UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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FORM
20-F
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(Mark
One)
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[ ]
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REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g)
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OF
THE SECURITIES EXCHANGE ACT OF 1934
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OR
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[X]
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
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For
the fiscal year ended
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December 31, 2008
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OR
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[ ]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF
THE SECURITIES EXCHANGE ACT OF 1934
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For
the transition period from
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to
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OR
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[ ]
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SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF
THE SECURITIES EXCHANGE ACT OF 1934
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Date
of event requiring this shell company report
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Commission
file number
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000-50113
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Golar
LNG Limited
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(Exact
name of Registrant as specified in its charter)
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(Translation
of Registrant's name into English)
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Bermuda
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(Jurisdiction
of incorporation or organization)
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Par-la-Ville
Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
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(Address
of principal executive offices)
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Georgina
Sousa, (1) 441 295 4705, (1) 441 295 3494
Par-la-Ville
Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
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(Name,
Telephone, E-mail and/or Facsimile number and Address of Company Contact
Person)
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Securities
registered or to be registered pursuant to section 12(b) of the
Act.
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Title
of each class
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Name
of each exchange
on
which registered
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Common
Shares, par value $1.00 per share
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NASDAQ
(GS)
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Securities
registered or to be registered pursuant to section 12(g) of the
Act.
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None
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(Title
of class)
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Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act.
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None
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(Title
of class)
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Indicate
the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the
annual report.
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67,576,866
Common Shares, par value $1.00 per share
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
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Yes
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No
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X
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If
this report is an annual or transition report, indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 of
15(d) of the Securities Exchange Act 1934.
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Yes
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No
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X
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Note-
Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 from their obligations under those Sections.
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Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
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Yes
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No
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Indicate
by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
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Yes
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X
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No
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Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act. (Check
one).
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Large
accelerated filer
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Accelerated
filer
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X
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Non-accelerated
filer
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U.S.
GAAP
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X
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International
Financial Reporting Standards
as issued by the International Accounting Standards
Board
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Other
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Item
17
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X
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Item
18
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Yes
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No
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X
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Yes
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No
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PART
I
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PAGE
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ITEM
1.
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IDENTITY
OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
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2
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ITEM
2
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OFFER
STATISTICS AND EXPECTED TIMETABLE
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2
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ITEM
3.
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KEY
INFORMATION
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2
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ITEM
4.
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INFORMATION
ON THE COMPANY
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19 |
ITEM
4A.
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UNRESOLVED
STAFF COMMENTS
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36 |
ITEM
5.
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OPERATING
AND FINANCIAL REVIEW AND PROSPECTS
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36 |
ITEM
6.
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DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES
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59 |
ITEM
7.
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MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
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62 |
ITEM
8.
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FINANCIAL
INFORMATION
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63 |
ITEM
9.
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THE
OFFER AND LISTING
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64 |
ITEM
10.
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ADDITIONAL
INFORMATION
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65 |
ITEM
11.
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QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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71 |
ITEM
12.
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DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES
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72 |
PART
II
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ITEM
13.
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DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES
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72 |
ITEM
14.
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MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
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72 |
ITEM
15.
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CONTROLS
AND PROCEDURES
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72 |
ITEM
16.
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RESERVED
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74 |
ITEM
16A.
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AUDIT
COMMITTEE FINANCIAL EXPERT
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74 |
ITEM
16B.
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CODE
OF ETHICS
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74 |
ITEM
16C.
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PRINCIPAL
ACCOUNTANT FEES AND SERVICES
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74 |
ITEM
16D.
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EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
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75 |
ITEM
16E.
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PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
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75 |
ITEM
16F.
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CHANGE
IN REGISTRANT'S CERTIFYING ACCOUNTANT
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75 |
ITEM
16G.
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CORPORATE
GOVERNANCE
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75 |
PART
III
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ITEM
17.
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FINANCIAL
STATEMENTS
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76 |
ITEM
18.
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FINANCIAL
STATEMENTS
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76 |
ITEM
19.
