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Golar LNG Partners: Preliminary Fourth Quarter and Financial Year 2012 Results


Golar LNG Partners: Preliminary Fourth Quarter and Financial Year 2012 Results

HAMILTON, BERMUDA -- (Marketwire) -- 02/28/13 --

Highlights

- Golar LNG Partners reports net income attributable to unit holders of $27.3 million and operating income of $46.0 million for the fourth quarter of 2012

- Generated distributable cash flow of $22.4 million for the fourth quarter of 2012

- Distribution increased to $0.50 per unit for the fourth quarter of 2012

- Completed second follow-on offering raising net proceeds of approximately $180 million

- Completion of acquisition of interests in the companies that lease and operate the LNG carrier Golar Grand

- Issued and listed NOK 1,300 million bonds in the Norwegian market (approximately $227 million) and repaid $222 million vendor loan from Golar LNG Limited in respect of the Golar Freeze acquisition

- The $155 million vendor loan from Golar LNG Limited in respect of the Nusantara Regas Satu ("NR Satu") acquisition is repaid following the successful completion of the NR Satu refinancing

Subsequent events

- Increase in distribution announced following the completion of acquisition of interest in the company that owns and operates the LNG carrier Golar Maria

- Completed third follow-on equity offering raising total net proceeds of approximately $130 million

Financial Results Overview

Golar LNG Partners LP ("Golar Partners" or the "Partnership") reports net income attributable to unit holders of $27.3 million and operating income of $46.0 million for the fourth quarter of 2012 ("the fourth quarter"), as compared to net income attributable to unit holders of $25.2 million and operating profit of $35.5 million for the fourth quarter of 2011(1).

(1)Following the acquisition of the Golar Grand and NR Satu from Golar, the comparative results for the fourth quarter and year ended 2011 assume that the Golar Grand and NR Satu were wholly owned by the Partnership for the entire period that the vessels have been under the common control of Golar.

As required by US GAAP, following the acquisition of the LNG carrier, the Golar Grand from Golar LNG Limited ("Golar" or "Golar LNG"), the results for the fourth quarter and year ended December 31, 2012 and comparative numbers for the fourth quarter and year ended December 31, 2011 assume that the Golar Grand was wholly owned by the Partnership for the entire period that the vessel has been under the common control of Golar. These results therefore include the historical carved out results of the Golar Grand.

There was a significant improvement in operating results for the fourth quarter of 2012 compared to the same period in 2011 due largely to the contribution of the NR Satu. This is because the NR Satu was on hire throughout the fourth quarter of 2012 but was undergoing its conversion to an FSRU during the fourth quarter of 2011 and, therefore, not generating revenues. The Golar Spirit was offhire from December 11, 2012, as planned, when the vessel commenced its transit to its first drydock as an FSRU. Operating results for the fourth quarter have therefore been negatively impacted by this offhire time for Golar Spirit and the related fuel costs. All other vessels operated well throughout the quarter with 100 per cent utilization.

Total offhire time for Golar Spirit drydock is now expected to be approximately eleven weeks. This is not however, expected to be indicative of future drydock offhire time. The Golar Mazo is planned to drydock at the beginning of the second quarter of 2013 but no offhire time is expected due to the time allowance for drydocking provided by the charter. The Methane Princess is expected to drydock towards the end of the second quarter of 2013 and approximately 3-4 weeks offhire time is expected.

Towards the end of the first quarter of 2013 the Golar Winter is expected to commence its drydock and agreed modification work. Golar Winter is expected to be offhire for a total of approximately six weeks commencing March/April 2013. Following the completion of the agreed modification work to Golar Winter, Golar Partners will receive approximately $24 million in additional revenue evenly over the remaining term of the contract (eleven years) commencing in the third quarter of 2013. This is before the effect of rate escalation as provided for in the time charter.

Net interest expenses increased to $10.7 million for the fourth quarter of 2012 compared to $6.8 million for the same period in 2011. This is principally due to additional interest cost associated with the vendor loan from Golar in respect of the NR Satu. During the fourth quarter, the Partnership entered into a $155 million term loan facility and a $20 million revolving loan facility with a group of banks and repaid the vendor loan in respect of the NR Satu in December 2012.

Other financial items loss for the fourth quarter of 2012 of $0.5 million is consistent with the loss of $0.5 million for the fourth quarter of 2011.

