UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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, , 10011
(Address of principal executive offices, including zip code)
(516 ) 268-7400
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 8.01. |
Other Events.
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As previously reported on its current report on Form 8-K filed on January 20, 2020, New Fortress Energy Inc. (“NFE”) has signed:
(i) an Agreement and Plan of Merger with Golar LNG Partners LP, a Marshall Islands limited partnership (“GMLP”), Golar GP LLC, a
Marshall Islands limited liability company and the general partner of GMLP, Lobos Acquisition LLC, a Marshall Islands limited liability company and an indirect subsidiary of NFE (“GMLP Merger Sub”), and NFE International Holdings Limited, a private
limited company incorporated under the laws of England and Wales and an indirect subsidiary of NFE, pursuant to which GMLP Merger Sub will merge with and into GMLP, with GMLP surviving the merger as an indirect subsidiary of NFE (the “GMLP
Merger”); and
(ii) an Agreement and Plan of Merger with Hygo Energy Transition Ltd., a Bermuda exempted company (“Hygo”), Golar LNG Limited, a
Bermuda exempted company (“GLNG”), Stonepeak Infrastructure Fund II Cayman (G) Ltd., and Lobos Acquisition Ltd., a Bermuda exempted company and an indirect, wholly-owned subsidiary of NFE (“Hygo Merger Sub”), pursuant to which Hygo Merger Sub will
merge with and into Hygo (the “Hygo Merger and together with the GMLP Merger, the “Proposed Mergers”) with Hygo surviving the Hygo Merger as a wholly owned subsidiary of NFE.
In connection with the Proposed Mergers, this current report on Form 8-K provides the following financial information which is being filed as Exhibits 99.1, 99.2
and 99.3, respectively, and incorporated in this Item 8.01 by reference:
| i. |
audited consolidated financial statements of GMLP as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 and the notes thereto;
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audited consolidated financial statements of Hygo as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 and the notes thereto;
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unaudited pro forma condensed combined financial statements
of NFE reflecting the Hygo Merger and the GMLP Merger.
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| Item 9.01. |
Financial Statements and Exhibits.
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(d)
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Exhibits. The following exhibits are being filed herewith:
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Exhibit
No. |
Description
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Consent of Ernst & Young LLP relating to the audited consolidated financial statements of GMLP
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Consent of Ernst & Young LLP relating to the audited consolidated financial statements of Hygo
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Audited consolidated financial statements of GMLP as of December 31, 2020 and 2019, and for the years ended December 31, 2020, 2019 and 2018
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Audited consolidated financial statements of Hygo as of December 31, 2020 and 2019, and for the years ended December 31, 2020 and 2019
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Unaudited pro forma condensed combined
financial statements of NFE reflecting the Hygo Merger and the GMLP Merger
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104
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Cover Page Interactive Data File, formatted in Inline XBRL
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
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NEW FORTRESS ENERGY INC.
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By:
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/s/ Christopher S. Guinta | |
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Christopher S. Guinta
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Chief Financial Officer
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Dated: March 18, 2021
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement on Form S-3 (No. 333-236921) of New Fortress Energy Inc. and incorporation by reference in the Post-Effective
Amendment No. 1 to the Registration Statement on Form S-8 (No. 333-229507) pertaining to the Amended and Restated New Fortress Energy Inc. 2019 Omnibus Incentive Plan of our report dated March 16, 2021, relating to the consolidated financial
statements of Golar LNG Partners LP as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 appearing in this Current Report on Form 8-K of New Fortress Energy Inc.
/s/ Ernst & Young LLP
London, United Kingdom
March 18, 2021
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement on Form S-3 (No. 333-236921) of New Fortress Energy Inc. and incorporation by reference
in the Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 (No. 333-229507) pertaining to the Amended and Restated New Fortress Energy Inc. 2019 Omnibus Incentive Plan of our report dated March 15, 2021, relating to the
consolidated financial statements of Hygo Energy Transition Ltd. as of and for the years ended December 31, 2020 and 2019 appearing in this Current Report on Form 8-K of New Fortress Energy Inc.
/s/ Ernst & Young LLP
London, United Kingdom
March 18, 2021
Exhibit 99.1
INDEX TO FINANCIAL STATEMENTS
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Page
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GOLAR LNG PARTNERS LP
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AUDITED CONSOLIDATED FINANCIAL STATEMENTS
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Reports of Independent Registered Public Accounting Firm
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F-2
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Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018
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F-6
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Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
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F-7
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Consolidated Balance Sheets as of December 31, 2020 and 2019
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F-8
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Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
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F-9
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Consolidated Statements of Changes in Partners’ Capital for the years ended December 31, 2020, 2019 and 2018
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F-11
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Notes to the Consolidated Financial Statements
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F-12
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F-1
Report of Independent Registered Public Accounting Firm
To the Unitholders and the Board of Directors of Golar LNG Partners LP
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Golar LNG Partners LP (the “Partnership”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income,
changes in partners’ capital and cash flows for each of the three years in the period ended December 31, 2020 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2020,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 16, 2021 expressed an unqualified opinion thereon.
The Partnership's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Partnership has
a senior secured credit facility that matures in April 2021, bonds that mature in November 2021 and currently projects that it may not comply with certain financial covenants in the twelve-month period following issuance of these consolidated
financial statements. Accordingly, the Partnership has stated that substantial doubt exists about the Partnership’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these
matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. This matter is also described in the “Critical Audit Matters” section of our report.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F-2
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Going concern assessment
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Description of the
matter
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The consolidated financial statements of the Partnership are prepared on the going concern basis of accounting. As described above and in Note 1, the Partnership has significant debt balances
that fall due within the twelve-month period from the date the consolidated financial statements are issued, and has stated that substantial doubt exists about the Partnership’s ability to continue as a going concern.
As described in Note 1 to the consolidated financial statements, on January 13, 2021, the Partnership entered into an agreement and plan of merger (the “Merger”) with New Fortress Energy
(“NFE”). As a result of the pending Merger, management has deferred activities related to the refinancing of its maturing debt facilities, including taking steps to secure the necessary waivers and/or covenant amendments in respect of
projected non-compliance with certain financial covenants, as they anticipate that NFE will refinance such facilities upon consummation of the Merger. As the successful completion of the Merger is dependent on factors outside of the
Partnership’s control, and the refinancing of the maturing debt facilities has been deferred based on an expectation of the Merger closing, management concluded that there is substantial doubt over the Partnership’s ability to continue as a
going concern for the twelve month period from the date the consolidated financial statements are issued.
Management’s going concern assessment includes assumptions related to financing plans. This involves an assessment of the probability of the successful closing of the Merger and management’s
plans should the Merger not complete, including the refinance of maturing debt facilities with banks and bondholders and securing any necessary waivers and/or covenant amendments.
Auditing the Partnership’s going concern assessment described above is complex because it involves a high degree of auditor judgment to assess the reasonableness of the cash flow forecasts,
planned refinancing actions and other assumptions used in the Partnership’s going concern analysis. The Partnership’s ability to execute the planned refinancing actions are especially judgmental as they are outside of management’s control
given the expected Merger, and that the global financial markets and economic conditions have been, and continue to be volatile, particularly with the COVID-19 pandemic, which provides additional uncertainty.
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How we addressed
the matter in our
audit
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We obtained an understanding, evaluated the design, and tested controls over the Partnership’s going concern assessment process. For example, we tested controls over management’s review of
significant assumptions in relation to financing options used in the assessment and the key inputs to the cash flow forecasts.
Further, we evaluated the key inputs to the cash flow forecast in management’s going concern assessment. We independently assessed the sensitivity and impact of reasonably possible changes in
the key assumptions and estimates included in management’s cash flow forecasts and liquidity position, including reperformance of covenant calculations through the going concern period. We inspected the relevant documents in relation to the
Merger and management’s assessment of conditions and approvals required for the completion of the Merger.
In assessing management’s plans to secure waivers and/or covenant amendments for the covenant impacted by the projected non-compliance, we understood the nature and extent of past covenant
amendments obtained by the Partnership, discussed the status and timeline of any discussions with lenders, evaluated the proposed amendments and inspected the loan agreements for the impact of any potential covenant breaches and remedies
available.
In relation to management’s plans for loan and bonds refinancing, we validated management’s assertion that their plans, while effective, have been deferred due to the Merger and are therefore
not advanced enough as of the date of the consolidated financial statements are issued to be considered probable. These procedures included, among others, understanding the nature and extent of past financing transactions concluded with the
counterparties, assessing relevant data and metrics (such as contracted cash flows and existing loan to value ratios, where applicable) and inspection of the terms and conditions proposed by banks.
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F-3
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We compared the proposed terms and conditions of the financing arrangements with those of the Partnership’s existing loan facilities. We discussed the status of the refinancing efforts and their
viability with management and assessed the probability of the Partnership executing the plans effectively.
We involved a professional with specialized knowledge of capital and debt markets, to assist us in our assessment of whether it is probable that management’s financing plans will be achieved to
allow the Partnership to meet the anticipated liquidity requirements over the twelve-month period of their assessment.
We assessed the adequacy of the Partnership’s going concern disclosures included in Note 1 to the consolidated financial statements.
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Vessel impairment
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Description of the
matter
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The Partnership’s vessel and equipment and vessel under finance lease balances were $1,308 million and $103 million, respectively, as of December 31, 2020. As explained in Note 2 to the consolidated financial
statements, management performs an annual impairment assessment at the year-end and whenever events or changes in circumstances indicate that the carrying value of a vessel might exceed its fair value in accordance with the guidance in ASC
360 – Property, Plant and Equipment (“ASC 360”). If indicators of impairment are identified, management analyses the future cash flows expected to be generated throughout the remaining useful life of
those vessels. These undiscounted cash flows are estimated using forecasted charter rates and other assumptions. In relation to forecasted charter rates, the Partnership applies the currently contracted charter rate for the period in the cash
flow where the vessel is on charter. For vessels with no contracted charters or when the vessels’ forecasted cash flow period falls beyond the contracted charter the forecasted charter rates are based on industry analysis and broker reports
(‘charter rates post-contract expiry’).
Auditing the Partnership’s impairment assessment was complex due to the significant estimation uncertainty, subjectivity and judgement in forecasting the undiscounted cash flows of the vessels and the degree of
subjectivity involved in determining the fair value of the impaired vessel. Significant assumptions and judgements used in management’s analysis included the estimation of charter rates post-contract expiry and vessel utilization percentages.
These significant assumptions are forward looking and subject to future economic and market conditions.
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How we addressed
the matter in our
audit
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We obtained an understanding of the Partnership’s impairment process, evaluated the design, and tested the operating effectiveness of the controls over the Partnership’s determination of key
inputs to the impairment assessment, including charter rates post-contract expiry and vessel utilization percentages.
We analysed management’s impairment assessment by comparing the methodology used to assess impairment of each vessel against the accounting guidance in ASC 360. We tested the reasonableness of
the charter rates post-contract expiry and vessel utilization percentages by comparing them to forecasted market rates and historical information. We evaluated whether the gradual step up and step down of charter rates estimated by management
is comparable to the liquefied natural gas ('LNG') curves published in the market. We also inspected market reports and analysed how the economic factors such as future demand and supply for LNG carriers and floating storage regasification
units ('FSRUs') have been incorporated in the charter rates post-contract expiry and vessel utilization percentages. Further, we calculated the average charter post-contract expiry rate used across the remaining useful life of the vessels and
compared it to the historical average across a similar period. We identified vessels which are not employed under active charters or are nearing the end of the charter and considered them to be highly sensitive to the charter rate
post-contract expiry. In relation to these vessels, we independently calculated the charter rate at which the undiscounted cash flows equalled the carrying value of the vessel (‘break-even charter rate’) and compared the rates against
forecasted market rates. Further we calculated the minimum utilization percentages required for these vessels by analysing the break-even charter rates relative to the forecasted market rates, and assessed the reasonability of these
percentages by comparing against historical utilization average and the LNG market outlook for a similar type of vessel. We also compared the assumptions and estimates made by management in their impairment assessment for the prior year
against the actual results in 2020 to assess the precision of management’s forecasting process.