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EXHIBITS
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77 |
ITEM
2. OFFER STATISTICS AND EXPECTED
TIMETABLE
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ITEM
3. KEY INFORMATION
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Fiscal Year Ended
December 31,
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2008
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2007
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2006
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2005
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2004
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(in
thousands of U.S. $, except number of shares, per common share data, fleet
and other financial data)
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Income
Statement Data:
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Total
operating revenues
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228,779 | 224,674 | 239,697 | 171,042 | 163,410 | |||||||||||||||
Gain
on sale of vessel/newbuilding
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78,108 | 41,088 | - | - | - | |||||||||||||||
Vessel
operating expenses (1)
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61,868 | 52,986 | 44,490 | 37,215 | 35,759 | |||||||||||||||
Voyage
and charter-hire expenses (2)
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33,126 | 10,763 | 9,582 | 4,594 | 2,561 | |||||||||||||||
Administrative
expenses
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17,815 | 18,645 | 13,657 | 12,219 | 8,471 | |||||||||||||||
Restructuring
costs
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- | - | - | 1,344 | - | |||||||||||||||
Depreciation
and amortization
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62,005 | 60,163 | 56,822 | 50,991 | 40,502 | |||||||||||||||
Impairment
of long-lived assets
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110 | 2,345 | - | - | - | |||||||||||||||
Gain
on sale of long-lived assets
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430 | - | - | - | - | |||||||||||||||
Operating
income
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132,393 | 120,860 | 115,146 | 64,679 | 76,117 | |||||||||||||||
Gain
on sale of available-for-sale securities
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- | 46,276 | - | - | - | |||||||||||||||
Net
financial expenses
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(132,761 | ) | (65,592 | ) | (52,156 | ) | (39,319 | ) | (25,304 | ) | ||||||||||
(Loss)
income before equity in net earnings of investees, income taxes and
minority interests
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(368 | ) | 101,544 | 62,990 | 25,360 | 50,813 | ||||||||||||||
Income
taxes and minority interests
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(7,215 | ) | (6,248 | ) | (8,306 | ) | (9,323 | ) | (7,995 | ) | ||||||||||
Equity
in net earnings (losses) of investees
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(2,406 | ) | 13,640 | 16,989 | 18,492 | 13,015 | ||||||||||||||
Gain
on sale of investee
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- | 27,268 | - | - | - | |||||||||||||||
Net
(loss) income
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(9,989 | ) | 136,204 | 71,673 | 34,529 | 55,833 | ||||||||||||||
(Loss)
earnings per common share
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||||||||||||||||||||
-
basic (3)
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(0.15 | ) | 2.09 | 1.09 | 0.53 | 0.85 | ||||||||||||||
-
diluted (3)
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(0.15 | ) | 2.07 | 1.05 | 0.50 | 0.84 | ||||||||||||||
Cash
dividends declared and paid per common share
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1.00 | 2.25 | - | - | - | |||||||||||||||
Weighted
average number of shares – basic (3)
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67,214 | 65,283 | 65,562 | 65,568 | 65,612 | |||||||||||||||
Weighted
average number of shares - diluted (3)
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67,214 | 65,715 | 65,735 | 65,733 | 65,797 | |||||||||||||||
Balance
Sheet Data (as of end of year):
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Cash
and cash equivalents
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56,114 | 185,739 | 56,616 | 62,227 | 51,598 | |||||||||||||||
Restricted
cash and short-term investments (4)
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60,352 | 52,106 | 52,287 | 49,448 | 41,953 | |||||||||||||||
Amounts
due from related parties
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538 | 712 | 778 | 17 | 294 | |||||||||||||||
Long-term
restricted cash (4)
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557,052 | 792,038 | 778,220 | 696,308 | 714,802 | |||||||||||||||
Equity
in net assets of non-consolidated investees
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30,924 | 14,023 | 97,255 | 65,950 | 48,869 | |||||||||||||||
Newbuildings
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- | - | 49,713 | 111,565 | 145,233 | |||||||||||||||
Vessels
and equipment, net
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668,141 | 659,018 | 669,639 | 533,008 | 371,867 | |||||||||||||||
Vessels
under capital lease, net
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893,172 | 789,558 | 796,186 | 676,036 | 706,516 | |||||||||||||||
Total
assets
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2,359,729 | 2,573,610 | 2,566,189 | 2,230,695 | 2,110,329 | |||||||||||||||
Current
portion of long-term debt
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71,395 | 80,037 | 72,587 | 67,564 | 66,457 | |||||||||||||||
Current
portion of obligations under capital leases
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6,006 | 5,678 | 5,269 | 2,466 | 2,662 | |||||||||||||||
Long-term
debt
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737,226 | 735,629 | 803,771 | 758,183 | 636,497 | |||||||||||||||
Long-term
obligations under capital leases (5)
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784,421 | 1,024,086 | 1,009,765 | 801,500 | 842,853 | |||||||||||||||
Minority
interest (6)
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41,688 | 36,983 | 32,436 | 27,587 | 26,282 | |||||||||||||||
Stockholders'
equity
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452,145 | 552,532 | 507,044 | 434,554 | 402,770 | |||||||||||||||
Common
shares outstanding (3)
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67,577 | 67,577 | 65,562 | 65,562 | 65,612 | |||||||||||||||
Fiscal Year Ended
December 31,
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||||||||||||||||||||
2008
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2007
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2006
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2005
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2004
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Cash
Flow Data:
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Net
cash provided by operating activities
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48,495 | 73,055 | 117,219 | 71,026 | 82,028 | |||||||||||||||
Net
cash (used in) provided by investing