The Partnership's Distributable Cash Flow(2) for the fourth quarter of 2012 was $22.4 million as compared to $25.2 million in the third quarter of 2012. These amounts are after adjustments to remove dropdown vessels results prior to their actual acquisition date. The reduction is due to offhire time and fuel cost related to the Golar Spirit drydocking in the fourth quarter as well as higher average operating costs in the fourth quarter. This is offset in part by the contribution of the Golar Grand from November 8, 2012.

On January 23, 2013, Golar Partners declared an increased distribution for the fourth quarter of $0.50 per unit. This represented a 5.3% increase from the third quarter of 2012 and reflected the full accretive value of the acquisition of the Golar Grand. The dividend was paid on February 14, 2013.

(2)Distributable cash flow is a non-GAAP financial measure used by investors to measure the performance of master limited partnerships. Please see Appendix A for a reconciliation to the most directly comparable GAAP financial measure.

Follow-on Equity Offerings

In November 2012, the Partnership completed its second follow-on equity offering selling a total of 4,300,000 common units, representing limited partner interests, at a price of $30.50 per common unit. In addition, Golar GP LLC, the Partnership's general partner, contributed approximately $3.6 million to the Partnership to maintain its 2.0% general partner interest in the Partnership. Simultaneously, the Partnership also closed a private placement of 1,524,590 common units to Golar at a price of $30.50 per common unit. The Partnership's total combined net proceeds amounted to approximately $180 million.

Subsequent to the quarter end, in February 2013, the Partnership completed its third follow-on offering selling a total of 3,900,000 common units, representing limited partner interests, at a price of 29.74 per common unit. In addition, Golar GP LLC, the Partnership's general partner, contributed approximately $2.6 million to the Partnership to maintain its 2.0% general partner interest in the Partnership. Simultaneously, the Partnership also closed a private placement of 416,947 common units to Golar at a pri ce of $29.74 per common unit. The Partnership's total combined net proceeds amounted to approximately $130 million.

Acquisitions LNG carrier Golar Grand

In November 2012, the Partnership completed the acquisition of interests in the companies that lease and operate the LNG carrier Golar Grand for a purchase price of $265 million. In connection with the acquisition, the Partnership assumed a $90 million finance lease liability (net of restricted cash) in respect of the Golar Grand with the balance of the purchase price funded using the proceeds of its second follow-on equity offering. The Golar Grand is on a three year charter to Methane Services Limited ("MSL"), a wholly owned subsidiary of BG Group. MSL have an option to extend the charter term for an additional three years. The Partnership have also entered into an Option Agreement pursuant to which the Partnership has the right to cause Golar LNG to charter the vessel from March 2015 until October 2017, in the event MSL does not exercise the option to extend. The Partnership estimates that the Golar Grand acquisition will give rise to annual revenues between $42 million and $44 million and annual net cash from operations (before the deduction of interest costs) between $36 million and $38 million during the term of its charter with Methane Services Limited.

LNG carrier Golar Maria

In February 2013, the Partnership completed its acquisition of interests in the company that owns and operates the LNG carrier, the Golar Maria, from Golar LNG for a purchase price of $215 million. The Golar Maria was delivered to its current charterer, LNG Shipping S.p.A. ("LNG Shipping"), a subsidiary of Eni S.p.A in November 2012 under a charter with an initial term expiring in December 2017. The acquisition is expected to generate annual revenues between $28 million and $29 million and annual net cash from operations (before the deduction of interest costs) between $22 million and $24 million during the term of its charter with LNG Shipping.

The Partnership financed the acquisition of the Golar Maria by assuming the debt on the vessel amounting to approximately $89 million and the remainder from the net proceeds of its equity offering that completed in February 2013.

Financing and Liquidity

Bond issuance for NOK 1,300 million

In September 2012, the Partnership successfully completed the issuance of a NOK 1,300 million bond in the Norwegian bond market with maturity expected to be on October 12, 2017. The aggregate net principal amount of the bonds is equivalent to approximately USD 227 million and has been swapped to US dollars, with a fixed interest rate of 6.485%. Golar Partners listed the bonds on the Oslo Stock Exchange in December 2012.