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F-4
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UK Tax lease
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Description of the
matter
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At December 31, 2020, as described in Note 26 to the consolidated financial statements, the Partnership has disclosed a contingent tax liability in the range of $nil to $34.2 million in respect to historical
lease arrangements. Contingencies are evaluated based on the likelihood of the Partnership incurring a liability and whether a loss or range of losses is reasonably estimable in accordance with the guidance on ASC 450 - Contingencies. In relation to the UK tax lease, the likelihood and amount of a loss or range of losses are estimated with reference to the claims submitted from the relevant tax authorities, the legal
basis for such claims and the status of discussions thereon with the authorities.
Auditing the Partnership’s contingent tax liability is complex and requires a high degree of judgement in assessing the likelihood of a liability arising as a result of the UK tax lease matter and the amount of
any potential outflow. Further, auditing the contingent tax liability involved professionals with specialised skills to evaluate the relevant tax regulations in order to assess the likelihood of a liability arising.
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How we addressed
the matter in our
audit
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We obtained an understanding over the Partnership’s assessment of the likelihood of a contingent liability arising in relation to these UK tax lease benefits, as well as the development of the estimate of a
liability. We evaluated the design and tested the operating effectiveness of controls over management’s review of contingencies, including significant judgements made.
To understand developments in relation to the matter, we inquired and obtained confirmations from internal and external legal counsel of the Partnership and read minutes of board meetings and management
committee meetings.
We involved our tax professionals with specialized skills and knowledge in relation to UK tax lease structures, who assisted us in evaluating management’s conclusion that these represent a contingent liability.
Our procedures also included inspecting correspondence with Her Majesty’s Revenue and Customs (‘HMRC’) and external legal counsel as well as re-performing the calculation performed by management to estimate the contingent liability. We
assessed the adequacy of the Partnership’s disclosures in relation to tax contingencies
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/s/ Ernst & Young LLP
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We have served as the Partnership’s auditor since 2014.
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London, United Kingdom
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March 16, 2021
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F-5
GOLAR LNG PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(in thousands of $, except per unit amounts)
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Notes
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2020
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2019
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2018
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Operating revenues
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Time charter revenues
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284,734
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299,652
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346,650
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Total operating revenues
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6
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284,734
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299,652
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346,650
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Operating expenses
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Vessel operating expenses
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6
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(56,509
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)
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(60,958
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)
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(65,247
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)
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Voyage and commission expenses
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6
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(7,986
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)
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(7,648
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)
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(11,222
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)
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Administrative expenses
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6
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(15,367
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)
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(13,412
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)
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(14,809
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)
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Depreciation and amortization
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(79,996
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)
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(83,239
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)
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(98,812
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)
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Total operating expenses
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(159,858
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)
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(165,257
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)
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(190,090
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)
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Operating income
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124,876
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134,395
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156,560
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Other non-operating income
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15
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661
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4,795
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449
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Financial income/(expense)
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Interest income
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15
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17,354
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13,278
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8,950
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Interest expense
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(68,855
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)
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(79,791
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)
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(80,650
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)
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||||||||||
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(Losses)/gains on derivative instruments, net
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7
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(51,922
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)
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(38,796
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)
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8,106
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Other financial items, net
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7
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1,000
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675
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(592
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)
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Net financial expenses
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(102,423
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)
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(104,634
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)
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(64,186
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)
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Income before tax, equity in net earnings of affiliate and non-controlling interests
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23,114
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34,556
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92,823
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|||||||||||||
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Income taxes
|
8
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(16,767
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)
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(17,962
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)
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(17,465
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)
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|||||||||
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Equity in net earnings of affiliate
|
10
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11,730
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4,540
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1,190
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||||||||||||
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Net income
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18,077
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21,134
|
76,548
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|||||||||||||
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Net income/(loss) attributable to:
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||||||||||||||||
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Non-controlling interests
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(1,119
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)
|
3,329
|
3,358
|
||||||||||||
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Golar LNG Partners LP Owners
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19,196
|
17,805
|
73,190
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|||||||||||||
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General partner's interest in net income
|
142
|
115
|
1,223
|
|||||||||||||
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Preferred unitholders’ interest in net income
|
12,109
|
12,042
|
12,042
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|||||||||||||
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Common unitholders’ interest in net income
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6,945
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5,648
|
59,925
|
|||||||||||||
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Earnings per unit - Common units:
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||||||||||||||||
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Basic and diluted
|
29
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0.10
|
0.08
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0.86
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||||||||||||
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Cash distributions declared and paid per Common unit in the year
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29
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0.46
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1.62
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1.96
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The accompanying notes are an integral part of these consolidated financial statements.
F-6
GOLAR LNG PARTNERS LP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(in thousands of $)
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Notes
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2020
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2019
|
2018
|
|||||||||||||
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Net income
|
18,077
|
21,134
|
76,548
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|||||||||||||
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Unrealized net loss on qualifying cash flow hedging instruments:
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Amounts reclassified from accumulated other comprehensive loss to the statement of operations
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—
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—
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(26
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)
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||||||||||||
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Net other comprehensive loss
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—
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—
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(26
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)
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||||||||||||
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Comprehensive income
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18,077
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21,134
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76,522
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|||||||||||||
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Comprehensive income/(loss) attributable to:
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Golar LNG Partners LP Owners
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19,196
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17,805
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73,164
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|||||||||||||
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Non-controlling interests
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(1,119
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)
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3,329
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3,358
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||||||||||||
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18,077
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21,134
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76,522
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The accompanying notes are an integral part of these consolidated financial statements.
F-7
GOLAR LNG PARTNERS LP
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2020 AND 2019
(in thousands of $)
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Notes
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2020
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2019
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ASSETS
|
||||||||||||
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Current assets
|
||||||||||||
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Cash and cash equivalents
|
48,783
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47,661
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||||||||||
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Restricted cash and short-term deposits
|
17
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55,547
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46,333
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|||||||||
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Trade accounts receivable
|
11
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16,466
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17,303
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|||||||||
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Amounts due from related parties
|
25
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804
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5,098
