Golar LNG's $500 Million Senior Notes Offering: Assessing Capital Structure Resilience and Strategic Positioning in the Evolving LNG Market

Golar LNG Limited's recent $500 million senior notes offering, announced on September 25, 2025, has reignited scrutiny over its capital structure resilience and long-term strategic positioning in the liquefied natural gas (LNG) market. The offering, which carries a 7.500% annual interest rate and matures on October 2, 2030, underscores the company's efforts to manage its debt profile amid a challenging operating environmentGolar LNG Announces Pricing of $500 Million Offering of Senior Notes due 2030^[1]. However, the move must be evaluated against a backdrop of elevated financial leverage and a strategic pivot toward floating LNG (FLNG) infrastructure—a sector poised for growth but requiring significant capital outlays.

Capital Structure: A Delicate Balance

Golar LNG's debt-to-equity ratio stood at 1.09 as of June 30, 2025, reflecting a capital structure heavily weighted toward debtGolar LNG Limited Closes Offering of $575 Million of 2.75% Convertible Senior Notes Due 2030 and Repurchase of 2.5 Million Common Shares^[2]. This level of leverage, combined with an interest coverage ratio of 0.32, highlights a precarious ability to service obligationsGolar LNG Earnings Q2 2025^[4]. For context, the company reported an operating loss of $3.6 million in Q2 2025, while interest expenses reached $6.4 million, leaving little room for operational flexibilityGolar LNG (GLNG) Interest Coverage Ratio Chart - GLNG Stock^[3].

The recent $500 million offering adds to an already complex debt profile. While the press release did not explicitly state the use of proceeds, historical patterns suggest the funds may be allocated to general corporate purposes, including share repurchases, debt refinancing, or growth investmentsGolar LNG Prices $500 Million Senior Notes at 7.5% Through 2030^[5]. For instance, in July 2025, Golar LNG used proceeds from a $575 million convertible bond issuance to repurchase 2.5% of its equity, signaling a focus on shareholder returnsGolar LNG Limited Closes Offering of $575 Million of 2.75% Convertible Senior Notes Due 2030 and Repurchase of 2.5 Million Common Shares^[2]. However, with a net debt-to-EBITDA ratio of 3.4x in Q2 2025 and a cash position of $900 million, the company appears to be balancing short-term liquidity needs with long-term capital expenditures for FLNG projectsGolar LNG (GLNG) Statistics & Valuation - Stock Analysis^[6].

Strategic Positioning: FLNG as a Growth Engine

Golar LNG's strategic shift toward FLNG infrastructure is a critical component of its long-term resilience. The company has secured $13.7 billion in Adjusted EBITDA backlog through 20-year charters with Southern Energy S.A. in Argentina for its FLNG Hilli and the future MKII FLNG vesselGolar LNG Earnings Q2 2025 | Golar LNG News & Analysis^[7]. These contracts, coupled with the nearing commercial operations of the FLNG Gimi, provide a de-risked revenue stream that could drive earnings visibility for over a decadeGolar LNG Earnings Q2 2025^[4].

The MKII FLNG project, however, remains a significant financial burden. With a total conversion cost of $2.2 billion—of which $1.5 billion remains equity-funded—Golar LNG must navigate capital constraints while maintaining operational disciplineGolar LNG: Markedly Improved Thesis Due to Secular LNG Growth^[8]. The recent senior notes offering, with its 7.5% coupon, introduces additional interest costs that could strain margins if not offset by revenue growth. Yet, the offering's 10-year maturity (2025–2030) provides a longer runway to service debt, aligning with the extended cash flow visibility from its FLNG backlogGolar LNG Announces Pricing of $500 Million Offering of Senior Notes due 2030^[1].

Market Dynamics and Risk Mitigation

The global LNG market is undergoing structural shifts, driven by Asia's growing demand for flexible infrastructure and inflation-linked charter adjustments. Golar LNG's pivot to FLNG—divesting non-core assets like the Golar Arctic and its Avenir LNG stake—positions it to capitalize on these trendsGolar LNG Earnings Q2 2025^[9]. Analysts at Papyrus Capital estimate that the company's free cash flow could reach $10–$12 per share, driven by its contracted backlog and commodity-linked revenue mechanismsGolar LNG (GLNG) Interest Coverage Ratio Chart - GLNG Stock^[3].

Nevertheless, risks persist. The company's interest coverage ratio of 0.32 remains far below the 3-year average of 1.20Golar LNG (GLNG) Interest Coverage Ratio Chart - GLNG Stock^[3], and its reliance on high-yield debt (7.5% coupon) could amplify volatility in earnings. Additionally, while the $900 million cash position offers short-term flexibility, the MKII project's equity requirements and potential commodity price fluctuations necessitate disciplined capital allocationGolar LNG (GLNG) Statistics & Valuation - Stock Analysis^[6].

Conclusion: A Calculated Bet on FLNG's Future

Golar LNG's $500 million senior notes offering reflects a calculated attempt to stabilize its capital structure while funding strategic growth in FLNG. While the high leverage and thin interest coverage ratios raise concerns, the company's long-term EBITDA backlog and pivot to a pure-play FLNG model provide a foundation for resilience. The offering's success will hinge on its ability to deploy proceeds effectively—whether toward debt refinancing, share repurchases, or capital expenditures—and to capitalize on the secular growth of LNG infrastructure. For investors, the key will be monitoring how Golar LNG balances its aggressive debt profile with the operational and financial discipline required to sustain its strategic vision.