Golar LNG (GLNG) Q3 2025: $17B EBITDA Backlog Secured, Fourth FLNG Order Imminent

2025-11-05 | By EarningsIQ Research

Golar LNG locked in full 20-year charters across its FLNG fleet, pushing total EBITDA backlog to $17 billion and cementing multi-decade cash flow visibility. Management is now moving decisively to secure long-lead items for a fourth FLNG, capitalizing on sector demand and cost advantages despite emerging supply chain pressures. With EBITDA set to quadruple by 2028 and a new $150 million buyback authorized, the company is entering a new phase of growth and capital return underpinned by infrastructure-grade contracts.

Summary

• Contracting Milestone: All three FLNGs are now fully contracted for 20 years, transforming revenue visibility.
• Growth Pipeline Focus: Fourth FLNG order is advancing with board approval for critical equipment purchases.
• Shareholder Returns: New $150 million buyback program and dividend policy signal confidence in future cash flow.

Performance Analysis

Golar LNG delivered a step-change quarter, securing long-duration contracts across its floating LNG (FLNG, floating liquefied natural gas) fleet, which now anchors a $17 billion EBITDA backlog before commodity upside and inflationary adjustments. The company reported $123 million in operating revenue, with HILI and GIMI contributing $51 million and $48 million in EBITDA, respectively, as both units operated at or above base capacity. Notably, GIMI’s first full quarter of operations under its BP contract drove incremental earnings and operational stability, while HILI maintained 100% economic uptime and surpassed 9.8 million tons of LNG produced to date.

Liquidity and leverage remain robust, with $1 billion in cash and net debt at $1.4 billion, even after retiring $190 million in Norwegian bonds and raising $500 million through a debut U.S.-rated unsecured bond issuance. The company declared a $0.25 per share dividend, and buyback activity continues to be opportunistic, supported by a new $150 million authorization. Adjusted EBITDA for the trailing twelve months reached $221 million, but management projects this figure to quadruple by 2028 as the full fleet comes online, with incremental upside tied to LNG price movements.

• EBITDA Backlog Surge: The $8 billion firm backlog addition from Mark II’s 20-year charter in Argentina fundamentally reshapes Golar’s risk profile.
• Operational Leverage: Both HILI and GIMI are performing above base throughput, supporting margin expansion and future de-bottlenecking potential.
• Capital Flexibility: Debt refinancing and asset-level financings are unlocking liquidity for growth without sacrificing balance sheet strength.

With all FLNG units now fully contracted, Golar’s business model pivots from contract risk to execution and capital allocation, setting the stage for disciplined growth and shareholder returns.

Executive Commentary

Strategic Positioning

1. Infrastructure-Grade Contracting Model

Golar’s FLNG contracts are structured as infrastructure-grade cash flows, with all payments in U.S. dollars, offshore remittance, English law jurisdiction, and cost pass-throughs for operations and maintenance. In Argentina, the company benefits from 30-year non-interruptible export licenses and fiscal protections under the RIGI framework, minimizing sovereign and regulatory risk.

2. Growth-Driven Capital Allocation

With the existing fleet fully contracted, management’s focus shifts to executing a fourth FLNG order, leveraging proven Mark I/II/III designs and maintaining flexibility to match vessel size to market demand. Board approval for long-lead item procurement reflects urgency, as supply chain constraints—especially in gas turbines, now pressured by AI data center demand—threaten delivery timelines. Golar’s approach is to order on speculation to capture commercial upside, as demonstrated by the Mark II’s successful charter process.

3. Competitive Moat and Market Dynamics

Golar remains the only proven provider of FLNG as a service, offering external partners access to liquefaction infrastructure without requiring equity participation in upstream gas. While new entrants are emerging, none match Golar’s track record or service model. The company’s cost advantage stems from sourcing lower-cost gas and proximity to end markets, undercutting U.S. export economics and shortening shipping distances.