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|||||||||
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Current portion of investment in leased vessel, net
|
15
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2,570
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2,308
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|||||||||
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Inventories
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1,719
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2,702
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||||||||||
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Other current assets
|
12
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20,932
|
11,894
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|||||||||
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Total current assets
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146,821
|
133,299
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||||||||||
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Non-current assets
|
||||||||||||
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Restricted cash
|
17
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129,838
|
135,928
|
|||||||||
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Investment in affiliate
|
10
|
185,562
|
193,270
|
|||||||||
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Vessels and equipment, net
|
13
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1,308,206
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1,369,665
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|||||||||
|
Vessel under finance lease, net
|
14
|
102,534
|
108,433
|
|||||||||
|
Investment in leased vessel, net
|
15
|
109,216
|
111,829
|
|||||||||
|
Intangible assets, net
|
16
|
41,295
|
50,409
|
|||||||||
|
Other non-current assets
|
18
|
4,189
|
2,779
|
|||||||||
|
Total assets
|
2,027,661
|
2,105,612
|
||||||||||
|
LIABILITIES AND EQUITY
|
||||||||||||
|
Current liabilities
|
||||||||||||
|
Current portion of long-term debt
|
21
|
702,962
|
225,254
|
|||||||||
|
Current portion of obligation under finance lease
|
22
|
2,521
|
1,990
|
|||||||||
|
Trade accounts payable
|
1,766
|
2,756
|
||||||||||
|
Accrued expenses
|
19
|
25,157
|
23,451
|
|||||||||
|
Other current liabilities
|
20
|
99,871
|
55,703
|
|||||||||
|
Total current liabilities
|
832,277
|
309,154
|
||||||||||
|
Non-current liabilities
|
||||||||||||
|
Long-term debt
|
21
|
416,746
|
991,679
|
|||||||||
|
Obligation under finance lease
|
22
|
122,029
|
120,789
|
|||||||||
|
Other non-current liabilities
|
23
|
31,288
|
31,296
|
|||||||||
|
Total liabilities
|
1,402,340
|
1,452,918
|
||||||||||
|
Commitments and contingencies
|
26
|
|||||||||||
|
Equity
|
||||||||||||
|
Partners’ capital:
|
||||||||||||
|
Common unitholders: 69,301,636 units issued and outstanding at December 31, 2020 (2019: 69,301,636)
|
28
|
361,912
|
387,631
|
|||||||||
|
Preferred unitholders: 5,520,000 preferred units issued and outstanding at December 31, 2020 (2019: 5,520,000)
|
28
|
132,991
|
132,991
|
|||||||||
|
General partner interest: 1,436,391 units issued and outstanding at December 31, 2020 (2019: 1,436,391)
|
28
|
48,306
|
48,841
|
|||||||||
|
Total partners’ capital before non-controlling interests
|
543,209
|
569,463
|
||||||||||
|
Non-controlling interests
|
82,112
|
83,231
|
||||||||||
|
Total equity
|
625,321
|
652,694
|
||||||||||
|
Total liabilities and equity
|
2,027,661
|
2,105,612
|
||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-8
GOLAR LNG PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(in thousands of $)
|
Notes
|
2020
|
2019
|
2018
|
|||||||||||||
|
Operating activities
|
||||||||||||||||
|
Net income
|
18,077
|
21,134
|
76,548
|
|||||||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
|
Depreciation and amortization expenses
|
79,996
|
83,239
|
98,812
|
|||||||||||||
|
Equity in net earnings of affiliate
|
(11,730
|
)
|
(4,540
|
)
|
(1,190
|
)
|
||||||||||
|
Deferred tax expense
|
8
|
2,114
|
3,620
|
1,728
|
||||||||||||
|
Amortization of deferred charges and debt guarantee, net
|
23, 25
|
3,402
|
2,683
|
7,154
|
||||||||||||
|
Foreign exchange losses/(gains)
|
435
|
941
|
(995
|
)
|
||||||||||||
|
Unit options expense
|
27
|
50
|
207
|
234
|
||||||||||||
|
Drydocking expenditure
|
(1,641
|
)
|
(10,463
|
)
|
(25,522
|
)
|
||||||||||
|
Dividends received from affiliates
|
11,352
|
2,328
|
1,191
|
|||||||||||||
|
Interest element included in obligation under finance lease
|
19
|
3
|
(55
|
)
|
||||||||||||
|
Gain on recognition of net investment in leased vessel
|
15
|
—
|
(4,195
|
)
|
—
|
|||||||||||
|
Sales-type lease payments received in excess of interest income
|
2,308
|
2,030
|
—
|
|||||||||||||
|
Movement in credit loss allowances
|
(371
|
)
|
—
|
—
|
||||||||||||
|
Change in market value of derivatives
|
7
|
35,306
|
43,746
|
(5,921
|
)
|
|||||||||||
|
Change in assets and liabilities:
|
||||||||||||||||
|
Trade accounts receivable
|
837
|
10,682
|
(9,730
|
)
|
||||||||||||
|
Inventories
|
983
|
(670
|
)
|
1,475
|
||||||||||||
|
Other current assets and non-current assets
|
(12,362
|
)
|
(6,421
|
)
|
3,906
|
|||||||||||
|
Amounts due to/(from) related parties
|
(2,852
|
)
|
3,622
|
(319
|
)
|
|||||||||||
|
Trade accounts payable
|
(990
|
)
|
(2,836
|
)
|
(3,610
|
)
|
||||||||||
|
Accrued expenses
|
2,503
|
3,414
|
(6,566
|
)
|
||||||||||||
|
Other current liabilities
|
15,470
|
4,183
|
26
|
|||||||||||||
|
Net cash provided by operating activities
|
142,906
|
152,707
|
137,166
|
|||||||||||||
|
Investing activities
|
||||||||||||||||
|
Additions to vessels and equipment
|
(3,188
|
)
|
(10,232
|
)
|
(10,735
|
)
|
||||||||||
|
Dividends received from affiliates
|
12,627
|
14,216
|
755
|
|||||||||||||
|
Acquisition of investment in affiliate from Golar
|
—
|
(10,296
|
)
|
(9,652
|
)
|
|||||||||||
|
Net cash provided by/(used in) investing activities
|
9,439
|
(6,312
|
)
|
(19,632
|
)
|
|||||||||||
|
Financing activities
|
||||||||||||||||
|
Repayments of long-term debt (including related parties)
|
(148,114
|
)
|
(100,156
|
)
|
(155,902
|
)
|
||||||||||
|
Proceeds from long-term debt (including related parties)
|
45,000
|
40,000
|
51,419
|
|||||||||||||
|
Repayments of obligation under finance lease
|
(1,922
|
)
|
(1,569
|
)
|
(1,286
|
)
|
||||||||||
|
Financing arrangement fees and other costs
|
(4,339
|
)
|
—
|
(1,699
|
)
|
|||||||||||
|
Advances from related party for Methane Princess lease security deposit
|
2,605
|
601
|
633
|
|||||||||||||
|
Cash distributions paid
|
(44,954
|
)
|
(126,599
|
)
|
(165,250
|
)
|
||||||||||
|
Common units repurchased and canceled
|
28
|
—
|
(1,565
|
)
|
(13,980
|
)
|
||||||||||
|
Proceeds from issuances of equity, net of issue costs
|
28
|
—
|
—
|
13,854
|
||||||||||||
|
Net cash used in financing activities
|
(151,724
|
)
|
(189,288
|
)
|
(272,211
|
)
|
||||||||||
|
Effect of exchange rate changes on cash
|
3,625
|
3,723
|
(6,118
|
)
|
||||||||||||
|
Net increase/(decrease) in cash, cash equivalents and restricted cash
|
4,246
|
(39,170
|
)
|
(160,795
|
)
|
|||||||||||
|
Cash, cash equivalents and restricted cash at beginning of year (1)
|
229,922
|
269,092
|
429,887
|
|||||||||||||
|
Cash, cash equivalents and restricted cash at end of year (1)
|
234,168
|
229,922
|
269,092
|
|||||||||||||
F-9
|
Notes
|
2020
|
2019
|
2018
|
|||||||||||||
|
Supplemental disclosure of cash flow information:
|
||||||||||||||||
|
Cash paid during the year for:
|
||||||||||||||||
|
Interest expense
|
68,792
|
75,892
|
81,962
|
|||||||||||||
|
Income taxes
|
10,021
|
13,791
|
5,929
|
|||||||||||||
(1) The following table identifies the balance sheet line-items included in "cash, cash equivalents and restricted cash" presented in
the consolidated statements of cash flows:
|
December 31,
|
||||||||||||||||
|
(in thousands of $)
|
2020
|
2019
|
2018
|
2017
|
||||||||||||
|
Cash and cash equivalents
|
48,783
|
47,661
|
96,648
|
246,954
|
||||||||||||
|
Restricted cash and short-term deposits - current
|
55,547
|
46,333
|
31,330
|
27,306
|
||||||||||||
|
Restricted cash - non-current
|
129,838
|
135,928
|
141,114
|
155,627
|
||||||||||||
|
234,168
|
229,922
|
269,092
|
429,887
|
|||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-10
GOLAR LNG PARTNERS LP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(in thousands of $)
|
Partners’ Capital
|
||||||||||||||||||||||||||||||||
|
Notes
|
Preferred
Units
|
Common
Units
|
General
Partner Units
and IDRs (1)
|
Accumulated
Other
Comprehensive
loss(2)
|
Total
before
Non-
controlling
interest
|
Non-
controlling
Interest
|
Total
Owner’s
Equity
|
|||||||||||||||||||||||||
|
Consolidated balance at December 31, 2017
|
132,991
|
585,440
|
52,600
|
26
|
771,057
|
76,544
|
847,601
|
|||||||||||||||||||||||||
|
Net income
|
12,042
|
59,925
|
1,223
|
—
|
73,190
|
3,358
|
76,548
|
|||||||||||||||||||||||||
|
Cash distributions
|
(12,042
|
)
|
(149,606
|
)
|
(3,066
|
)
|
—
|
(164,714
|
)
|
—
|
(164,714
|
)
|
||||||||||||||||||||
|
Other comprehensive loss
|
—
|
—
|
—
|
(26
|
)
|
(26
|
)
|
—
|
(26
|
)
|
||||||||||||||||||||||
|
Net proceeds from issuance of common units
|
—
|
13,563
|
291
|
—
|
13,854
|
—
|
13,854
|
|||||||||||||||||||||||||
|
Common units repurchased and canceled
|
28
|
—
|
(13,980
|
)
|
—
|
—
|
(13,980
|
)
|
—
|
(13,980
|
)
|
|||||||||||||||||||||
|
Grant of unit options
|
—
|
234
|
—
|
—
|
234
|
—
|
234
|
|||||||||||||||||||||||||
|
Consolidated balance at December 31, 2018
|
132,991
|
495,576
|
51,048
|
—
|
679,615
|
79,902
|
759,517
|
|||||||||||||||||||||||||
|
Net income
|
12,042
|
5,648
|
115
|
—
|
17,805
|
3,329
|
21,134
|
|||||||||||||||||||||||||
|
Cash distributions
|
(12,042
|
)
|
(112,235
|
)
|
(2,322
|
)
|
—
|
(126,599
|
)
|
—
|
(126,599
|
)
|
||||||||||||||||||||
|
Units options expense
|
—
|
207
|
—
|
—
|
207
|
—
|
207
|
|||||||||||||||||||||||||
|
Common units repurchased and canceled
|
28
|
—
|
(1,565
|
)
|
—
|
—
|
(1,565
|
)
|
—
|
(1,565
|
)
|
|||||||||||||||||||||
|
Consolidated balance at December 31, 2019
|
132,991
|
387,631
|
48,841
|
—
|
569,463
|
83,231
|
652,694
|
|||||||||||||||||||||||||
|
Opening adjustment (3)
|
—
|
(501
|
)
|
(10
|
)
|
—
|
(511
|
)
|
—
|
(511
|
)
|
|||||||||||||||||||||
|
Balance at January 1, 2020
|
132,991
|
387,130
|
48,831
|
—
|
568,952
|
83,231
|
652,183
|
|||||||||||||||||||||||||
|
Net income
|
12,109
|
6,945
|
142
|
—
|
19,196
|
(1,119
|
)
|
18,077
|
||||||||||||||||||||||||
|
Cash distributions
|
(12,109
|
)
|
(32,213
|
)
|
(667
|
)
|
—
|
(44,989
|
)
|
—
|
(44,989
|
)
|
||||||||||||||||||||
|
Units options expense
|
—
|
50
|
—
|
—
|
50
|
—
|
50
|
|||||||||||||||||||||||||
|
Consolidated balance at December 31, 2020
|
132,991
|
361,912
|
48,306
|
—
|
543,209
|
82,112
|
625,321
|
|||||||||||||||||||||||||
| (1) |
As of December 31, 2020 and 2019, the carrying value of the equity attributable to the incentive distribution rights holders was $32.5 million.
|
| (2) |
Relates to unrealized net losses on qualifying cash flow hedges.
|
| (3) |
Opening Total Equity has been adjusted following the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent
amendments effective January 1, 2020, see note 3.
|
The accompanying notes are an integral part of these consolidated financial statements.
F-11
GOLAR LNG PARTNERS LP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
Golar LNG Partners LP (the “Partnership,” “we,” “our,” or “us”) is a publicly traded Marshall Islands limited partnership initially formed as a subsidiary of Golar LNG Limited (“Golar”) in September 2007, to own and
operate LNG carriers and FSRUs under long-term charters.
We completed our initial public offering (“IPO”) in April 2011. Our common units are traded on the NASDAQ under the symbol: GMLP.
On July 12, 2018, we acquired an interest in the Hilli Episeyo (the “Hilli”), a floating liquefied natural gas (“FLNG”) vessel through
the acquisition of 50% of the common units (the “Hilli Common Units”) in Golar Hilli LLC ("Hilli LLC") (the “Hilli Acquisition”) (see note 10).
As of December 31, 2020 and 2019, we had a fleet of six FSRUs, four LNG carriers and an interest in the Hilli.
As of December 31, 2020, Golar held 30.8% (December 31, 2019: 30.6%) of our common units, a 2% (December 31, 2019: 2%) general partner interest in us and 100% (December 31, 2019: 100%) of our incentive distribution
rights (“IDRs”).
References to Golar in these consolidated financial statements refer, depending on the context, to Golar LNG Limited and to one or any more of its direct or indirect subsidiaries.
Going concern
The consolidated financial statements have been prepared on a going concern basis.
On January 13, 2021, we announced that we and our general partner entered into an agreement and plan of merger (the “Merger Agreement”) with New Fortress Energy Inc. (“NFE”) and the other parties thereto. Under the
Merger Agreement, NFE has agreed to acquire all of the outstanding common units of the Partnership for $3.55 per unit in cash, with the Partnership surviving the merger as a wholly-owned subsidiary of NFE (the “Merger”). As a result of the pending
Merger, which is expected to close in the first half of 2021, we have deferred our activities related to the refinancing of our $800 million credit facility and the 2015 Norwegian Bonds, both of which will mature within the 12-month period from the
date these consolidated financial statements were issued. It is currently anticipated that NFE will refinance these maturing debt facilities (the “Related Debt Refinancings”), including related accrued interest and fees, upon consummation of the
Merger.
In the event the Merger is delayed or does not complete, we would pursue extension of the maturity of, or obtain the necessary funding to meet, our payment obligations under the $800 million credit facility and 2015
Norwegian Bonds, which are repayable in April 2021 and November 2021 respectively. Also, the Partnership currently projects that it may not comply with certain financial covenants during the 12-month period following issuance of these consolidated
financial statements, in which event we would take the necessary steps to secure the necessary waivers and/or covenant amendments. The fundamentals of our underlying assets remain strong (contracted cash flows and existing leverage ratios); however,
due to the pending Merger, the refinancing of the $800 million credit facility and the 2015 Norwegian Bonds have not progressed to a stage, such that we can be certain that these could be executed in time or at all. Further, if the Partnership is
unable to meet or amend certain financial covenants, the Partnership’s indebtedness could become immediately due and payable in the event of default. Global financial markets and economic conditions have been and continue to be volatile, particularly
with the COVID-19 pandemic, which provides for additional uncertainty.
Although the Partnership believes the Merger and Related Debt Refinancings will close in the first half of 2021, the successful completion of the Merger and Related Debt Refinancings are dependent on factors outside of
the Partnership’s control, and therefore there is substantial doubt over the Partnership’s ability to continue as a going concern for the 12-month period from the date these consolidated financial statements were issued. The consolidated financial
statements do not include any adjustments that might result from the outcome of these uncertainties.
F-12
2. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
The accounting policies set out below have been applied consistently to all periods in these consolidated financial statements, except for accounting policy that changed as a result of adopting the requirements of
Accounting Standards Updates ("ASU") 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments ("Topic 326"), effective January
1, 2020.
Principles of consolidation
A variable interest entity (“VIE”) is defined by the accounting standard as a legal entity where either (a) equity interest holders, as a group, lack the characteristics of a controlling financial interest, including
decision making ability and an interest in the entity’s residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial
support, or (c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the
entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. A party that is a variable interest holder is required to consolidate a VIE if the holder has both (a) the power to direct the
activities that most significantly impact the entity’s economic performance, and (b) the obligation to absorb losses that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant
to the VIE.
These consolidated financial statements include the financial statements of the entities listed in notes 4 and 5.
