. Vakamart is 300 TCF. So there's more than sufficient gas, it's onshore, and it's relatively easy to extract. Hence, The market opportunity for Argentinian gas exports is massive, probably beyond what just Golar can deliver anyway. We think that the attractiveness of what we can deliver is certainty of supply through a proven asset and with very tangible delivery. We know when Hille comes off contract, and if we do place the order for Mark 2 within this quarter, we do know when we have delivery of that vessel, and that's further de-risked by the progress made on the LNG items for that asset.

29:38 So we see as our role to be the first enabler for Argentina, or Baca Muerte specifically, gas exports. The gas is plentiful, and the only, call it, The key thing you need to cross is to have a designated pipeline in order to bring the gas to the export site. The existing infrastructure supports at least one FLNG. In order to go beyond that, you need to expand the existing pipeline system.

30:10 Okay, and would you need, hopefully I can get one more, but would you need a bigger pipeline for a Mark II versus the Hilly, or would the existing infrastructure work for either?

30:22 That's why we have substitution right on the first. So on the first one, you could utilize either Healy or Mark II. If you go beyond one unit, i.e. beyond 3.5 MTPA, you need to look into the pipeline infrastructure.

30:37 Got it. So my second question is it relates to sort of all of the other opportunities. Obviously, Argentina, there's potential for multiple units. But as you're thinking about sort of the opportunity set elsewhere, You know, appreciating that it's, you know, diverse, but can you maybe talk through how many of those you think are like single unit kind of situations or do you see a lot of, you know, situations where there potentially could be multiple units and that would be needed?

31:18 I think if you map out where stranded gas is in the world, it's extremely plentiful, but where it's most obvious is in West Africa. You have very, very large resources of stranded gas sitting in the ground that could be developed significantly cheaper than, for example, incremental US LNG export projects. The shipping distance to end markets both in Europe and the Far East is shorter, and we believe we can construct FLNG units at the capex per ton at around half the price of where you can create incremental tons on capex per ton in the US. So the competitive advantage of these projects is very significant. The gas is proven and plentiful. So that's where you see the biggest opportunity.

32:08 Obviously, in addition to areas like the Middle East, they have more than enough gas, and the same is true for certain pockets of South America. It's basically South America, West Africa, and to some extent Middle East that could see multiple units. The Southeast Asian opportunity is one unit initially.

32:30 Right. Okay. Thank you. Thank you. We will now take the next question. From the line of Craig Sher from Tuohi Brothers, please go ahead.

32:46 Good morning and thanks for taking the questions. So how quickly could you secure a HILI refinancing? Could that be a first half 2025 event?

33:02 That can certainly be a 25 event, yes. So I think once all of the subjects and FID on the project is taken, which we explained is expected later this year, it would be natural to look at refinancing initiatives into next areas.

33:22 Great. And do you have a second Mark II Vessel for conversion identified and when would you have to issue FID for a second Mark II to meet that 2028 delivery?

33:41 Yes, there are plenty of so-called MOS design ships that you can acquire in the market today that are operating as LNG carriers today. And we have identified several vessels that could be suitable candidates. and some of them we have previously also inspected. FID, if we were to go on the second mark two, would have to be based on current positions, unless we manage to improve them, within Q125. Thank you. Thank you. We will now take the next question. from the line of Liam Borg from BeVile and Financial.

34:29 Please go ahead.

34:31 Yes, thank you. Good morning, Karl. Good morning, Eduardo. Morning. Morning. Karl, we saw the addition of a new fortress to the FLNG providers. Obviously, it's smaller capacity. It's for internal consumption. But are you seeing any other Understanding these are tough projects to do, but the economics are pretty attractive. Are you seeing anybody else stepping up and trying to provide FLNG as a service?

35:05 There is one project that has FID out of Samsung now, which is called Cedar LNG, which is backed by Pembina for an LNG export in Canada. They're doing that, but they're doing it against locked-in offtake. I think it's been 15 years in the making, that project. It's former Golar employees that does it, and it was a project that initially was started under Golar. Other than that, we do see people having initiatives, but we haven't seen yet and other contenders that have the in-house engineering or operational or financial balance sheet capability to lift such projects now.

35:53 Great, thank you. And on your outside investments, how are you balancing future FLNG projects? Now, potentially you have two more on the books versus some of your outside projects like McCaw and Avenir.

36:11 So, if you look at Golar over the course of the last three years, basically after Eduardo and myself came in, we've tried to streamline the companies from a diversified fleet or portfolio to a very focused FLNG company. Avenir LNG is one legacy investment that we haven't disposed for a number of reasons, but it was an investment made when we owned Golar Power. We like the supply-demand dynamics. We have invested around 50 million dollars and right now it's an investment that we have strong belief in and therefore want to keep. We are not planning to deploy incremental capital into it, but we do want to reap the benefits of the investment.

36:58 When it comes to Macau, the way we see it is a replication of what we are doing in a maritime environment at a smaller scale onshore. But the whole trick is that you capture flare gas that would otherwise be burnt into the atmosphere. So i.e. the cost is extremely low of the input and there's significant environmental benefit if you manage to crack this solution. So on Macau, what we're trying to do is to leverage on the technological capabilities of the GOLA organization. to utilize the same or to capture the same market opportunity that we do at large scale in a maritime environment at smaller scale onshore. However, there should be no confusion that Golar's focus is to grow on FLNG and that's our focus and we are not planning to divert any significant capital elsewhere.

37:57 Great. Thank you, Karl. Thank you. We will now take the next question from the line of Alexander Bittwald from Weber Research and Advisory. Please go ahead.

38:14 Thanks for taking my question here. Just jumping back to Argentina, with the project requiring minimal infrastructure investment, could you provide a little more color on what infrastructure is actually required Are we talking mostly offshore mooring or an offshore jetty subsea infrastructure? And then how much of this infrastructure would be specific to the asset that's deployed, so either hilly or mark two?

38:43 The key things that's required is, as you correctly point out, mooring. Mooring is covered by South American logistics and a short pipeline from the existing grid to site and the site selection.

39:02 All right.

39:03 Thank you. And a quick follow up. For Mark 2 in that swap option in Argentina, I thought I heard you say that the swap had to be executed before FID. Is that correct?

39:17 Yes.

39:19 OK. Thank you very much. Thank you. Thank you. We will now take the next question. from the line of Chris Robertson from Deutsche Bank. Please go ahead.

39:33 Hey guys, thanks for taking a follow-up question for me. I just wanted to return to McCaw for a moment here. And Karl, you mentioned about not being confused with the focus on FLNG. So with regards to McCaw, is there any potential that you could license out the technology given that you have patent control over it rather than doing the undertaking yourself?

39:58 Sure, so what we've said quite clearly since we initiated Macau is that we want to fund it through proof of concept. Once proof of concept is achieved, hopefully in the relatively near term, our ambition then is to look at strategic alternatives for the growth phase. GOLAR is not intending to have Macau fight for our balance sheet resources. And therefore, we are looking at any type of structure that could benefit the technology that has been created at Macau without compromising any of our FLNG growth ambitions.

40:40 Got it. That's really clear. Thank you, Karl. Thank you. I would now like to turn the conference back to Karl Fredrik Staubo for closing remarks.

40:52 Thank you all for dialing in. We are very excited about the quarter that just passed and the direction of where the company is going and we look forward to talk to you again next quarter and hopefully we're then engaged on our FLNG growth phase. Thanks again and have a good day. This concludes today's conference call. Thank you for participating. You may now disconnect.