activities activities
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(83,548 | ) | 224,435 | (268,993 | ) | (213,176 | ) | (356,113 | ) | |||||||||||
Net
cash (used in) provided by financing activities
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(94,572 | ) | (168,367 | ) | 146,163 | 152,779 | 207,800 | |||||||||||||
Fleet
Data (unaudited)
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Number
of vessels at end of year (7)
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14 | 12 | 12 | 10 | 9 | |||||||||||||||
Average
number of vessels during year (7)
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13 | 12 | 11.52 | 10 | 8.33 | |||||||||||||||
Average
age of vessels (years)
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13.9 | 14.7 | 13.7 | 15.3 | 15.9 | |||||||||||||||
Total
calendar days for fleet
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4,836 | 4,380 | 4,214 | 3,645 | 3,023 | |||||||||||||||
Total
operating days for fleet (8)
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4,466 | 3,732 | 3,845 | 2,976 | 2,660 | |||||||||||||||
Other
Financial Data (Unaudited):
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Adjusted
EBITDA (9)
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$ | 191,922 | $ | 268,207 | $ | 188,957 | $ | 134,162 | $ | 129,634 | ||||||||||
Average
daily time charter equivalent earnings (9)
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$ | 45,700 | $ | 51,000 | $ | 55,700 | $ | 46,200 | $ | 54,900 | ||||||||||
Average
daily vessel operating costs (10)
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$ | 12,793 | $ | 12,097 | $ | 10,558 | $ | 10,210 | $ | 11,800 |
(1)
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Vessel
operating expenses are the direct costs associated with running a vessel
including crew wages, vessel supplies, routine repairs, maintenance and
insurance. In addition, prior to the April 2005 reorganization
relating to the outsourcing of our day-to-day vessel management activities
to third party ship managers, vessel operating expenses also included an
allocation of overheads allocable to vessel operating
expenses.
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(2)
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The
majority of our vessels are operated under time charters. Under a time
charter, the charterer pays substantially all of the vessel voyage costs,
which are primarily fuel and port charges. However, we may
incur voyage related expenses when positioning or repositioning vessels
before or after the period of a time charter, during periods of commercial
waiting time or while off-hire during a period of
drydocking.
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Charter-hire
expense – refers to the charge for vessels chartered-in under operating
leases.
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(3)
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Basic
earnings per share is computed based on the income available to common
shareholders and the weighted average number of shares
outstanding. Treasury shares are not included in the
calculation. The computation of diluted earnings per share
assumes the conversion of potentially dilutive
instruments.
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(4)
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Restricted
cash and short-term investments consist of bank deposits, which may only
be used to settle certain pre-arranged loan or lease payments and deposits
made in accordance with our contractual obligations under our equity swap
line facilities. Please see the section of this annual report
entitled Item 5, "Operating and Financial Review and Prospects – Results
of Operations" for a discussion of our equity swap line
facilities.
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(5)
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We
have entered into eight lease financing arrangements, which are classified
as capital leases.
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(6)
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Minority
interest refers to a 40% ownership interest held by Chinese Petroleum
Corporation in the Golar
Mazo.
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(7)
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In
each of the periods presented above, except for 2008, we chartered-in two
vessels under short-term charters and we had a 60% ownership interest in
one of our vessels and a 100% ownership interest in our remaining
vessels.
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(8)
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The
operating days for our fleet is the total number of days in a given period
that the vessels were in our possession less the total number of days
off-hire. We define days off-hire as days spent on repairs,
drydockings, special surveys and vessel upgrades or during periods of
commercial waiting time during which we do not earn charter
hire.
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(9)
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Non-GAAP
Financial Measures
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Year
Ended December 31,
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||||||||||||||||||||
2008
|
2007
|
2006
|
2005
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2004
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(in
thousands of U.S.$)
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||||||||||||||||||||
Net
(loss) income
|
(9,989 | ) | 136,204 | 71,673 | 34,529 | 55,833 | ||||||||||||||
Depreciation
and amortization
|
62,005 | 60,163 | 56,822 | 50,991 | 40,502 | |||||||||||||||
Interest
income
|
(45,828 | ) | (54,906 | ) | (40,706 | ) | (35,653 | ) | (31,879 | ) | ||||||||||
Interest
expense
|
96,489 | 112,336 | 101,298 | 82,479 | 61,987 | |||||||||||||||
Other
financial items, net
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82,100 | 8,162 | (8,436 | ) | (7,507 | ) | (4,804 | ) | ||||||||||||
Income
taxes and minority interest
|
7,215 | 6,248 | 8,306 | 9,323 | 7,995 | |||||||||||||||
Adjusted
EBITDA
|
191,922 | 268,207 | 188,957 | 134,162 | 129,634 | |||||||||||||||
Year
Ended December 31,
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||||||||||||||||||||
2008
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2007
|
2006
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2005
|
2004
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(in
thousands of U.S.$, except number of days and
average
daily TCE)
|
||||||||||||||||||||
Total
operating revenues
|
228,779 | 224,674 | 239,697 | 171,042 | 163,410 | |||||||||||||||
Voyage
expenses
|
(24,483 | ) | (10,763 | ) | (9,582 | ) | (4,594 | ) | (2,561 | ) | ||||||||||
204,296 | 213,911 | 230,115 | 166,448 | 160,849 | ||||||||||||||||
Calendar
days less scheduled off-hire days
|
4,466 | 4,197 | 4,130 | 3,602 | 2,930 | |||||||||||||||
Average
daily TCE (to
the closest $100)
|
45,700 | 51,000 | 55,700 | 46,200 | 54,900 |
(10)
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We
calculate average daily vessel operating costs by dividing vessel
operating costs by the number of calendar
days.