Investments in entities in which we directly or indirectly hold more than 50% of the voting control are consolidated in the financial statements, as well as certain variable interest entities in which we are deemed to
be the primary beneficiary. All intercompany balances and transactions are eliminated. The non-controlling interests of the above mentioned subsidiaries are included in the consolidated balance sheets and consolidated statements of operations as
“Non-controlling interests”.
Foreign currencies
We and our subsidiaries’ functional currency is the U.S. dollar as the majority of the revenues are received in U.S. dollars and a majority of our expenditures are incurred in U.S. dollars. Our reporting currency is
U.S. dollars.
Transactions in foreign currencies during the year are translated into U.S. dollars at the rates of exchange in effect at the date of the transaction. Foreign currency monetary assets and liabilities are translated
using rates of exchange at the balance sheet date. Foreign currency non-monetary assets and liabilities are translated using historical rates of exchange. Foreign currency transaction and translation gains or losses are included in the statements of
operations.
Lease accounting versus revenue accounting
Contracts relating to our LNG carriers and FSRUs can take the form of operating leases, sales-type leases, direct financing leases and operating and services agreements. Although the substance of these contracts are
similar, the accounting treatment varies. We outline our policies for determining the appropriate U.S. GAAP treatment below.
To determine whether a contract conveys a lease agreement for a period of time, we assess whether, throughout the period of use, the customer has both of the following:
F-13
| • |
the right to obtain substantially all of the economic benefits from the use of the identified asset; and
|
| • |
the right to direct the use of that identified asset.
|
If a contract relating to an asset fails to give the customer both of the above rights, we account for the agreement as a revenue contract. A contract relating to an asset will generally be accounted for as a revenue
contract if the customer does not contract for substantially all of the capacity of the asset (i.e. another third party could contract for a meaningful amount of the asset capacity).
Where we provide services unrelated to an asset contract, we account for the services as a revenue contract.
Lease accounting
When a contract is designated as a lease, we make an assessment on whether the contract is an operating lease, sales-type lease, or direct financing lease. An agreement will be a sales-type lease if any of the
following conditions are met:
| • |
ownership of the asset is transferred at the end of the lease term;
|
| • |
the contract contains an option to purchase the asset which is reasonably certain to be exercised;
|
| • |
the lease term is for a major part of the remaining useful life of the contract, although contracts entered into the last 25% of the asset’s useful life are not subject to this criterion;
|
| • |
the discounted value of the fixed payments under the lease represent substantially all of the fair value of the asset; or
|
| • |
the asset is heavily customized such that it could not be used for another charter at the end of the term.
|
Lessor accounting
In making the classification assessment, we estimate the residual value of the underlying asset at the end of the lease term with reference to broker valuations. None of our lease contracts contain residual value
guarantees, and any purchase options are disclosed in note 9. Agreements with renewal and termination options in the control of the lessee are included together with the non-cancellable contract period in the lease term when “reasonably certain” to
be exercised or if controlled by the lessor. The determination of reasonably certain depends on whether the lessee has an economic incentive to exercise the option. Generally, lease accounting commences when the asset is made available to the
customer, however, where the contract contains specific customer acceptance testing conditions, lease accounting will not commence until the asset has successfully passed the acceptance test. We assess a lease under the modification guidance when
there is change to the terms and conditions of the contract that results in a change in the scope or the consideration of the lease.
Costs directly associated with the execution of the lease or costs incurred after lease inception or the execution of the contract but prior to the commencement of the lease that directly relate to preparing the asset
for the lease (i.e. bunker costs), are capitalized and amortized to the consolidated statements of operations over the lease term. We also defer upfront revenue payments (i.e. repositioning fees) to the consolidated balance sheets and amortize to the
consolidated statements of operations over the lease term.
Time charter operating leases
Revenues include fixed minimum lease payments under time charters and fees for repositioning vessels. Revenues generated from time charters, which we classify as operating leases, are recorded over the term of the
charter on a straight-line basis as service is provided and is included in "Time charter revenues" in our consolidated statement of operations. Variable revenue is accounted for as incurred in the relevant period. Fixed revenue includes fixed
payments (including in-substance fixed payments that are unavoidable) and variable payments based on a rate or index. However, we do not recognize revenue if a charter has not been contractually committed to by a customer and us, even if the vessel
has discharged its cargo and is sailing to the anticipated load port on its next voyage. For our operating leases, we have elected the practical expedient to combine our service revenue and operating lease income as the timing and pattern of transfer
of the components are the same.
F-14
Repositioning fees (included in "Time charter revenues") received in respect of time charters are recognized at the end of the charter when the fee becomes fixed and determinable. However, where there is a fixed amount
specified in the charter, which is not dependent upon redelivery location, the fee will be recognized evenly over the term of the charter.
Time charter sales-type leases
On inception of a sales-type lease for which we are lessor, we de-recognize the related asset and record "Net investment in leased vessel” on our consolidated balance sheets. The net investment in leased vessel
represents the fixed payments due from the lessee, discounted at the rate implicit in the lease. We allocate sales-type lease income to the consolidated statements of operations in the "Interest income” line item to reflect a constant periodic rate
of return on our sales-type lease investment.
For sales-type leases, non-lease revenue and operating and service agreements in connection with the time charters are recorded over the term of the charter as the service is provided. The transaction price is based on
the standalone selling price for the service.
Amounts are presented net of allowances for credit losses, which are assessed at the individual lease level, reflecting the risk profile for each vessel unique to each project. The allowance is calculated by
multiplying the balance exposed on default by the probability of default and loss given default over the term of the lease. The exposure at default is calculated net of the vessel collateral that is returned on default. As forecasts for counterparty
probability of default and loss given default are not readily available or supportable for the life of the applicable instrument, annualized rates have been applied based on a 5-year period forecast. A probability weighting has been applied to each
period of default over the remaining instrument life.
Lessor expense recognition
Initial direct costs (those directly related to the negotiation and consummation of the lease) are deferred and allocated to earnings over the lease term.
Under our time charters, the majority of voyage expenses are paid by our customers. Voyage related expenses, principally fuel, may also be incurred when positioning or repositioning the vessel before or after the
period of time charter and during periods when the vessel is not under charter or is off-hire, for example when the vessel is undergoing repairs. These expenses are recognized as incurred.
Vessel operating expenses, which are recognized when incurred, include crewing, repairs and maintenance, insurance, stores, lube oils, communication expenses and third party management fees.
Use of estimates
The preparation of financial statements requires that management make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
In assessing the recoverability of our vessels’ carrying amounts, we make assumptions regarding estimated future cash flows, estimates in respect of residual or scrap value, charter rates, ship operating expenses, and
drydocking requirements.
Investment in affiliate
Affiliates are entities over which we generally have between 20% and 50% of the voting rights, or over which we have significant influence, but over which we do not exercise control or have the power to control the
financial and operational policies. Investments in these entities are accounted for by the equity method of accounting. Affiliates are also entities in which we hold a majority ownership interest, but we do not control, due to other parties'
participating rights. Under the equity method of accounting, we record our investment in the affiliate at cost, and adjust the carrying amount for our share of the earnings or losses of the affiliate subsequent to the date of the investment and
report the recognized earnings or losses in income. Dividends received from an affiliate reduce the carrying amount of the investment. The excess, if any, of the purchase price over book value of our investments in equity method affiliates, or basis
difference, is included in the consolidated balance sheets as "Investment in affiliate". We allocate the basis difference across the assets and liabilities of the affiliate, with the residual assigned to goodwill. The basis difference will then be
amortized through the consolidated statements of operations as part of the equity method of accounting. When our share of losses in an affiliate equals or exceeds the value of our interest, we do not recognize further losses, unless we have incurred
obligations or made payments on behalf of the affiliate.
F-15
We recognize gains and losses in earnings based on the economic results allocated based on a contractual agreement, net of interest, tax and basis difference amortization.
Guarantees
Guarantees issued by us, excluding those that are guaranteeing our own performance, are recognized at fair value at the time that the guarantees are issued, and reported in “Other current liabilities” and "Other
non-current liabilities". A liability is recognized in " investment in affiliate" for an amount corresponding to the fair value of the obligation undertaken in issuing the guarantee. If it becomes probable that we will have to perform under a
guarantee, we will recognize an additional liability if (and when) the amount of the loss can be reasonably estimated. The recognition of fair value is not required for certain guarantees such as the parent's guarantee of a subsidiary's debt to a
third party. For those guarantees excluded from the above guidance requiring recognition of the liability for its fair value, financial statement disclosures of such items are made. Financial guarantees are assessed for credit losses, and any
allowance is presented as a liability for off-balance sheet credit exposures where the balance exceeds the collateral provided over the remaining instrument life. The allowance is assessed at the individual guarantee level, calculated by multiplying
the balance exposed on default by the probability of default and loss given default over the term of the guarantee.
F-16
Business combinations
When the assets acquired and liabilities assumed constitute a business, then the acquisition is a business combination. If substantially all of the fair value of the gross asset acquired is concentrated in a single
identifiable asset or group of similar identifiable assets, the asset is not considered a business. Business combinations are accounted for under the acquisition method. On acquisition, the identifiable assets, liabilities and contingent liabilities
are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill. In instances where the cost of acquisition is lower than the
fair values of the identifiable net assets acquired (i.e. bargain purchase), the difference is credited to the statement of operations in the period of acquisition. The consideration transferred for an acquisition is measured at fair value of the
consideration given. Acquisition related costs are expensed as incurred. The results of operations of acquired businesses are included from the date of acquisition.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we will recognize a measurement-period adjustment during the period in which we
determine the amount of the adjustment, including the effect on earnings of any amounts we would have recorded in previous periods if the accounting had been completed at the acquisition date.
Income taxes
Income taxes are based on a separate return basis. The guidance on income taxes prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. Penalties and interest related to uncertain tax positions are recognized in “Income taxes” in our consolidated statements of operations.
Deferred tax assets and liabilities are recognized principally for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization of the deferred income tax asset is dependent on generating
sufficient taxable income in future years.
We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return regarding uncertainties in income tax positions. The first step is recognition: we determine whether
it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is measurement: a tax position that
meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of
being realized upon ultimate settlement.
Cash and cash equivalents
We consider all demand and time deposits and highly liquid investments with original maturities of three months or less to be equivalent to cash. Amounts are presented net of allowances for credit losses, which are
assessed based on consideration of whether the balances have short-term maturities and whether the counterparty has an investment grade credit rating, limiting any credit exposure.
F-17
Restricted cash and short-term deposits
Restricted cash and short-term deposits consist of bank deposits, which may only be used to settle certain pre-arranged loan or lease payments, other claims which requires us to restrict cash, performance bonds related
to charters, cash collateral required for certain swaps, and cash held by the VIE. We consider all short-term deposits as held to maturity. These deposits are carried at amortized cost. We place our short-term deposits primarily in fixed term
deposits with high credit quality financial institutions. Amounts are presented net of allowances for credit losses, which are assessed based on consideration of whether the balances have short-term maturities and whether the counterparty has an
investment grade credit rating, reducing any credit exposure.
F-18
Trade accounts receivable
Trade receivables are presented net of allowances for expected credit losses. At each balance sheet date, all potentially uncollectible accounts are assessed individually for the purposes of determining the appropriate
allowance for expected credit loss. The expected credit loss allowance is calculated using a loss rate applied against an aging matrix, with assets pooled based on the vessel type that generated the underlying revenue (LNG carrier or FSRU), which
reflects similar credit risk characteristics.
Our trade receivables have short maturities so we have considered that forecasted changes to economic conditions will have an insignificant effect on the estimate of the allowance, except in extraordinary
circumstances.
