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Golar LNG (NASDAQ:GLNG)

Q1 2013 Earnings Call

May 30, 2013 10:00 am ET

Executives

Brian Tienzo - Chief Financial Officer

Doug Arnell - Chief Executive Officer of Golar Management Ltd

Analysts

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Fotis Giannakoulis - Morgan Stanley, Research Division

Michael Webber - Wells Fargo Securities, LLC, Research Division

Urs M. Dür - Clarkson Capital Markets, Research Division

Øyvind Berle

Nathan Weiss

Eirik Haavaldsen - Pareto Securities AS, Research Division

Operator

Good day, and welcome to the Golar LNG Limited Q1 2013 Results Presentation. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brian Tienzo. Please go ahead, sir.

Brian Tienzo

Thank you for that. Hello, everyone, and welcome to Golar LNG's First Quarter 2013 Quarter Results. My name is Brian Tienzo. And as per usual, we'll be taking you through the first quarter highlights, as well as the financial highlights also. I'm joined here also by our CEO, Doug Arnell, who will take you through the business update and summary and outlook sections.

To kick off, let's now turn to Page 4 for the Q1 2013 highlights. As previously announced, on -- Golar LNG Limited now deconsolidates the results of Golar LNG Partners, and on the basis that the results of Golar Partners are no longer consolidated, Golar LNG reports operating income of $75.9 million and net income of $85.6 million also. To the extent we are in a transition period for looking at the results of Golar LNG Limited, we will also look at the comparative consolidated numbers of how the numbers would have looked like had we continued to consolidate.

Further on, Golar Partners completes its third follow-on equity offering, raising net proceeds of $130 million in February. This is by virtue of issuance of 3.9 million units to the public. GP maintains 2% shareholding of GMLP. And as the result of this equity raising, Golar now owns 50.9% of GMLP. Golar LNG Limited sells its interest in the company that owns and operates the Golar Maria to Partners for $215 million. This was partly funded by the public offering that Partners did, and also bid the assumption of $90 million worth of debt associated with the asset. Subsequent to the dropdown, GMLP increased its dividend to $0.515 per quarter, and significantly, Golar now has triggered the 25% IDR threshold as part of the increase of distribution from GMLP.

Results on a consolidated basis were affected by the Golar Spirit's completion of drydocking. It was on drydock until up to the 26th of February. We also announced during Q1 that Golar has been chosen as preferred bidder for Jordan FSRU, and the time charter negotiations and discussions are progressing well.

Finally, the Board declares increased dividend of $0.45 for the quarter. This is despite volatility outlook of the next couple of years, and Board has communicated its intention to maintain this level of dividend. To date, since the IPO of MLP, Golar LNG's dividend has grown by 80% since Q1 2013.

Moving now to Page 5 for the subsequent events, and which Doug will go through in much more detail later. Golar has agreed terms to participate in the Douglas Channel LNG project, with a view of reaching FID in Q3 2013 and startup for the project of late 2015 or early 2016. Two factors that are likely to impact earnings on a consolidated basis in Q2 will be the Golar Winter drydocking and its modification work. Furthermore, Hilli and Gandria entered layup earlier on in Q2 also.

Turning now to Page 6. This is really just to go through and highlight the differences resulting from deconsolidation of Golar Partners. So as previously announced, the company has determined that Golar Partners is required to be deconsolidated effective on 13th of December 2012, which has -- as a result of the change of composition of Directors of Golar LNG Partners. The Q1 results, which we made public today, reflect the deconsolidated basis, but for the purposes and to help investors analyze the underlying performance of the group, we're also showing consolidated basis to help out with that.

As previously mentioned, the main impact of deconsolidation are: One, to de-recognize the assets and liabilities associated with the GMLP, which is then replaced by recognizing the fair value of its investments in Golar Partners; furthermore, future dropdowns will be at fair value versus the common control treatments of previous transactions; and gains and losses arising from those dropdowns will be recognized.

Cash distributions received from GMLP, derived from ownership of common units, GP units and IDRs will now be recognized as dividend income in Golar's books. More importantly, though, the company reiterates that cash flows, in respect of its relationship with GMLP, will not be affected.