|
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We
may be unable to retain our existing customers
if:
|
|
1.
|
our
customers are unable to make charter payments because of its financial
inability, disagreements with us or
otherwise;
|
|
2.
|
in
certain circumstances, our customers may exercise their right to terminate
their charters early, in the event
of:
|
|
a.
|
a
loss of the vessel or damage to it beyond
repair;
|
|
b.
|
a
default of our obligations under the charter, including prolonged periods
of off-hire;
|
|
c.
|
a
war or hostilities that would significantly disrupt the free trade of the
vessel;
|
|
d.
|
a
requisition by any governmental authority;
|
|
e.
|
with
respect to the Golar
Spirit, Golar
Winter and Golar
Freeze, upon six months' written notice at any time after the fifth
anniversary of the commencement of the charter, the charterers (Petrobras
and DUSUP) may exercise their option to terminate the charter upon payment
of a termination fee;
|
|
f.
|
with
respect to the Golar
Spirit and Golar
Winter, Petrobras may exercise its option to purchase each vessel
after a specified period of time;
or
|
|
g.
|
with
respect to the Golar
Winter and Golar
Freeze, the charterers may terminate the charters of either because
we fail to deliver the vessels on time or the vessels fail to satisfy
certain contractual performance requirements after
delivery.
|
|
3.
|
a
prolonged force majeure event affecting the customer, including damage to
or destruction of relevant production facilities, war or political unrest
which may prevent us from performing services for that
customer.
|
|
·
|
merge
into or consolidate with any other entity or sell or otherwise dispose of
all or substantially all of their
assets;
|
|
·
|
make
or pay equity distributions;
|
|
·
|
incur
additional indebtedness;
|
|
·
|
incur
or make any capital expenditure;
|
|
·
|
materially
amend, or terminate, any of our current charter contracts or management
agreements; or
|
|
·
|
charter
our vessels
|
|
·
|
Marine
disaster;
|
|
·
|
Piracy;
|
|
·
|
Environmental
accidents; and
|
|
·
|
Business
interruptions caused by mechanical failure, human error, war, terrorism,
political action in various countries, labor strikes, or adverse weather
conditions.
|
|
·
|
increases
in interest rates or other events that may affect the availability of
sufficient financing for LNG projects on commercially reasonable
terms;
|
|
·
|
decreases
in the price of LNG, which might decrease the expected returns relating to
investments in LNG projects;
|
|
·
|
the
inability of project owners or operators to obtain governmental approvals
to construct or operate LNG
facilities;
|
|
·
|
local
community resistance to proposed or existing LNG facilities based on
safety, environmental or security
concerns;
|
|
·
|
any
significant explosion, spill or similar incident involving an LNG
facility, LNG carrier or FSRU; and
|
|
·
|
labor
or political unrest affecting existing or proposed areas of LNG production
and regasification.
|
|
·
|
Following
the corporate restructuring you will hold an indirect ownership interest
in the Subsidiary. Your ownership interest will be diluted by the amount
our ownership interest is reduced in the Subsidiary. Because we
may sell shares of the Subsidiary in privately negotiated transactions,
the prices at which we sell these shares will vary and these variations
may be significant. Purchasers of the shares we sell, as well
as our existing shareholders, will experience significant dilution if we
sell shares at prices significantly below the equivalent price at which
they invested.
|
|
·
|
The
Subsidiary may issue additional common shares or we may sell all or part
of our holdings in the Subsidiary further diluting your indirect ownership
interest in the Subsidiary.
|
|
·
|
Conflicts
of interest may arise between the minority shareholders and us, the
majority shareholder.
|
|
·
|
The
amount of cash available for paying dividends may
decrease.
|
|
·
|
The
market price of our common shares may
decrease.
|
|
·
|
In July 2008, we invested an initial sum of $22.0 million
in a (50:50) Dutch Antilles incorporated joint venture named Bluewater
Gandria N.V., or Bluewater Gandria, with Bluewater Energy Services B.V.,
or Bluewater, formed for the purposes of pursuing opportunities to develop
offshore LNG FSRU projects. The initial equity investment was used
to acquire a 1977 built LNG carrier, the Gandria, for conversion
and use as a FSRU.
|
|
·
|
In
2006, we purchased 23 million shares in LNGL, an Australian publicly
listed company, for a consideration of $8.6 million, making us LNGL's
largest shareholder. As of December 31, 2008, we had a 16%
interest.