Allowance for credit losses
Financial assets recorded at amortized cost and off-balance sheet credit exposures not accounted for as insurance (including financial guarantees) reflect an allowance for current expected credit losses ("credit
losses") over the lifetime of the instrument. The allowance for credit losses reflects a deduction to the net amount expected to be collected on the financial asset. Amounts are written off against the allowance when management believes the
uncollectability of a balance is confirmed or certain. Expected recoveries will not exceed the aggregate of amounts previously written-off or current credit loss allowance by financial asset category. We estimate expected credit losses based on
relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. We have elected to calculate expected credit losses on the
combined balance of both the amortized cost and accrued interest from the unpaid principal balance. Specific calculation of our credit allowances are included in the respective accounting policies included herein; all other financial assets are
assessed on an individual basis calculated using the method we consider most appropriate for each asset.
Inventories
Inventories, which are comprised principally of fuel, lubricating oils and vessel spares, are stated at the lower of cost or market value. Cost is determined on a first-in, first-out basis.
Vessels and equipment
Vessels are stated at cost less accumulated depreciation. The cost of vessels less the estimated residual value is depreciated on a straight-line basis over the assets’ remaining useful economic lives. Management
estimates the residual values of our vessels based on a scrap value cost of steel and aluminum times the weight of the vessel noted in lightweight tons. Residual values are periodically reviewed and revised to recognize changes in conditions, new
regulations or other reasons.
The cost of building mooring equipment is capitalized and depreciated over the initial lease term of the related charter.
Refurbishment costs incurred during the period are capitalized as part of vessels and depreciated over the vessels’ remaining useful economic lives. Refurbishment costs are costs that appreciably increase the capacity,
or improve the efficiency or safety of vessels and equipment.
Drydocking expenditures are capitalized when incurred and amortized over the period until the next anticipated drydocking, which is generally every five years. For vessels that are newly built or acquired, we have
adopted the “built-in overhaul” method of accounting. The built-in overhaul method is based on the segregation of vessel costs into those that should be depreciated over the useful life of the vessel and those that require drydocking at periodic
intervals to reflect the different useful lives of the components of the assets. The estimated cost of the drydocking component is amortized until the date of the first drydocking following acquisition, upon which the cost is capitalized and the
process is repeated. When a vessel is disposed, any unamortized drydocking expenditure is charged against income in the period of disposal.
F-19
Useful lives applied in depreciation are as follows:
|
Vessels (excluding converted FSRUs)
|
40 years
|
|
Vessels - converted FSRUs
|
20 years from conversion date
|
|
Drydocking expenditure
|
5 years
|
|
Mooring equipment
|
11 years
|
Vessel under finance lease
We lease one vessel under an agreement that has been accounted for as a finance lease. Obligations under finance lease are carried at the present value of future minimum lease payments, and the asset balance is
amortized on a straight-line basis over the remaining economic useful life of the vessel. Interest expense is calculated at a constant rate over the term of the lease.
Depreciation of the vessel under finance lease is included within depreciation and amortization expense in the statement of operations. The vessel under finance lease is depreciated on a straight-line basis over the
vessel’s remaining useful economic life, based on a useful life of 40 years. Refurbishment costs and drydocking expenditures incurred in respect of the vessel under finance lease is accounted for consistently as that of an owned vessel.
Our finance lease is ‘funded’ via long term cash deposits which closely match the lease liability. Future changes in the lease liability arising from interest rate changes are only partially offset by changes in
interest income on the cash deposits, and where differences arise, this is funded by, or released to, available working capital.
Income derived from the sale of subsequently leased assets is deferred and amortized in proportion to the amortization of the leased assets (see note 22). Amortization of deferred income is offset against depreciation
and amortization expense in the statement of operations.
Intangible assets
Intangible assets pertain to customer related and contract based assets representing primarily long-term time charter party agreements acquired in connection with the acquisition of certain businesses from Golar
(business combinations). Intangible assets identified are recorded at fair value. Fair value is determined by reference to the discounted amount of expected future cash flows. These intangible assets are amortized over the term of the time charter
party agreement and the amortization expense is included in the statement of operations in the depreciation and amortization line item. Impairment testing is performed when events or changes in circumstances indicate that the carrying amount of the
intangible asset may not be recoverable.
Impairment of long-lived assets
We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. In assessing the recoverability of our vessels’ carrying amounts, we make
assumptions regarding estimated future cash flows and estimates in respect of residual scrap value. Management performs an annual impairment assessment and when such events or changes in circumstances are present, we assess the recoverability of
long-term assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, an impairment loss
shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value.
During the year ended December 31, 2020, following the novel coronavirus ("COVID-19") outbreak and its impact on our operations, we considered whether indicators of impairment existed that could indicate that the
carrying amounts of the vessels may not be recoverable or whether changes in circumstances had occurred to warrant a change in the assumptions. We performed a recoverability test and concluded no impairment should be recognized on our vessels as of
December 31, 2020.
F-20
Deferred charges
Costs associated with long-term financing, including debt arrangement fees, are deferred and amortized over the term of the relevant loan under the effective interest method. Amortization of debt issuance cost is
included in "Interest expense". These costs are presented as a deduction from the corresponding liability, consistent with debt discounts.
Provisions
In the ordinary course of business, we are subject to various claims, suits and complaints. Management, in consultation with internal and external advisers, will provide for a contingent loss in the financial
statements if the contingency was present at the date of the financial statements and the likelihood of loss was probable and the amount can be reasonably estimated. If we have determined that the reasonable estimate of the loss is a range and there
is no best estimate within the range, we will provide the lower amount within the range.
F-21
Derivatives
We use derivatives to reduce market risks associated with our operations. We use interest rate swaps for the management of interest risk exposure. The interest rate swaps effectively convert a portion of our debt from
a floating to a fixed rate over the life of the transactions without an exchange of underlying principal.
We seek to reduce our exposure to fluctuations in foreign exchange rates through the use of foreign currency forward contracts.
All derivative instruments are initially recorded at fair value as either assets or liabilities in the accompanying consolidated balance sheets and subsequently remeasured to fair value, regardless of the purpose or
intent for holding the derivative.
Where the fair value of a derivative instrument is a net liability, the derivative instrument is classified in “Other current liabilities” in the consolidated balance sheets. Where the fair value of a derivative
instrument is a net asset, the derivative instrument is classified in “Other current assets” or “Other non-current assets” in the consolidated balance sheets depending on its maturity. The method of recognizing the resulting gain or loss is dependent
on whether the derivative contract is designed to hedge a specific risk and qualifies for hedge accounting. For derivative instruments that are not designated i.e. economic hedges and/or those that do not qualify for hedge accounting purposes, the
changes in fair value of the derivative instruments are recognized in earnings and recorded each period in current earnings in “Gains/(losses) on derivative instruments”.
Cash flows from derivative instruments that are accounted for as cash flow hedges are classified in the same category as the cash flows from the items being hedged. We have no existing interest rate swaps held for
hedging.
Unit-based compensation
We expense the fair value of unit options issued to employees over the period the options vest. We amortize unit-based compensation for awards on a straight-line basis over the period during which the employee is
required to provide service in exchange for the reward - the requisite service (vesting) period. No compensation cost is recognized for unit options for which employees do not render the requisite service. The fair value of employee unit options is
estimated using the Black-Scholes option-pricing model.
Fair value measurements
We account for fair value measurements in accordance with the accounting standards guidance using fair value to measure assets and liabilities. The guidance provides a single definition of fair value, together with a
framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities.
Related parties
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also
related if they are under common control with, or subject to significant influence by, another party. Amounts owed from or to related parties are presented net of allowances for credit losses, which are calculated using a loss rate applied against an
aging matrix.
Segment reporting
A segment is a distinguishable component of the business that is engaged in business activities from which we earn revenues and incur expenses whose operating results are regularly reviewed by our Board of Directors,
being the Chief Operating Decision Maker (CODM), and which are subject to risks and rewards that are different from those of other segments. We have identified three reportable industry segments: FSRUs, LNG carriers and FLNG.
F-22
3. RECENTLY ISSUED ACCOUNTING STANDARDS
Adoption of new accounting standards
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments and subsequent amendments, including ASU 2018-19, ASU 2019-04 and ASU 2019-11: Codification Improvements to Topic 326 ‘‘Financial Instruments-Credit Losses”.
Topic 326 replaces the incurred loss impairment methodology with a requirement to recognize lifetime expected credit losses (measured over the contractual life of the instrument) immediately, based on information about past events, current conditions
and forecasts of future economic conditions. This will reflect the net amount expected to be collected from the financial asset and is referred to as the current expected credit losses, or "CECL", methodology, with measurement applicable to financial
assets measured at amortized cost as well as off-balance sheet credit exposures not accounted for as insurance (including financial guarantees). Topic 326 also makes changes to the accounting for available-for-sale debt securities and purchased
credit deteriorated financial assets, however, no such financial assets existed on date of adoption or in the reporting periods covered by these consolidated financial statements.
Using the modified retrospective method, reporting periods beginning from January 1, 2020 are presented under Topic 326 while comparative periods continue to be reported in accordance with previously applicable GAAP
and have not been restated. The cumulative effect of adoption on January 1, 2020 resulted in recognition of an allowance for credit losses on our consolidated balance sheets of $0.5 million (of which $0.3 million reflects a reduction to line-item
‘Other current assets’ and $0.2 million represents a reduction to line-items ‘Current portion of investment in leased vessel, net’ and ‘Investment in leased vessel, net’), with an offset to total equity of $0.5 million.
In August 2018, the FASB issued ASU 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The
amendments in this ASU remove some disclosure requirements relating to transfers between Level 1 and Level 2 of the fair value hierarchy and introduced new disclosure requirements for Level 3 measurements. We adopted the disclosure improvements
prospectively on January 1, 2020, but this amendment has not had a material impact on our disclosure requirements as we do not have any transfers between Level 1 and Level 2 and we have no Level 3 measurements as of December 31, 2020.
In October 2018, the FASB issued ASU 2018-17 Consolidation (Topic 810) - Targeted Improvements to Related Party Guidance for Variable Interest Entities, effective January 1,
2020. The amendments in this ASU specify that for the purposes of determining whether a decision-making fee is a variable interest, a company is now required to consider indirect interests held through related parties under common control on a
proportionate basis as opposed to as a direct investment. We are required to adopt the codification improvements retrospectively using a cumulative-effect method to retained earnings of the earliest period presented herein, but the amendment had no
impact on historic consolidation assessments or retained earnings.
In March 2020, the FASB issued ASU 2020-03 Financial Instruments (Topic 825) - Codification Improvements. The amendments in this ASU propose seven clarifications to improve the
understandability of existing guidance, including that fees between debtor and creditor and third-party costs directly related to exchanges or modifications of debt instruments include line-of-credit or revolving debt arrangements. We adopted the
codification improvements that were effective on issuance from January 1, 2020 under the specified transition approach connected with each of the codification improvements. These amendments have not had a material impact on our consolidated financial
statements or related disclosures, including retained earnings, as of January 1, 2020.
