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LNG oversupply hits Golar

Golar LNG has reported a $24.2m loss in the second quarter, as $13.6m in non-cash losses on interest rate swaps worsened an $11m operating loss.

Revenues decreased 34% in the first half, from $64.4m in 2013 to $42m this year, with operating profit falling from $75.4m to $9.6m as the fleet shrank and income on the drop down of assets to Golar Partners fell. The company's first half loss totalled $11.2m, down from a $144m profit in the same period last year.

The tumbling results are a product of the drop down of much of the company's fleet to MLP Golar Partners, the company's 41.4% interests in which paid out $6.4m in the second quarter.

Taken as a group, Golar LNG and Golar Partners earned revenues of $119.9m. Group-wide time charter equivalent (TCE) earnings of $93,692 per day were higher than the first quarter TCE of $85,794 per day as utilisation of two vessels improved, another was laid up and positioning voyages were fewer. 87% of aggregate net charter revenue came from vessels in the Golar Partners fleet.

Consolidated operating profit was $53.2m including Golar Partners' result.

In July golar ordered the world's first FLNG vessel conversion at Keppel in Singapore, named FLNG Hilli. Golar expects a contract for the employment of FLNG Hilli by the end of the year, with approval clearance in 2015. The vessel is due for delivery in Early 2017.

The Golar board stated that the fundamental supply/demand balance will remain challenging in the LNG market, with low effective utilisation rates a "serious concern". Operating results for the rest of the year likely to be similar to the first half.

Alongside the difficult LNG shipping market, which it expects to see last for 12-18 months, Golar is expecting a "period of rapid growth linked to investments in the FLNG business."

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