Golar LNG: Unlocking $3B in EBITDA as FLNG Gimi Nears Milestone COD – A Compelling 'Buy' Ahead of Earnings

Golar LNG (NASDAQ: GLNG) stands at a pivotal moment, with its Q1 2025 earnings release on May 27 poised to validate a transformative strategy centered on Floating Liquefied Natural Gas (FLNG) projects. The company's progress toward commercial operations at its flagship FLNG Gimi facility, combined with resolved cash flow disputes and a resilient dividend policy, positions it as a high-conviction investment ahead of its earnings catalyst. Here's why investors should act now.

The FLNG Gimi Milestone: A $3 Billion EBITDA Catalyst

The FLNG Gimi's Commercial Operations Date (COD) is now expected within Q2 2025, marking the culmination of years of investment and regulatory hurdles. Once achieved, this 2.4 MTPA facility will trigger the recognition of a staggering $3 billion Adjusted EBITDA backlog, unlocking value tied to its 20-year Lease and Operate Agreement with BP and Kosmos Energy. The COD will also enable Golar to begin receiving contractual day-rate payments—split into capital and operating components—which will flow directly into both its income statement and balance sheet.

This milestone is non-trivial. The FLNG Gimi's EBITDA contribution alone could add ~$150 million annually to Golar's bottom line, while its backlog represents 40% of the company's current market cap. With first gas already achieved in Mauritania/Senegal's GTA Hub, the project is on track to become a cash flow juggernaut.

Cash Flow Disputes Resolved: Uncertainty Lifted

A lingering concern—disputes over pre-COD cash flows—has now been settled. Golar reached an agreement in principle with BP and Kosmos, resolving claims over payments dating back to January 2024. The deal provides progressive stage payments from January 2024 to COD, ensuring deferred cash flows are gradually recognized. This removes a major overhang, allowing Golar to focus squarely on executing its FLNG growth agenda.

Dividend Resilience: 2.67% Yield Despite High Payout Ratio

Golar's dividend yield of 2.67% (annualized at $1.00 per share) may appear modest, but it masks a compelling narrative. The company's Q1 2024 dividend of $0.25 per share was maintained despite a temporary dip in earnings, resulting in a 208.33% payout ratio. Critics might question this, but the payout is strategically defensible:

1. EBITDA Surge Ahead: The FLNG Gimi's COD will flip the script on profitability. Once operational, its $3B EBITDA backlog will slash the payout ratio to ~50% or lower.
2. Share Buybacks as a Growth Lever: With $74.1 million remaining under its $150 million buyback program, Golar is actively reducing shares outstanding. Fewer shares mean higher EPS accretion when FLNG cash flows materialize.
3. Dividend History: Golar has maintained this payout for over five years, even during industry downturns. The dividend is a signal of management's confidence in its FLNG model.

A “Buy” Rating: Why Act Now?

Analysts project Q1 2025 EPS of $0.31 and revenue of $64.9 million, but the real value lies in the qualitative catalysts:
- FLNG Gimi's COD confirmation will validate execution capabilities.
- EBITDA realization will begin immediately, reducing leverage (Adjusted Net Debt of $816 million as of Dec 2024) and fueling future dividends.
- Shareholder returns: The buyback program and dividend combo create a double-digit total return potential even before EBITDA ramps up.

With a P/E ratio of 267.59, GLNG trades at a premium to peers. However, this reflects the market's anticipation of FLNG-driven growth. A post-COD re-rating is inevitable, with analysts already pricing in a $49.70 average target price—a 33% upside from current levels.

Final Call to Action

Golar LNG is at a critical inflection point. The FLNG Gimi's COD is a binary catalyst that could redefine its valuation multiple. With a 2.67% dividend yield, a $3B EBITDA backlog, and a resolved cash flow dispute, GLNG offers a rare blend of income and growth. Investors should initiate a position ahead of May 27's earnings, targeting a $49.70 price target—a “Buy” rating that ignores this FLNG revolution does so at its peril.

Risks: Delays in COD, lower-than-expected gas prices, or regulatory hurdles in new FLNG projects (e.g., Argentina's MKII unit). However, the company's execution track record and diversified FLNG pipeline mitigate these concerns.

This is not just an earnings call—it's the dawn of Golar's FLNG era. Don't miss it.