F-23
Accounting pronouncements that have been issued but not yet adopted
The following table provides a brief description of other recent accounting standards that have been issued but not yet adopted:
|
Standard
|
Description
|
Date of Adoption
|
Effect on our Consolidated
Financial Statements or Other
Significant Matters
|
||||
|
ASU 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.
|
The amendment removes certain exceptions previously available and provides some additional calculation rules to help simplify the accounting for income taxes.
|
January 1, 2021
|
No impacts are expected as a result of the adoption of this ASU.
|
||||
|
ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.
and
ASU 2021-01 Reference Rate Reform (Topic 848): Scope.
|
The amendments provide temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The applicable expedients
for us are in relation to modifications of contracts within the scope of Topic 310, Receivables, Topic 470, Debt, and Topic 842, Leases. This optional guidance may be applied prospectively from any date beginning March 12, 2020 and cannot be
applied to modifications that occur after December 31, 2022.
|
Under evaluation
|
Under evaluation
|
||||
|
ASU 2020-06 Debt with equity and other options (Topic 470) and contracts in Entity’s Own Equity (Topic 815).
|
The amendments simplify the issuer’s accounting for convertible instruments and its application of the equity classification guidance. The new guidance eliminates some of the existing models for assessing convertible instruments, which
results in more instruments being recognized as a single unit of account on the balance sheet and expands disclosure requirements. The new guidance simplifies the assessment of contracts in an entity’s own equity and existing EPS guidance in
ASC 260. This optional guidance is effective on a modified retrospective basis on January 1, 2022.
|
Under evaluation
|
No impacts are expected as a result of the adoption of this ASU.
|
F-24
4. SUBSIDIARIES
The following table lists our significant subsidiaries and their purpose as of December 31, 2020. Unless otherwise indicated, we own 100% of each subsidiary.
|
Name
|
Jurisdiction of
Incorporation
|
Purpose
|
||
|
Golar Partners Operating LLC
|
Marshall Islands
|
Holding Company
|
||
|
Golar LNG Holding Corporation
|
Marshall Islands
|
Holding Company
|
||
|
Golar Maritime (Asia) Inc.
|
Republic of Liberia
|
Holding Company
|
||
|
Golar Servicos de Operacao de Embaracaoes Limited
|
Brazil
|
Management Company
|
||
|
Golar Winter Corporation
|
Marshall Islands
|
Owns Golar Winter
|
||
|
Golar Winter UK Ltd
|
United Kingdom
|
Operates Golar Winter
|
||
|
Golar Spirit Corporation
|
Marshall Islands
|
Owns Golar Spirit
|
||
|
Faraway Maritime Shipping Company (60% ownership)
|
Republic of Liberia
|
Owns and operates Golar Mazo
|
||
|
Golar LNG 2215 Corporation
|
Marshall Islands
|
Leases Methane Princess
|
||
|
Golar 2215 UK Ltd
|
United Kingdom
|
Operates Methane Princess
|
||
|
Golar Freeze Holding Corporation
|
Marshall Islands
|
Owns Golar Freeze
|
||
|
Golar Freeze UK Ltd
|
United Kingdom
|
Operates Golar Freeze
|
||
|
Golar Khannur Corporation
|
Marshall Islands
|
Holding Company
|
||
|
Golar LNG (Singapore) Pte. Ltd.
|
Singapore
|
Holding Company
|
||
|
PT Golar Indonesia*
|
Indonesia
|
Owns and operates NR Satu
|
||
|
Golar Grand Corporation
|
Marshall Islands
|
Owns and operates Golar Grand
|
||
|
Golar LNG 2234 LLC
|
Republic of Liberia
|
Owns and operates Golar Maria
|
||
|
Golar Hull M2031 Corporation
|
Marshall Islands
|
Owns and operates Golar Igloo
|
||
|
Golar Eskimo Corporation**
|
Marshall Islands
|
Leases and operates Golar Eskimo
|
* We hold all of the voting stock and control all of the economic interests in PT Golar Indonesia (“PTGI”) pursuant to a Shareholder’s Agreement with the other shareholder of PTGI, PT Pesona Sentra Utama (“PT Pesona”).
PT Pesona holds the remaining 51% interest in the issued share capital of PTGI.
** The above table excludes Eskimo SPV, from which we lease one of our vessels, the Golar Eskimo, under a sale and leaseback. See note 5.
5. VARIABLE INTEREST ENTITIES (“VIEs”)
Eskimo SPV
As of December 31, 2020 and 2019, we leased one vessel from a VIE under a finance lease with a wholly-owned subsidiary, Sea 23 Leasing Co. Limited (“Eskimo SPV”) of China Merchants Bank Leasing (“CMBL”). Eskimo SPV is
a special purpose vehicle (SPV).
In November 2015, we sold the Golar Eskimo to Eskimo SPV and subsequently leased back the vessel under a bareboat charter for a term of ten years. From the third year
anniversary of the commencement of the bareboat charter, we have an annual option to repurchase the vessel at fixed pre-determined amounts, which we have not exercised. The next repurchase option is in November 2021. We have an obligation to
repurchase the Golar Eskimo at the end of the ten year lease period.
While we do not hold any equity investment in Eskimo SPV, we have determined that we have a variable interest in Eskimo SPV and that Eskimo SPV is a VIE. Based on our evaluation of the bareboat agreement we have
concluded that we are the primary beneficiary of Eskimo SPV and, accordingly, have consolidated Eskimo SPV into our financial results. We did not record any gain or loss from the sale of the Golar Eskimo to
Eskimo SPV, and we continued to report the vessel in our consolidated financial statements at the same carrying value, as if the sale had not occurred, and our contractual debt with the Eskimo SPV eliminates on consolidation.
F-25
The equity attributable to CMBL in Eskimo SPV is included in "Non-controlling interests" in our consolidated results. As of December 31, 2020 and 2019, the Golar Eskimo is
reported under “Vessels and equipment, net” in our consolidated balance sheets.
The following table gives a summary of the sale and leaseback arrangement, including repurchase options and obligation as of December 31, 2020:
|
Vessel
|
Effective from
|
Sales value
(in $ millions)
|
Subsequent
repurchase option
(in $ millions)
|
Subsequent
repurchase
option
|
Repurchase
obligation at end of
lease term
(in $ millions)
|
End of lease term
|
|
Golar Eskimo
|
November 2015
|
285.0
|
189.1
|
November 2021
|
128.3
|
November 2025
|
A summary of our payment obligations under the bareboat charter with Eskimo SPV as of December 31, 2020 is shown below:
|
(in thousands of $)
|
2021
|
2022
|
2023
|
2024
|
2025
|
|||||||||||||||
|
Golar Eskimo*
|
19,724
|
19,230
|
18,893
|
18,685
|
15,358
|
|||||||||||||||
*The payment obligation table above includes variable rental payments due under the lease based on an assumed LIBOR plus margin but excludes the repurchase obligation at the end of lease term.
The most significant impact of consolidation of Eskimo SPV’s liabilities on our consolidated balance sheets is as follows:
|
(in thousands of $)
|
2020
|
2019
|
||||||
|
Liabilities
|
||||||||
|
Short-term debt (note 21)
|
11,083
|
11,436
|
||||||
|
Long-term debt (note 21)
|
153,384
|
169,395
|
||||||
The most significant impact of consolidation of Eskimo SPV’s operations on our consolidated statement of operations is interest expense of $5.7 million, $7.6 million and $8.0 million for the years ended December 31, 2020, 2019, and 2018 respectively. The most significant impact of consolidation of Eskimo SPV’s cash flows on
our consolidated statement of cash flows is net cash of $22.1 million, $20.1 million, and $12.8 million used in financing activities for the years ended December 31, 2020, 2019, and 2018, respectively.
Hilli LLC
On July 12, 2018, we acquired an interest in the Hilli through the acquisition of 50% of the Hilli Common Units for a purchase price of $658 million less assumed net lease
obligations and net of working capital adjustments. Concurrently with the closing of the Hilli Acquisition, we have determined that (i) Hilli LLC is a VIE, (ii) Golar is the primary beneficiary and retains sole control over the most significant
activities and the greatest exposure to variability in residual returns and expected losses from the Hilli and (iii) we are not the primary beneficiary. Thus, Hilli LLC was not consolidated into our
financial statements.
As of December 31, 2020, our maximum exposure as a result of our ownership in the Hilli LLC is the carrying value of our investment in affiliate of $185.6 million (note 10) and the outstanding portion of the Hilli
Facility which we have guaranteed (note 25).
F-26
PTGI
We consolidate PTGI, which owns the NR Satu, in our consolidated financial statements effective September 28, 2011. PTGI became a VIE, and we became its primary beneficiary
upon our agreement to acquire all of Golar’s interests in certain subsidiaries that own and operate the NR Satu on July 19, 2012. We consolidate PTGI as we hold all of the voting stock and control all of the
economic interests in PTGI.
F-27
The following table summarizes the balance sheets of PTGI as of December 31, 2020 and 2019:
|
(in thousands of $)
|
2020
|
2019
|
||||||
|
ASSETS
|
||||||||
|
Cash
|
11,040
|
13,108
|
||||||
|
Restricted cash (note 17)
|
8,723
|
9,543
|
||||||
|
Vessels and equipment, net*
|
206,315
|
227,418
|
||||||
|
Other assets
|
7,373
|
3,158
|
||||||
|
Total assets
|
233,451
|
253,227
|
||||||
|
LIABILITIES AND EQUITY
|
||||||||
|
Accrued liabilities
|
4,077
|
2,704
|
||||||
|
Current portion of long-term debt
|
14,462
|
14,382
|
||||||
|
Amounts due to related parties
|
19,901
|
51,203
|
||||||
|
Other current liabilities
|
1,076
|
974
|
||||||
|
Long-term debt
|
44,403
|
58,865
|
||||||
|
Total liabilities
|
83,919
|
128,128
|
||||||
|
Total equity
|
149,532
|
125,099
|
||||||
|
Total liabilities and equity
|
233,451
|
253,227
|
||||||
*PTGI recorded the NR Satu at the acquisition price when it purchased the vessel from a Golar related party entity. However, as of the date of the acquisition of the
subsidiaries which own and operate the NR Satu, the acquisition was deemed to be a reorganization of entities under common control, and accordingly, we recorded the NR Satu
at historical book values.
Trade creditors of PTGI have no recourse to our general credit. The long-term debt of PTGI is secured against the NR Satu and has been guaranteed by us.
PTGI paid no dividends to PT Pesona during each of the years ended December 31, 2020, 2019 and 2018.
6. SEGMENT INFORMATION
A segment is a distinguishable component of the business that is engaged in business activities from which we earn revenues and incur expenses whose operating results are regularly reviewed by the CODM, and which are
subject to risks and rewards that are different from those of other segments.
As of December 31, 2020, we operate in the following three reportable segments: FSRUs, LNG carriers and FLNG.
| • |
FSRUs are vessels that are permanently located offshore to regasify LNG. Six of our vessels are FSRUs, of which one vessel is in cold layup;
|
| • |
LNG carriers are vessels that transport LNG and are compatible with many LNG loading and receiving terminals globally. Four of our vessels are LNG carriers, of which one vessel is in cold layup; and
|
| • |
FLNG is a vessel that is moored above an offshore natural gas field on a long-term basis. A FLNG receives, liquefies and stores LNG at sea and transfers it to LNG carriers that berth while offshore.
|
The accounting policies applied to the reportable segments are the same as those applied in the Consolidated Financial Statements, except that our equity in net earnings of affiliate is presented under the effective
share of interest consolidation method for the segment reporting.