|
|
·
|
In
November 2006, we invested $5.0 million to purchase a 20% interest in
OLT-O, an Italian unincorporated company involved in the construction,
development, operation and maintenance of a FSRU. As of
December 31, 2008, we had a 2.7%
interest.
|
|
·
|
Costs: Technological
advances and economies of scale have lowered capital expenditure
requirements.
|
|
·
|
Environmental: Natural
gas is a clean-burning fuel. It produces less carbon dioxide and other
pollutants and particles per unit of energy production than coal, fuel oil
and other common hydrocarbon fuel
sources.
|
|
·
|
Demand from Power
Generation: According to the IEA, natural gas is the
fastest growing fuel source for electricity generation worldwide
accounting for around 30 - 40% of the total incremental growth in
world-wide natural gas consumption.
|
|
·
|
Market
Deregulation: Deregulation of the gas and electric power
industry in the United States, Europe and Japan, has resulted in new
entrants and an increased market for natural
gas.
|
|
·
|
Significant Natural Gas
Reserves: Approximately half of the world's remaining
hydrocarbon reserves are natural gas. As of end of 2007
reserves of natural gas were estimated at approximately 6.26 trillion
cubic feet (tcf) or more than 60 times the 100 tcf of natural gas produced
worldwide in 2004.
|
|
·
|
Emerging
economies: Projected average increases in emerging
economies consumption of natural gas of up to 4.1% per year up to 2025 has
recently been forecast by the IEA as compared to 2.3% per annum average
growth for transitional economies and 0.6% per annum for mature
economies.
|
|
·
|
The
Moss system was
developed in the 1970s and uses free standing insulated spherical tanks
supported at the equator by a continuous cylindrical skirt. In
this system, the tank and the hull of the vessel are two separate
structures.
|
|
·
|
The
Membrane system
uses insulation built directly into the hull of the vessel, along with a
membrane covering inside the tanks to maintain their
integrity. In this system, the ship's hull directly supports
the pressure of the LNG cargo.
|
Moss
System
|
Membrane
System
|
![]() |
![]() |
|
LNG
Regasification Terminals
|
|
·
|
permanently
located offshore;
|
|
·
|
permanently
alongside (with LNG transfer being either directly ship to ship or over a
jetty);
|
|
·
|
shuttle
carrier with regasification and discharge offshore (sometimes referred to
as energy bridge); and
|
|
·
|
shuttle
carrier with alongside discharge.
|
|
·
|
Operational excellence:
We are an experienced and professional provider of LNG shipping
that places value on operating to the highest industry standards of
safety, reliability and environmental
performance.
|
|
·
|
Customer relationships:
Our success is directly linked to the service and value we deliver to our
customers. Our customers and partners include some of the biggest
participants in the LNG market: BG Group, Pertamina, Royal Dutch Shell
(Shell) and Petrobras.
|
|
·
|
Secure cash flow: 10 of
our fleet of 13 vessels and a 50% equity interest in the Gandria are on, or are
contracted to start, medium-term or long-term charters, which, provides a
relatively secure and stable cash flow and a financial platform for us to
grow and expand.
|
|
·
|
LNG shipping experience:
We have more than 30 years of experience of operating LNG
ships. Our crewing activities are managed by three
internationally recognized third party ship managers which all have access
to a large pool of experienced LNG
crew.
|
|
·
|
Technical and
Commercial experience and expertise: With our existing assets,
extensive experience and significant technical and commercial expertise we
are able to quickly take advantage of market opportunities as they arise
and offer innovative solutions to our customers'
needs.
|
|
·
|
FSRU leadership
position: We believe that our experience in converting the first
FSRU from an LNG carrier provides us a first mover advantage in securing
future FSRU opportunities.
|
|
·
|
Relationship with the
Fredriksen Group. We believe there are opportunities for
meaningful operational and relationship-based synergies with members of
the Fredriksen Group. For example, there are technical
similarities between the floating production storage and offloading (FPSO)
systems developed by Frontline Limited and the FSRU system developed by us
which has enabled us to make use of a common pool of engineering
talent. Furthermore, we have benefited in our dealings with
shipbuilders and customers due to our affiliation with the Fredriksen
Group.
|
Vessel
Name
|
Year
of
Delivery
|
Capacity
cbm.
|
Flag
|
Type
|
Charterer
|
Current
Charter Expiration
|
Charter
Extension Options
|
||||||||||||
Hilli
|
1975
|
125,000 |
MI
|
Moss
|
n/a
|
(1) | |||||||||||||
Gimi
|
1976
|
125,000 |
UK
|
Moss
|
BG
|
2010
|
|||||||||||||
Golar
Freeze
|
1977
|
125,000 |
UK
|
Moss/FSRU(2)
|
Chartered
to BG until June 2009. Thereafter chartered to DUSUP upon conversion
to an FSRU which we expect to be completed in the second quarter of
2010.