As we mentioned there in the footnote, we have included some appendices to the presentation to help out understanding how the various treatments of investments are shown in the books.

Turning over to Page 7. So we've got 3 blocks of columns there. I will start off with the middle block under the consolidated columns and look at Q4 2012 versus Q1 2013 to show what the underlying performance of the Golar Group looked like. So net operating revenues for Q1 2013 are $105.5 million, slightly lower than $100.7 million -- $107.5 million as in Q4. This was affected mostly by the Golar Spirit drydocking, which was in drydock up to the 26th of February, but to some extent, mitigated by a full quarter revenue earnings by the Golar Maria, and there is a new time charter.

To mitigate the reduction in revenue in Q2 -- in Q1, we had lower operating costs in Q1 versus Q4, and within these operating costs are included -- included are crew employment costs, in respect of preparation for the upcoming newbuilding deliveries. In Q1 2013, we -- within the $21.6 million of operating costs, $1.4 million is related to the crew employment costs of -- for newbuildings in Q4 2012. $3.2 million of that is in relation to building up a crew for the newbuild deliveries.

Furthermore, administration costs for the quarter is also lower by approximately $2 million.

Moving down the list, going down to net income. As a result of a slight decrease in revenue savings and operating cost savings on OpEx, and to some extent also some savings in net financial expenses, we get a net income number of $39 million on a consolidated basis.

Further down the list, now looking at the time charter equivalents. As a result of the Golar Maria in -- on charter for most of the quarter, the time charter equivalent for Q1 2013 at $94,748 is better, is improved versus the Q4 2012 at $91,479 per day.

Utilization also improved, again mostly because of the Golar Maria full employment during the quarter.

Going now to the standalone deconsolidated numbers. The net operating revenues are simply of the 5 vessels now left at Golar LNG Limited, which are Gimi, Hilli, Gandria, Viking and Arctic. Similarly, operating expenses are -- reflect those 5 vessels' operating expenses. But as I mentioned earlier, any dropdowns now between Golar Partners and Golar LNG Limited will be reflected at fair value, which because of the Golar Maria dropdown in February, Golar LNG Limited now reflects a gain of $65.2 million during the quarter.

Just to note, of course, that not all of the gain is recognized in the quarter. Some of the gain is deferred by virtue of certain investments in Golar LNG Partners, and that amount of deferral will be amortized over time. Nevertheless, regardless of whether it's a standalone basis or on a consolidated basis, Golar LNG Limited declares an increase in dividend of $0.025 to $0.45 for -- in respect of Q1 results.

Going over to Page 8. These highlights really -- just the various treatments of the -- of Golar -- of the company's investments in Golar LNG Partners. So now, we have 3 different treatments as far as the different investments are concerned.

Now looking at investments in available-for-sale securities, those are essentially representing the common units that Golar LNG Limited owns. Investment and affiliates represents the subordinated units that Golar LNG Limited owns with Partners. And finally, the cost method investments is where the IDR and the GP units now sits. Obviously, these numbers will move according to if and when Golar Partners issue additional units and, of course, the investments in available-for-sale securities will be remeasured every quarter.

Going over to Page 9. As the result of the deconsolidation, the debts associated with the vessels at Golar LNG Partners now move away from Golar LNG Limited's balance sheet. Hence, majority of the highlights here is really just showing that majority of those debts are now out of Golar LNG's balance sheet and will be solely reflected at Golar LNG Partners'.

And lastly, the last highlight there is the Golar LNG Limited's stockholders' equity, which jumped from Q3 2012 to 8 -- from $841,000 to $1.7 million in 2000 -- to end of the year 2012, simply because of the gain recognized as a result of the deconsolidation.

Going over to Page 10. As mentioned earlier, the cash flows, as far as the relationship between LNG Partners and Limited, are unaffected. Hence, any gains or losses arising from the transactions between the 2 are then added back to get to our operating activities. And again, the second highlight there is just to show the number of predelivery installments in respect of a newbuilding program that is paid during the quarter.