F-28
|
December 31, 2020
|
||||||||||||||||||||||||||||
|
(in thousands of $)
|
FSRU(1)
|
LNG Carrier
|
FLNG(2)
|
Unallocated(3)
|
Total
Segment
Reporting
|
Elimination(4)
|
Consolidated
Reporting
|
|||||||||||||||||||||
|
Statement of operations:
|
||||||||||||||||||||||||||||
|
Total operating revenues
|
229,530
|
55,204
|
104,271
|
—
|
389,005
|
(104,271
|
)
|
284,734
|
||||||||||||||||||||
|
Vessel operating expenses
|
(38,570
|
)
|
(17,939
|
)
|
(22,701
|
)
|
—
|
(79,210
|
)
|
22,701
|
(56,509
|
)
|
||||||||||||||||
|
Voyage and commission expenses
|
(4,613
|
)
|
(3,373
|
)
|
—
|
—
|
(7,986
|
)
|
—
|
(7,986
|
)
|
|||||||||||||||||
|
Administrative expenses(5)
|
(9,594
|
)
|
(5,773
|
)
|
(1,408
|
)
|
—
|
(16,775
|
)
|
1,408
|
(15,367
|
)
|
||||||||||||||||
|
Amount invoiced under sales-type lease(6)
|
18,300
|
—
|
—
|
—
|
18,300
|
(18,300
|
)
|
—
|
||||||||||||||||||||
|
Adjusted EBITDA
|
195,053
|
28,119
|
80,162
|
—
|
303,334
|
(98,462
|
)
|
204,872
|
||||||||||||||||||||
|
Balance sheet:
|
||||||||||||||||||||||||||||
|
Total assets (7)
|
1,033,742
|
486,214
|
185,562
|
322,143
|
2,027,661
|
—
|
2,027,661
|
|||||||||||||||||||||
|
Other segmental financial information:
|
||||||||||||||||||||||||||||
|
Capital expenditure(7)
|
(2,902
|
)
|
(1,242
|
)
|
—
|
—
|
(4,144
|
)
|
—
|
(4,144
|
)
|
|||||||||||||||||
|
December 31, 2019
|
||||||||||||||||||||||||||||
|
(in thousands of $)
|
FSRU(1)
|
LNG Carrier
|
FLNG(2)
|
Unallocated(3)
|
Total
Segment
Reporting
|
Elimination(4)
|
Consolidated
Reporting
|
|||||||||||||||||||||
|
Statement of operations:
|
||||||||||||||||||||||||||||
|
Total operating revenues
|
240,695
|
58,957
|
104,073
|
—
|
403,725
|
(104,073
|
)
|
299,652
|
||||||||||||||||||||
|
Vessel operating expenses
|
(40,978
|
)
|
(19,980
|
)
|
(23,042
|
)
|
—
|
(84,000
|
)
|
23,042
|
(60,958
|
)
|
||||||||||||||||
|
Voyage and commission expenses
|
(4,467
|
)
|
(3,181
|
)
|
(230
|
)
|
—
|
(7,878
|
)
|
230
|
(7,648
|
)
|
||||||||||||||||
|
Administrative expenses(5)
|
(8,090
|
)
|
(5,322
|
)
|
(1,093
|
)
|
—
|
(14,505
|
)
|
1,093
|
(13,412
|
)
|
||||||||||||||||
|
Amount invoiced under sales-type lease(6)
|
11,500
|
—
|
—
|
—
|
11,500
|
(11,500
|
)
|
—
|
||||||||||||||||||||
|
Adjusted EBITDA
|
198,660
|
30,474
|
79,708
|
—
|
308,842
|
(91,208
|
)
|
217,634
|
||||||||||||||||||||
|
Balance sheet:
|
||||||||||||||||||||||||||||
|
Total assets (7)
|
1,079,369
|
510,558
|
193,270
|
322,415
|
2,105,612
|
—
|
2,105,612
|
|||||||||||||||||||||
|
Other segmental financial information:
|
||||||||||||||||||||||||||||
|
Capital expenditure(7)
|
(13,465
|
)
|
(15
|
)
|
—
|
—
|
(13,480
|
)
|
—
|
(13,480
|
)
|
|||||||||||||||||
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
(in thousands of $)
|
FSRU
|
LNG Carrier
|
FLNG(2)
|
Unallocated(3)
|
Total Segment Reporting
|
Elimination(4)
|
Consolidated Reporting
|
|||||||||||||||||||||
|
Statement of operations:
|
||||||||||||||||||||||||||||
|
Total operating revenues
|
294,889
|
51,761
|
49,754
|
—
|
396,404
|
(49,754
|
)
|
346,650
|
||||||||||||||||||||
|
Vessel operating expenses
|
(42,736
|
)
|
(22,511
|
)
|
(9,834
|
)
|
—
|
(75,081
|
)
|
9,834
|
(65,247
|
)
|
||||||||||||||||
|
Voyage and commission expenses
|
(7,138
|
)
|
(4,084
|
)
|
(434
|
)
|
—
|
(11,656
|
)
|
434
|
(11,222
|
)
|
||||||||||||||||
|
Administrative expenses(5)
|
(9,384
|
)
|
(5,425
|
)
|
(1,306
|
)
|
—
|
(16,115
|
)
|
1,306
|
(14,809
|
)
|
||||||||||||||||
|
Adjusted EBITDA
|
235,631
|
19,741
|
38,180
|
—
|
293,552
|
(38,180
|
)
|
255,372
|
||||||||||||||||||||
|
Balance sheet:
|
||||||||||||||||||||||||||||
|
Total assets (7)
|
1,115,663
|
534,805
|
206,180
|
384,169
|
2,240,817
|
—
|
2,240,817
|
|||||||||||||||||||||
|
Other segmental financial information:
|
||||||||||||||||||||||||||||
|
Capital expenditure (7)
|
(28,307
|
)
|
(13,894
|
)
|
—
|
—
|
(42,201
|
)
|
—
|
(42,201
|
)
|
|||||||||||||||||
F-29
(1) Includes revenue relating to operating and service contracts, that is a non-lease component of sales-type leases recognized on a
straight line basis over the contract term.
(2) Relates to the effective share of revenues, expenses and Adjusted EBITDA attributable to our 50% ownership of the Hilli Common Units
which we acquired in July 2018 (see note 10). The earnings attributable to our investment in Hilli LLC are reported in the equity in net earnings of affiliate on the consolidated statement of operations.
(3) Relates to assets not allocated to a segment, but included to reflect the total assets in the consolidated balance sheets.
(4) Eliminations reverse the effective earnings attributable to our 50% ownership of the Hilli Common Units and the amounts invoiced
under the sales-type lease. There are no transactions between reportable segments.
(5) Indirect administrative expenses are allocated to the FSRU and LNG carrier segments based on the number of vessels while
administrative expenses for FLNG relate to our effective share of expenses attributable to our 50% ownership of the Hilli Common Units.
(6) This represents the actual invoiced amounts on the Golar Freeze sales-type lease. As the income generated from the Golar Freeze
sales-type lease is not reflected in our total operating revenues, we have included the amounts invoiced under the lease in arriving at our FSRU Adjusted EBITDA to enable comparability with the rest of our FSRU segment's charters.
(7) Total assets and capital expenditure by segment refers to our principal assets and capital expenditure relating to our vessels,
including the net investment in leased vessel.
Revenues from external customers
During 2020, our FSRUs and LNG carriers operated under medium to long-term time charters with eight charterers, including, among others, Petrobras, PT Nusantara Regas (“PTNR”), the Hashemite Kingdom of Jordan
(“Jordan”), and Kuwait National Petroleum Company (“KNPC”).
For the years ended December 31, 2020, 2019 and 2018, revenues from each of the following customers accounted for over 10% of our total consolidated operating revenues:
|
(in thousands of $)
|
Segment
|
2020
|
2019
|
2018
|
|||||||||||||||||||||
|
PTNR
|
FSRU
|
68,196
|
24
|
%
|
68,089
|
23
|
%
|
68,474
|
17
|
%
|
|||||||||||||||
|
Petrobras
|
FSRU
|
64,841
|
23
|
%
|
64,368
|
21
|
%
|
63,098
|
16
|
%
|
|||||||||||||||
|
Jordan
|
FSRU
|
55,639
|
20
|
%
|
57,535
|
19
|
%
|
57,337
|
14
|
%
|
|||||||||||||||
|
KNPC
|
FSRU
|
32,708
|
11
|
%
|
40,379
|
13
|
%
|
48,093
|
12
|
%
|
|||||||||||||||
|
Dubai Supply Authority
|
FSRU
|
—
|
—
|
—
|
—
|
|
56,823
|
14
|
%
|
||||||||||||||||
Geographical data
The following geographical data presents our consolidated reporting information: revenues from customers and fixed assets with respect only to our FSRUs, while operating under long-term charters, at specific locations.
LNG carriers operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operations to specific countries:
|
Revenues (in thousands of $)
|
2020
|
2019
|
2018
|
|||||||||
|
Indonesia
|
68,196
|
68,089
|
68,474
|
|||||||||
|
Brazil
|
64,841
|
64,368
|
63,098
|
|||||||||
|
Jordan
|
55,639
|
57,535
|
57,337
|
|||||||||
|
Kuwait
|
32,708
|
40,379
|
48,093
|
|||||||||
|
United Arab Emirates
|
—
|
—
|
56,823
|
|||||||||
|
Fixed assets (in thousands of $)
|
2020
|
2019
|
||||||
|
Jordan
|
247,776
|
254,881
|
||||||
|
Kuwait
|
257,498
|
262,530
|
||||||
|
Brazil
|
194,129
|
203,889
|
||||||
|
Indonesia
|
134,940
|
149,247
|
||||||
F-30
|
(in thousands of $)
|
2020
|
2019
|
2018
|
|||||||||
|
Mark-to-market (losses)/gains for interest rate swap derivatives
|
(35,306
|
)
|
(43,746
|
)
|
(1,455
|
)
|
||||||
|
Interest income/(expense) on un-designated interest rate swaps
|
(16,616
|
)
|
4,950
|
2,161
|
||||||||
|
Mark-to-market adjustment on Earn-Out Units (1)
|
—
|
—
|
7,400
|
|||||||||
|
(Losses)/gains on derivative instruments, net
|
(51,922
|
)
|
(38,796
|
)
|
8,106
|
|||||||
|
Foreign exchange (losses)/gains on finance lease obligations and related restricted cash
|
(71
|
)
|
(941
|
)
|
1,105
|
|||||||
|
Amortization of Partnership guarantee (note 25)
|
1,772
|
2,065
|
503
|
|||||||||
|
Financing arrangement fees and other costs
|
(441
|
)
|
(531
|
)
|
(1,363
|
)
|
||||||
|
Foreign exchange gains/(losses) on operations
|
(260
|
)
|
82
|
(837
|
)
|
|||||||
|
Other financial items, net
|
1,000
|
675
|
(592
|
)
|
||||||||
|
(1)
|
This relates to the mark-to-market movement on the Earn-Out Units issued in connection with the IDR reset transaction in October 2016 which were recognized as a derivative liability in our consolidated
balance sheets. In October 2018, we declared a reduced quarterly distribution of $0.4042 per common unit. Consequently, the second tranche of Earn-Out Units was not issued. Accordingly, we recognized a $nil valuation on the Earn-Out
Units derivatives as of December 31, 2018, resulting in a mark-to-market gain related to the Earn-Out Units. See notes 28 and 29.
|
The components of income tax expense are as follows:
|
(in thousands of $)
|
2020
|
2019
|
2018
|
|||||||||
|
Current tax expense
|
14,653
|
14,342
|
15,737
|
|||||||||
|
Deferred tax expense
|
2,114
|
3,620
|
1,728
|
|||||||||
|
Total income tax expense
|
16,767
|
17,962
|
17,465
|
|||||||||
The income taxes for the years ended December 31, 2020, 2019 and 2018 differed from the amounts computed by applying the Marshall Islands statutory income tax rate of 0% for all years as follows:
|
(In thousands of $)
|
2020
|
2019
|
2018
|
|||||||||
|
Effect of taxable income in various countries
|
15,590
|
18,023
|
16,342
|
|||||||||
|
Effect of change on uncertain tax positions
|
1,177
|
(61
|
)
|
1,329
|
||||||||
|
Effect of recognition of deferred tax asset
|
—
|
—
|
(206
|
)
|
||||||||
|
Total tax expense
|
16,767
|
17,962
|
17,465
|
|||||||||
Pursuant to the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operations of vessels is generally exempt from U.S. tax if the company operating the ships meets
certain requirements. Among other things, in order to qualify for this exemption, the company operating the ships must be incorporated in a country which grants an equivalent exemption from income taxes to U.S. citizens and U.S. corporations and
must either satisfy certain public trading requirements or be more than 50% owned by individuals who are residents, as defined, in such country or another foreign country that grants an equivalent exemption to U.S. citizens and U.S. corporations.
We believe that we satisfied these requirements and therefore by virtue of the above provisions, we were not subject to tax on our U.S. source income.
F-31
Jurisdictions open to examination
The earliest tax years that remain subject to examination by the major taxable jurisdictions in which we operate are UK (2019), Brazil (2015), Indonesia (2017), Kuwait (2020), Jordan (2015) and Barbados (2017).