Subsequent to the issuance of the bonds, in October 2012, the Partnership used some of the net proceeds to repay the vendor loan from Golar of $222.3 million in respect of the Golar Freeze acquisition.

NR Satu Debt Financing

In December 2012, PT Golar Indonesia, the company that owns and operates the FSRU, NR Satu, entered into a 7 year secured loan facility. The total facility is $175 million and is split into two tranches, a $155 million term loan facility and a $20 million revolving facility. The facility is with a syndicate of banks and bears interest at LIBOR plus a margin. The facility has a balloon payment of $52.5 million payable after 7 years.

Immediately after the closing of the NR Satu facility, the Partnership used the proceeds to repay the vendor loan from Golar of $155 million in respect of the NR Satu acquisition. The $20 million revolving tranche remains undrawn.

In February 2013, the Partnership entered into interest rate swaps to fix the LIBOR interest rate on a principal amount of $122.5 million in connection with the NR Satu financing at an average rate of 1.27%.

Liquidity Position

As of December 31, 2012 the Partnership had cash and cash equivalents of $66.3 million and undrawn revolving credit facilities of $40 million. Total debt and capital lease obligations net of restricted cash was $930.4 million as of December 31, 2012.

Based on the above debt amount and annualized(3) fourth quarter 2012 adjusted EBITDA(4 )Golar Partners has a debt to adjusted EBITDA multiple of 3.9 times.

As of December 31, 2012, Golar Partners had interest rate swaps with a notional outstanding value of $759.6 million (including swaps of notional amount of $227.2 million in connection with the Partnership's bonds) representing approximately 81.6% of total debt and capital lease obligations, net of restricted cash. As noted above, subsequent to the quarter end, the Partnership swapped an additional notional amount of $122.5 million. The average fixed interest rate of swaps related to bank debt and capital lease obligations is approximately 2.5%. Average bank margins paid on outstanding bank debt in addition to the interest rate are approximately 1.84%. The all in rate of interest payable on the Partnerships bonds is 6.485%.

(3)Annualized means the figure for the quarter multiplied by 4.

(4)Adjusted EBITDA: Earnings before interest, other financial items, taxes, non-controlling interest, depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure used by investors to measure our performance. Please see Appendix A for a reconciliation to the most directly comparable GAAP financial measure.

Outlook

Since Golar Partners IPO in April 2011 quarterly distributions have increased from the minimum quarterly distribution of $0.385 per unit to $0.475 as paid prior to December 31, 2012. This represents an increase of 23.4%. As a result of the Golar Grand acquisition, Golar Partners' has further increased quarterly distributions from $0.475 per unit to $0.50 per unit. This increased distribution, representing a 5.3% increase, was declared for the fourth quarter of 2012 and paid in February 2013.

Following the acquisition of the Golar Maria the Partnership's management intends to recommend to the Board an increase in the Partnership's quarterly cash distribution of between $0.0125 and $0.0175 (or an annualized increase of between $0.05 and $0.07), which would become effective for the distribution with respect to the quarter ending March 31, 2013. If approved this would result in a quarterly distribution level of between $0.5125 and $0.5175 representing an increase of between 2.5% and 3.5% over the $0.50 distribution paid in February 2013.

The Board is pleased with the acquisition of the Golar Maria, particularly as it is further demonstration of the strong incentive of both the Partnership and Golar to pursue further drop-down transactions. It also maintains the pace of strong distribution growth that the Partnership is highly focused on.

First quarter 2013 operating results will be positively impacted by the acquisition of the Golar Maria but will also reflect offhire related to the Golar Spirit drydock and the likely commencement of the Golar Winter drydock and modification work. The rate increase in connection with the Golar Winter modification work will commence in the third quarter of 2013.

Golar has a fleet of eleven newbuild LNG carriers, four of which deliver in 2013 and two FSRU's, one of which delivers in 2013. With strong market fundamentals and this fleet of potential drop-down vessels that Golar owns, the Board remains optimistic that Golar Partners can continue its high growth rate and continue to increase distributions over the long-term.

February 28, 2013

Golar LNG Partners L.P.

Hamilton, Bermuda.

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Golar LNG Partners L.P. via Thomson Reuters ONE

[HUG#1682086]

Quest ions should be directed to: C/o Golar Management Ltd +44 207 063 7900 Brian Tienzo or Graham Robjohns

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