|
2020
|
Terms
extending up to 2025
|
||||||||||||
Khannur
|
1977
|
125,000 |
UK
|
Moss
|
BG
|
2010
|
|||||||||||||
Golar
Spirit
|
1981
|
128,000 |
MI
|
Moss/FSRU
|
Chartered
to Petrobras as an FSRU.
|
2018
|
An
three-year term and an additional two-year term
|
||||||||||||
Golar
Mazo (3)
|
2000
|
135,000 |
LIB
|
Moss
|
Pertamina
|
2017
|
Two
additional five-year terms
|
||||||||||||
Methane
Princess
|
2003
|
138,000 |
UK
|
Membrane
|
BG
|
2024
|
Two
additional five-year terms
|
||||||||||||
Golar
Winter
|
2004
|
138,000 |
MI
|
Membrane/
FSRU
|
Commenced
its long-term charter with Petrobras as an FSRU in early July 2009,
subject to the successful completion of performance test runs scheduled
for the second half of July 2009.
|
2019
|
|||||||||||||
Gracilis
|
2005
|
140,000 |
MI
|
Membrane
|
Shell
|
2011
|
|||||||||||||
Grandis
|
2006
|
145,700 |
IOM
|
Membrane
|
Shell
|
2011
|
|
||||||||||||
Granosa
|
2006
|
145,700 |
MI
|
Membrane
|
Shell
|
2011
|
|
||||||||||||
Golar
Arctic
(formerly
known
as the Granatina)
|
2003
|
140,000 |
MI
|
Membrane
|
Spot
Trading
|
n/a
|
|
||||||||||||
Ebisu
(4)
|
2008
|
145,000 |
BAH
|
Moss
|
Spot
Trading
|
n/a
|
|||||||||||||
Gandria
(5)
|
1977
|
126,000 |
NIS
|
Moss
|
n/a
|
(1) |
n/a
|
(1)
|
Currently,
the Hilli and
Gandria are
layed-up in Labuan, Malaysia.
|
(2)
|
In
2008 we entered into an agreement to convert the Golar Freeze into a
FSRU. Following its delivery to us in the second quarter of
2010, the Golar
Freeze is scheduled to commence a 10-year time charter with
DUSUP.
|
(3)
|
We
have a 60% ownership interest in the Golar Mazo with the
remaining 40% owned by Chinese Petroleum
Corporation.
|
(4)
|
In
October 2008, we chartered-in the Ebisu under a two-year
time charter party.
|
(5)
|
In
connection with our joint venture Bluewater Gandria we have a 50% equity
interest in the Gandria with the
remaining 50% owned by Bluewater.
|
|
·
|
natural
resource damages and related assessment
costs;
|
|
·
|
real
and personal property damages;
|
|
·
|
net
loss of taxes, royalties, rents, profits or earnings
capacity;
|
|
·
|
net
cost of public services necessitated by a spill response, such as
protection from fire, safety or health hazards;
and
|
|
·
|
loss
of subsistence use of natural
resources.
|
|
·
|
on-board
installation of ship security alert systems, which do not sound on the
vessel but only alerts the authorities on
shore;
|
|
·
|
the
development of vessel security
plans;
|
|
·
|
ship
identification number to be permanently marked on a vessel's
hull;
|
|
·
|
a
continuous synopsis record kept onboard showing a vessel's history
including, the name of the ship and of the state whose flag the ship is
entitled to fly, the date on which the ship was registered with that
state, the ship's identification number, the port at which the ship is
registered and the name of the registered owner(s) and their registered
address; and
|
|
·
|
to
comply with flag state security certification
requirements.
|
|
·
|
The Golar
Spirit, the Golar Winter and the Golar Freeze will be operated in a
substantially different manner. Until November 2006, the
Golar Spirit
operated under a long-term time charter with Pertamina, which generated
$25.5 million of total operating revenue for the year ended December 31,
2006. The Golar Spirit operated
in the spot market under short-term time charters at significantly lower
rates from November 2006 until October 2007. In October 2007,
the Golar Spirit
entered the shipyard to undergo retrofitting for FSRU service, which
completed in June 2008. While in the shipyard, the Golar Spirit did not
generate any revenue. In July 2008, the Golar Spirit commenced
FSRU service under its long-term charter with
Petrobras.
|
|
·
|
FSRU
operating expenses will be higher than the operating expenses for LNG
carriers and will increase our exposure to foreign exchange
rates. Our historical operating expenses reflect the
operation of the Golar
Spirit (until the commencement of its FSRU service in July 2008),
the Golar Winter
and the Golar
Freeze as LNG carriers. Following the completion of
their retrofitting and operation as FSRUs, we expect to incur higher
operating expenses on average with respect to their operation as FSRUs
compared to conventional LNG vessels. We expect these increased
operating expenses to be offset by increased charter hire
revenues. In addition, the majority of our expenses and
revenues have in the past been denominated in U.S.