Going now to Page 11 and to discuss the financing on a newbuild program. We continue to progress in financing its program, and to date, the discussions have been proceeding very positively. Today, the company has paid approximately $700 million in predelivery installments. There will continue to -- there will be another $100 million prior to the first delivery in August. Against that, the company has cash reserves today of approximately $270 million.

Now the strategy, as far as funding the deliveries are concerned, haven't really changed. We have had very positive discussions, and continuing towards refining structures with the ECA. As mentioned there, they are engaged in a financing plan in respect of a number of deliveries, is being structured and now in much progressed discussions with them. To the extent that discussions have been going very positively, we have had more than sufficient interest from banks and ECAs compared to the number of -- to the financing that we're looking for, for the initial deliveries.

We've also been discussing various proposals put forward to us by banks when it comes to funding some of those deliveries by bond transactions. We have, today, signed a term sheet in respect of 1 vessel -- financing 1 vessel. We're working through the documentation. And finally, one thing, of course, that we mustn't forget is the dropdowns to GMLP to date. The funding, as resulting from GMLP dropdowns, have generated more than $1 billion. And of course, with the deliveries of the vessels coming through, the company's confident that further dropdowns will occur. This, of course, alleviates and assists the funding program for the new deliveries.

Finally, a big portion of the financing that's mentioned above is certainly going to be in place by the time the first delivery is -- comes out of the yard. I now hand over the presentation to Doug, who will go through the commercial and outlook section of our press release today. Doug?

Doug Arnell

Thanks, Brian, and good morning and good afternoon, everybody. I would like to start off on Page 12.

Again, as Brian mentioned briefly, as part of our earnings presentation today, we are announcing that Golar has entered into firm agreements with respect to the Douglas Channel LNG project. Now we talked about this project over the past few quarters. It's something we've been working on for some time, but I'll just review what the project is. It is a project that will take competitively priced natural gas from Western Canada, exported by an LNG liquefaction facility, primarily to markets in Asia. We've been very attracted to this project from the beginning, since we first looked at it, due to the assets that the project has. And those include firm existing pipeline capacity, all the way back to a very liquid gas supply point. The project also has a National Energy Board export permit in place for 1.8 million tonnes per year of export for 20 years. So the combination of those 2 things, and what we have now put in place, which we think is a very excellent partnership, makes for a very, very positive story. So what we have struck in the past couple of days is a framework agreement between ourselves, the Haisla First Nation, the LNG Partners out of Houston, Texas, who are the original developers of the project, and a major energy company, which will be named in due course. Golar has taken a 25% stake in the project, which means that it will have a right to the eventual investment of at least 25% of the capital and the facilities, and a right to 25% control of the offtake.

We're very excited, as I say, about this partnership. The large energy company, which will be named later, certainly provides a very good market capacity for the project. And we also are very excited to be in partnership with the Haisla First Nation, who will work to ensure that the local community relations are handled in a very positive manner.

The initial size of the project is 0.6 million to 0.7 million tonnes per year, which corresponds to the level of the pipeline capacity that's in place for the project. And we expect that the project can be onstream in late 2015 or early 2016. It should be said that the commitment that the Partners have made presently, is to fund all the required activities to take the project to its Final Investment Decision. That means some detailed engineering and some regulatory work in order to lock down the cost and schedule parameters of the project. We expect that the FID can be taken fairly quickly. It should happen within the third quarter of this year. But the investing community should be aware that the FID will be subject to receipt and positive finalization of EPC contracts and the receipt of required regulatory consents in order to construct and operate the project.

As I mentioned, the project has an export permit, which allows an export volume of 1.8 million tonnes per year. The initial project, as I said, is 0.6 million to 0.7 million tonnes. So the partnership will begin investigation of an additional project to use up the rest of that export permit through the construction of another train. And again, Golar will have the right and the option to invest in a minimum of 25% of that train and the associated offtake rights.

We're very excited about taking a step forward with our participation in this project. We believe Western Canada, with its huge low cost to produce gas reserves and support of legal and government situation in place, that this area is going to become a very major LNG export location. And we're pretty proud that we believe we're in the first project that will export from that area.