4. Embedded Optionality and Upside

Contract structures provide meaningful commodity upside, with every $1 per million BTU above $8 translating to approximately $100 million in additional annual free cash flow under the CESA charters. The company also retains flexibility to pursue de-bottlenecking and operational enhancements, particularly on GIMI, which could boost throughput and margins beyond base case assumptions.

5. Capital Returns and Shareholder Alignment

Golar’s capital return strategy is multi-pronged, balancing dividends, opportunistic buybacks, and potential asset-level acquisitions (such as the remaining 30% of GIMI) against reinvestment in new FLNG units. Over $800 million has been returned to shareholders in five years, with further upside as free cash flow accelerates from 2028 onward.

Key Considerations

This quarter marks a strategic inflection for Golar LNG, transitioning from contract risk to execution risk as the company leverages its contracted backlog and balance sheet for disciplined growth and shareholder returns. The following considerations will shape the company’s near- and long-term trajectory:

Key Considerations:

• Contract Protections Buffer Country Risk: US-dollar payments, offshore cash flows, and parent guarantees reduce exposure to local politics and regulatory changes, especially in Argentina.
• Supply Chain Timing Is Critical: Long-lead equipment, particularly gas turbines, faces delivery delays due to AI data center and shipping sector competition, making early procurement essential for project economics.
• Operational Upside Remains: Both HILI and GIMI are exceeding base throughput, and ongoing de-bottlenecking could unlock further capacity and margin improvements.
• Capital Allocation Is Opportunistic: Management balances buybacks, dividends, and potential asset acquisitions with the need to fund new FLNG units, maintaining flexibility as market conditions evolve.

Risks

Execution risk now dominates, as timely delivery of the fourth FLNG depends on securing critical equipment amid lengthening lead times. While contract structuring mitigates much of the sovereign risk, any material change in upstream partner credit or unforeseen regulatory shifts could impact cash flows, especially in Argentina. Competition for shipyard slots and supplier capacity is intensifying, raising the risk of cost inflation and delays for future projects.

Forward Outlook

For Q4 2025, Golar LNG expects:

• Continued full operations from HILI and GIMI, with ongoing throughput optimization.
• Closure of a $1.2 billion refinancing facility for GIMI, unlocking over $400 million in net proceeds.

For full-year 2025, management reiterated:

• Base EBITDA secured at $800 million annually (once all units are operational), with significant upside tied to commodity prices.

Management highlighted several factors that will influence near-term results:

• Progress on fourth FLNG long-lead procurement and narrowing of design choice.
• Ongoing buyback execution and potential asset-level investments as capital is released from refinancing.

Takeaways

Golar LNG’s transition to a fully contracted FLNG fleet marks a structural shift in business risk and cash flow visibility, with infrastructure-grade contracts anchoring multi-decade returns.

• Contracted Cash Flows Anchor Valuation: The $17 billion EBITDA backlog transforms Golar into a predictable, infrastructure-like business, with risk now concentrated in project execution and operational delivery.
• Growth Optionality Remains: Fourth FLNG procurement and embedded commodity upside create meaningful levers for future value creation, even as sector competition intensifies.
• Execution and Capital Discipline Are Key: Investors should monitor procurement progress, buyback deployment, and the pace of operational enhancements as leading indicators of future performance.

Conclusion

Golar LNG’s Q3 2025 results confirm a new phase of growth and predictability, with a fully contracted fleet, robust capital returns, and a clear path to quadrupling EBITDA by 2028. The company’s ability to execute on its fourth FLNG order and maintain discipline in capital allocation will determine how much of the embedded upside is ultimately realized.

Industry Read-Through

This quarter’s results reinforce the accelerating adoption of FLNG as a mainstream solution for monetizing stranded and associated gas assets, with Golar’s infrastructure-style contracts setting a benchmark for risk mitigation and cash flow predictability. The tightening supply chain for critical equipment, driven by AI data center and shipping demand, is a cautionary signal for all capital-intensive energy infrastructure projects. Competitors and new entrants must contend with rising costs and delivery delays, while established players with proven execution and supplier relationships, like Golar, are best positioned to capture the next wave of sector growth.

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