Dollars. Under the Petrobras charters, we will incur a portion
of our expenses and receive a portion of our revenues in Brazilian Reais
and, therefore, we expect to have increased exposure to foreign exchange
rates.
|
|
·
|
We expect
continued inflationary pressure on crew costs. Due to
the specialized nature of operating LNG carriers and FSRUs, the increase
in size of the worldwide LNG carrier fleet and the limited pool of
qualified officers, we believe that crewing and labor related costs will
continue to experience increases.
|
|
·
|
We expect
to incur additional Brazilian taxes in connection with our operation of
the FSRUs in Brazil. Our operation of the Golar Spirit and the
Golar Winter will
result in our being subject to Brazilian taxes on the revenue we receive
under the operation and services agreement with Petrobras. For
the year ended December 31, 2008, we incurred $0.8 million of Brazilian
taxes in connection with the commencement of the Golar Spirit FSRU
charter in July 2008.
|
|
·
|
Sale of the
Golar Frost to OLT Offshore LNG Toscana in 2008 and the immediate charter
back of the vessel until the end of May 2009. We sold
the Golar Frost,
for $231.0 million, recognizing a gain of $78.1 million in July
2008. We immediately chartered back the vessel on a short-term
time charter until its redelivery to OLT-O at the end of May
2009.
|
|
·
|
Investment
in projects. We are continuing to invest in and develop
our various projects, the costs we have incurred historically may not be
indicative of future costs.
|
|
·
|
the
number of vessels in our fleet, including our ability to make delivery of
the Golar Freeze
on its scheduled delivery date;
|
|
·
|
whether
Petrobras exercises its options to acquire the Golar Spirit or the
Golar Winter and,
if so, whether we can effectively redeploy the proceeds from any such
exercise;
|
|
·
|
whether
Petrobras exercises its option to terminate the Golar Spirit or the
Golar Winter
charters upon payment of a termination
fee;
|
|
·
|
whether
DUSUP exercises its option to terminate the Golar Freeze charter
upon payment of a termination fee;
|
|
·
|
our
ability to maintain good relationships with our five key existing
customers (including Petrobras) and to increase the number of our customer
relationships;
|
|
·
|
increased
demand for LNG shipping services, including FSRU services, and in
connection with this is the underlying demand and supply for natural gas
and specifically LNG;
|
|
·
|
the
success or failure of the LNG infrastructure projects that we are working
on or may work on in the future;
|
|
·
|
our
ability to successfully employ our vessels at economically attractive
rates, as our charters expire or are otherwise
terminated;
|
|
·
|
our
ability to obtain debt financing in respect of our capital commitments in
the current difficult credit
markets;
|
|
·
|
the
effective and efficient technical management of our
vessels;
|
|
·
|
our
ability to obtain and maintain major international energy company
approvals and to satisfy their technical, health, safety and compliance
standards; and
|
|
·
|
economic,
regulatory, political and governmental conditions that affect the shipping
industry. This includes changes in the number of new LNG
importing countries and regions and availability of surplus LNG from
projects around the world, as well as structural LNG market changes
allowing greater flexibility and enhanced competition with other energy
sources.
|
|
·
|
the
hire rate earned by our vessels and unscheduled off-hire
days;
|
|
·
|
non-utilization
for vessels not subject to fixed rate
charters;
|
|
·
|
pension
and share option expense;
|
|
·
|
mark-to-market
charges in interest rate, equity swaps and foreign currency
derivatives;
|
|
·
|
foreign
currency exchange gains and losses;
|
|
·
|
our
access to capital required to acquire additional vessels and/or to
implement our business strategy;
|
|
·
|
the
performance of our equity
interests;
|
|
·
|
increased
crewing costs; and
|
|
·
|
our
level of debt and the related interest expense and amortization of
principal.
|
Inflation
and Cost Increases
|
|
·
|
The
Golar Mazo's
charter provides for operating cost and insurance cost pass-throughs and
so we will be protected from the impact of the vast majority of such
increases.
|
|
·
|
The
Methane Princess'
charter provides that the operating cost component of the charter hire
rate, established at the beginning of the charter, will increase by a
fixed percentage per annum, except for insurance, which is covered at
cost.
|
|
·
|
Under
the OSAs for both the Golar Spirit and the
Golar Winter, the
hire amounts are payable in Brazilian Reais. The hire payable
under the OSAs covers all vessel operating expenses, other than drydocking
and insurance which are covered under the Time Charter
Party. The hire amounts payable under the OSAs were established
between the parties at the time the charter was entered into and will be
increased based on a specified mix of consumer price and U.S. Dollar
foreign exchange rate indices on an annual
basis.