Interest and penalties charged to “Income taxes” in our statement of operations amounted to $0.1 million, $0.2 million and $0.1 million for the years ended December 31, 2020, 2019 and 2018 respectively.
Deferred taxes
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes.
|
(in thousands of $)
|
2020
|
2019
|
||||||
|
At January 1
|
||||||||
|
Deferred tax assets
|
—
|
103
|
||||||
|
Deferred tax liabilities (note 23)
|
(10,643
|
)
|
(7,126
|
)
|
||||
|
(10,643
|
)
|
(7,023
|
)
|
|||||
|
Recognized in the year
|
||||||||
|
Adjustment in respect of prior year
|
—
|
(1,537
|
)
|
|||||
|
Recognition of deferred tax liability on fixed asset temporary differences
|
(2,114
|
)
|
(2,083
|
)
|
||||
|
(2,114
|
)
|
(3,620
|
)
|
|||||
|
At December 31
|
||||||||
|
Deferred tax assets
|
—
|
—
|
||||||
|
Deferred tax liabilities (note 23)
|
(12,757
|
)
|
(10,643
|
)
|
||||
|
(12,757
|
)
|
(10,643
|
)
|
|||||
There is no deferred tax asset as of December 31, 2020 and December 31, 2019.
The total deferred tax liability as of December 31, 2020 and 2019, related to the accounting net book value of the Golar Eskimo, operated under time charter in Jordan,
being greater than the tax written down value, arising from excess of tax depreciation over accounting depreciation.
There are no potential deferred tax liabilities arising on undistributed earnings within the Partnership. This is because either: (i) no tax would arise on distribution, or (ii) in the case of PTGI, the Partnership
intends to utilize surplus earnings to reduce borrowings or reinvest its earnings, as opposed to making any distribution.
The minimum contractual future rentals represent revenues to be recognized on a straight line basis for each of the following periods, as of December 31, 2020:
|
Year ending December 31,
(in thousands of $)
|
Total
|
|||
|
2021
|
266,522
|
|||
|
2022
|
229,890
|
|||
|
2023
|
137,300
|
|||
|
2024
|
109,944
|
|||
|
2025 and thereafter
|
25,961
|
|||
|
Total
|
769,617
|
|||
F-32
Minimum lease rentals are calculated based on contractual future revenue expected to be recognized on a straight-line basis over the lease term with certain assumptions such as those relating to expected off-hire
days.
PTNR has the right to purchase the NR Satu at any time after the first anniversary of the commencement date of its charter at a price that must be agreed upon between us
and PTNR. We have assumed that this option will not be exercised. Accordingly, the minimum lease rentals set out above include revenues arising within the option period.
Jordan has the option, for a termination fee, to terminate the charter after June 2020, the fifth anniversary of the delivery date of the Golar Eskimo. The minimum
contractual future revenues above assume that this option will not be exercised.
All our vessels are held for contractual future leasing, see note 13 and note 14. For arrangements where operating costs are borne by the charterer on a pass through basis, the pass through of operating costs are
reflected in both revenue and expenses.
The components of operating lease income were as follows:
|
(in thousands of $)
|
|
2020 |
|
2019 | ||||
|
Operating lease income
|
274,924
|
291,806
|
||||||
|
Variable lease income (1)
|
1,665
|
2,148
|
||||||
|
Total operating lease income
|
276,589
|
293,954
|
(1)‘Variable lease income’ is excluded from lease payments that comprise the minimum contractual future revenues from
non-cancellable leases.
The components of equity in net assets of our non-consolidated affiliate are as follows:
|
(in thousands of $)
|
|
2020 |
|
2019 | ||||
|
Equity in net assets of affiliate at January 1,
|
193,270
|
206,180
|
||||||
|
Dividends
|
(19,438
|
)
|
(17,450
|
)
|
||||
|
Equity in net earnings of affiliate
|
11,730
|
4,540
|
||||||
|
Equity in net assets of affiliate at December 31
|
185,562
|
193,270
|
Quoted market prices for Hilli Common Units are not available because they are not publicly traded.
Hilli LLC
On July 12, 2018, we purchased 50.0% of the Hilli Common Units from Golar, affiliates of Keppel Shipyard Limited ("Keppel") and Black & Veatch ("B&V") (together, the “Sellers”). Hilli LLC owns Golar Hilli
Corporation ("Hilli Corp), the disponent owner of the Hilli. The Hilli Common Units provide us with significant influence over Hilli LLC. The Hilli is currently
operating under an 8-year liquefaction tolling agreement (the “LTA”) with Perenco Cameroon S.A. (“Perenco”) and Société Nationale des Hydrocarbures (“SNH” and together with Perenco, the “Customer”). The purchase price for the Hilli Acquisition
was $658 million, less 50% of the net lease obligations under the Hilli Facility on the Closing Date, plus working capital adjustments. The post closing purchase price adjustments were finalized in October 2018.
We entered into the Amended and Restated Limited Liability Company Agreement of Hilli LLC (the “Hilli LLC Agreement”) on July 12, 2018. The ownership interests in Hilli LLC are represented by three classes of
units, the Hilli Common Units, the Series A Special Units and the Series B Special Units. We do not own any of the Series A Special Units or Series B Special Units. The ownership interests of Hilli LLC are represented below:
F-33
|
Percentage ownership interest
|
|
|
Hilli Common Units
|
|
|
The Partnership
|
50.0%
|
|
Golar
|
44.6%
|
|
Keppel
|
5.0%
|
|
B&V
|
0.4%
|
The Hilli LLC Agreement provides that within 60 days after the end of each quarter, Golar, in its capacity as the managing member of Hilli LLC shall determine the amount of Hilli LLC’s available cash and
appropriate reserves (including cash reserves for future maintenance capital expenditures, working capital and other matters), and Hilli LLC shall make a distribution to the unitholders of Hilli LLC (the “Hilli Unitholders”) of the available
cash, subject to such reserves. All three classes of ownership interests in Hilli LLC have certain participating and protective rights. Hilli LLC shall make distributions to the Hilli Unitholders when, as and if declared by Golar; provided,
however, that no distributions may be made on the Hilli Common Units on any distribution date unless Series A Distributions (defined below) and Series B Distributions (defined below) for the most recently ended quarter and any accumulated Series
A Distributions and Series B Distributions in arrears for any past quarter have been or contemporaneously are being paid or provided for.
The Series A Special Units are entitled to receive the “Series A Distributions,” which means, with respect to any quarter, 100% of any Incremental Perenco Revenues received by Hilli Corp during such quarter.
“Incremental Perenco Revenues” is contractually defined as:
| • |
any cash received by Hilli Corp from revenue invoiced to the extent such revenue invoiced are based on tolling fees under the LTA relating to an increase in the Brent Crude price above $60 per barrel; less
|
| • |
any incremental tax expense arising from or related to any cash receipts referred to in the bullet point above; less
|
| • |
the pro-rata portion of any costs that may arise as a result of the underperformance of the Hilli (“Underperformance Costs”) incurred by Hilli Corp during such quarter.
|
Series B Special Units are entitled to receive the “Series B Distributions,” which means, with respect to any quarter, an amount equal to 95% of Revenues Less Expenses received by Hilli Corp during such quarter.
“Revenues Less Expenses” is contractually defined as:
| • |
the cash receipts from revenues invoiced by Hilli Corp as a direct result of the employment of more than the first 50% of LNG production capacity for the Hilli, before deducting any
Underperformance Costs (unless the incremental capacity above the first 50% is supplied under the terms of the LTA and the term of the LTA is not expanded beyond 500 billion cubic feet of feed gas), excluding, for the avoidance of doubt,
any Incremental Perenco Revenues; less
|
| • |
any incremental costs whatsoever, including but not limited to operating expenses, capital costs, financing costs and tax costs, arising as a result of employing and making available more than the first 50% of LNG production capacity
for the Hilli; less
|
| • |
any reduction in revenue attributable to the first 50% of LNG production capacity availability as a result of making more than 50% of capacity available under the LTA (including, but not limited to, for example, as a result of a
tolling fee rate reduction as contemplated in the LTA); less
|
| • |
the pro-rata share of Underperformance Costs incurred by Hilli Corp during such quarter.
|
Hilli Common Units: Distributions to Hilli Common Units may not be made until any Series A Distributions and Series B Distributions for the most recently ended quarter and
any accumulated Series A Distributions and Series B Distributions in arrears for any past quarter have been paid. Hilli LLC Common Unitholders may also receive, with respect to any quarter, an amount equal to 5% of Revenues less Expenses received
by Hilli Corp during such quarter.
F-34
Summarized financial information of Hilli LLC*
The following table summarizes the financial information of Hilli LLC shown on a 100% basis as of and for the years ended December 31, 2020 and 2019:
|
(in thousands of $)
|
2020
|
2019
|
||||||
|
Balance sheet
|
||||||||
|
Current assets
|
56,481
|
54,000
|
||||||
|
Non-current assets
|
1,203,805
|
1,300,065
|
||||||
|
Current liabilities
|
(32,337
|
)
|
(45,106
|
)
|
||||
|
Non-current liabilities
|
(845,658
|
)
|
(924,578
|
)
|
||||
|
Statement of operations
|
||||||||
|
Liquefaction services revenue
|
226,061
|
218,095
|
||||||
|
Net income
|
71,684
|
70,756
|
||||||
*The summarized financial information of Hilli LLC excludes the Hilli LLC lessor VIE's financial information.
As of December 31, 2020 and 2019, there was no provision for doubtful accounts.
|
(in thousands of $)
|
2020
|
2019
|
||||||
|
Prepaid expenses
|
1,810
|
2,087
|
||||||
|
Indemnity amount receivables
|
17,325
|
8,200
|
||||||
|
Other receivables
|
1,797
|
1,607
|
||||||
|
20,932
|
11,894
|
|||||||
Indemnity amount receivables relates to amounts expected to be recovered pursuant to indemnity clauses relating to past performance of a bareboat charter and operating and services agreement with a charterer. The
indemnity relates to how the bareboat charter and operating and services agreement should be taxed under the Jamaican tax authority and the receivable includes withholding and payroll taxes that are treated as operating expenses. As of December
31, 2020, we have recognized the corresponding liabilities for payment of taxes and associated charges of $1.2 million (2019: $0.6 million) and $16.1 million (2019: $7.6 million), which are included within ‘Accrued expenses’ (note 19) and ‘Other
current liabilities’ (note 20), respectively.
There was no accrued interest included within the other current assets balance as of December 31, 2020 and 2019.
F-35
13. VESSELS AND EQUIPMENT, NET
|
2020
|
||||||||||||||||
|
(in thousands of $)
|
Vessels
|
Drydocking
expenditure
|
Mooring equipment
|
Total
|
||||||||||||
|
Cost
|
||||||||||||||||
|
As of January 1
|
1,941,948
|
47,228
|
37,826
|
2,027,002
|
||||||||||||
|
Additions
|
3,013
|
1,131
|
—
|
4,144
|
||||||||||||
|
Write-off of fully depreciated and amortized asset
|
(1,691
|
)
|
(4,283
|
)
|
—
|
(5,974
|
)
|
|||||||||
|
As of December 31
|
1,943,270
|
44,076
|
37,826
|
2,025,172
|
||||||||||||
|
Depreciation and amortization
|
||||||||||||||||
|
As of January 1
|
(605,243
|
)
|
(24,929
|
)
|
(27,165
|
)
|
(657,337
|
)
|
||||||||
|
Charge for the year
|
(52,507
|
)
|
(9,549
|
)
|
(3,547
|
)
|
(65,603
|
)
|
||||||||
|
Write-off of fully depreciated and amortized asset
|
1,691
|
4,283
|
—
|
5,974
|
||||||||||||
|
As of December 31
|
(656,059
|
)
|
(30,195
|
)
|
(30,712
|
)
|
(716,966
|
)
|
||||||||
|
Net book value as of December 31
|
1,287,211
|
13,881
|
7,114
|
1,308,206
|
||||||||||||