|
|
·
|
the
acquisition of the Golar
Arctic (formerly known as the Granatina) in January
2008 and the delivery of two newbuildings, the Grandis in January 2006
and the Granosa
in June 2006;
|
|
·
|
the
gain on disposal of the Golar Frost in 2008 and
our newbuilding DSME Hull 2244 in 2007, realizing a gain of
$78.1 million and $41.1 million,
respectively;
|
|
·
|
the
disposal of our entire equity interest in Korea Line in 2007 resulting in
an aggregate gain of $73.6 million and a corresponding decrease in its
contribution to equity in net earnings of
investees;
|
|
·
|
our
vessels not on long-term charters affected by commercial waiting
time. During 2008, the Golar Frost (which was
sold in July 2008, was immediately chartered back on a short-term time
charter), Golar
Winter and Golar
Arctic all operated in the spot market; and the Hilli was in
lay-up. Also the three vessels on five-year charters with
Shell; the Grandis, Gracilis and Granosa, ("Shell
vessels") are subject to variable (market) charter rates and commercial
waiting. However, in March 2007, the Gracilis commenced a
three-year sub charter at a fixed rate, as part of the Shell charter
arrangement;
|
|
·
|
lease
finance and arrangements that we have
entered;
|
|
·
|
the
movement in mark-to-market valuations of our derivative instruments and
the impact of the adoption of hedge accounting, effective from October 1,
2008 for certain of our interest rate swap derivatives;
and
|
|
·
|
share
options expense.
|
(in
thousands of $)
|
2008
|
2007
|
Change
|
Change
|
||||||||||||
Total
operating revenues
|
228,779 | 224,674 | 4,105 | 2 | % | |||||||||||
Voyage
and charter-hire expenses
|
(33,126 | ) | (10,763 | ) | (22,363 | ) | (208 | %) |
|
·
|
the
addition to the fleet of the Golar
Arctic acquired in January 2008 and the charter-in of the
Ebisu under
a two year charter in October 2008;
|
|
·
|
the
commencement of the Golar Spirit's 10-year
charter with Petrobras in July 2008, pursuant to its redelivery from the
shipyard on completion of its FSRU retrofitting in June
2008. The Golar Spirit first
entered the shipyard for conversion in October
2007.
|
|
·
|
off-hire
time incurred by the Golar Winter upon
entering the shipyard at the end of September 2008 for its FSRU
retrofitting until its redelivery to us in May
2009;
|
|
·
|
an
overall decline in charter rates and lower utilization levels of our
vessels trading on the spot market or in lay-up in 2008 (the Golar Frost, Golar Winter, Golar Arctic, the Ebisu and the Hilli), including our
vessels operating under the Shell five-year charters subject to variable
(market) charter rates and commercial waiting time (the Grandis, Granosa and
Gracilis).
The total operating revenues generated by these vessels in 2008 were
$103.9 million as compared to $139.4 million in
2007.
|
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Calendar
days less scheduled off-hire days
|
4,466 | 4,197 | 639 | 15 | % | |||||||||||
Average
daily TCE (to the closest $100)
|
$ | 45,700 | $ | 51,000 | $ | (5,300 | ) | (10 | %) |
(in
thousands of $)
|
2008
|
2007
|
Change
|
Change
|
||||||||||||
Gain
on sale of vessel/ newbuilding
|
78,108 | 41,088 | 37,020 | 90 | % |
(in
thousands of $, except for average daily vessel operating
costs)
|
2008
|
2007
|
Change
|
Change
|
||||||||||||
Vessel
operating expenses
|
61,868 | 52,986 | 8,882 | 17 | % | |||||||||||
Average
daily vessel operating costs
|
12,793 | 12,097 | 696 | 6 | % |
(in
thousands of $)
|
2008
|
2007
|
Change
|
Change
|
||||||||||||
Administrative
expenses
|
17,815 | 18,645 | (830 | ) | (4 | %) |
|
·
|
a
decrease of $2.9 million in the charge relating to employee share options.
For further detail please see the section of this annual report
entitled Item 18, "Consolidated Financial Statements: Note 26 –
Share Capital and Share Options."
|
|
·
|
an
increase of $0.9 million in salary and related expenses mainly due to the
depreciation of GBP against the U.S. dollar, an increase in employee
numbers and higher pension costs;
|
|
·
|
higher
property related expenses, which increased by $0.5 million in 2008,
arising from the relocation to new offices in London at the end of
2008. This includes the effect of a provision for the rental
costs of our former office space until the end of its lease in mid 2009;
and
|
|
·
|
higher
legal and professional costs mainly relating to a higher level of
commercial activity.
|
(in
thousands of $)
|
2008
|
2007
|
Change
|
Change
|
||||||||||||
Depreciation
and amortization
|
62,005 | 60,163 | 1,842 | 3 | % |
(in
thousands of $)
|
2008
|
2007
|
Change
|
Change
|
||||||||||||
Impairment
of long-lived assets
|
110 | 2,345 | (2,235 | ) | (95 | %) | ||||||||||
Gain
on sale of long-lived assets
|
430 | - | 430 | N/a |
(in
thousands of $)
|
2008
|
2007
|
Change
|
Change
|
||||||||||||
Interest
income from capital lease restricted cash deposits
|
42,869 |