So moving on to Slide 13. Of course, the Douglas Channel project is just the first and most major part of what has been a strategy that we've been pursuing since, more formally, since last summer. And that is to drive Golar's business presence further along the value chain, in this case, upstream into the liquefaction space. We believe that with our participation in that part of the value chain, we are able to extract a greater portion of the overall net value of the -- of bringing low-cost gas to high-value markets. So we continue along. As you know, and as we've talked about in the past, we continue along with our work on the FEED study with Keppel, for the conversion of our first floating liquefaction vessel. That work is on track to be completed by the end of July. Also of course, we are in discussions with various potential gas supply -- gas suppliers and gas supply regions. We have both other projects, which will be sourced from pipeline quality gas in the Americas. And we're also looking at stranded or flared gas opportunities in West Africa and other parts of the world.

We will continue on the path that we've taken in Douglas Channel, where we will strive to retain partners who bring unique assets to the table that will reduce the execution risk of the project. We will certainly be willing to trade down on equity percentage in the project if we can increase, materially, the chance of success for the projects. The deals that we're looking at are extremely attractive from an economic point of view. But everyone should realize that the execution risk on these deals is great, and there's lots of hurdles to get by before they become firm, but we certainly think they are very well worthwhile working on and we're very optimistic that some of them will come to fruition.

We talked about forming a separate entity to pursue these projects, an entity that will have a very clear mandate to pursue the value proposition of these types of projects. We still have that as an intention, although probably a little bit later than we had indicated in our last quarterly call. We've determined that, given that the materiality of the funding requirements for the projects that we are working on is not very great at this time, and the fact that we are not quite finished with our FEED work with Keppel, led us to delay the launch of this entity in the pursuit of that strategy until the second half of this year. But we still do have the same intention.

Of course, on all of these projects, one of the great side benefits of this is that we can leverage our franchises on the carrier side and the FSRU side into full-chain market propositions. And on every one of these projects, including Douglas Channel, we'll have the firm opportunity to provide shipping to the projects and we'll be looking for ways that we can also bring our FSRU franchise to bear on the deals.

Turning to Slide 14. We'll just step back a bit and look at the near-term LNG market and how it's impacting on shipping at the moment. I think the story of the past year in the LNG industry and LNG shipping has been that certainly, production levels have been well below in aggregate on what was anticipated, due to a, just a lot of unexpected delays and outages in various projects. In fact, 2012 saw an actual reduction, year-on-year reduction, in total LNG produced, which is certainly unprecedented in recent history. Despite all that, shipping rates have remained strong. And the real reason for that is sort of displayed on that graphic on the top right-hand corner, where the Atlantic Basin, our European price to Asian price spread has been fairly wide, which, of course, tends to draw cargoes to the East, which increases the overall average tonne miles for the fleet. This has kept demand quite strong for shipping, and that's why you've seen, generally, that rates have remained very, very strong compared to historical levels.

We would -- we, in 2013, would expect to see that trend continuing. I think on the shipping side, things will be improved by the fact that some of these outages and delays on new liquefaction production coming on will start to be worked through, and you'll start to see those volumes coming on and that markets should remain fairly strong for shipping through the rest of 2013.

Following on '14 and '15, no question will be a rebalancing year, rebalancing period, both to sort of catch-up on shipping in terms of the current demand, but also there's a lot of shipping coming on to the market that is destined to be serving the large quantities of new production that will be coming on late 2015, 2016. But as you can see from the graphic in the top left-hand corner, the shipping is, as we've all expected and consistently have shown, that the shipping -- the new shipping capacity is coming on 1 to 2 years before the large production increases.

Through that period of time, you will see Golar looking at the market in a pragmatic way. We'll look at a mixture of short-, medium- and long-term fixtures until the new production hits the portfolios of the major industry players, requiring them to add structural tonnage to their fleets.

Moving on to Slide 15. Of course, a big driver of change and a big game-changer for the LNG shipping market likely will be the U.S. LNG exports. Recently, we've had some good news with Freeport LNG becoming the second project to receive their DOE permit, to export LNG to non-FTA countries. With that, combined with the Sabine Pass project, you've got 28 million tonnes per annum of nameplate export capacity. Why is that so important? If you look at the stats that we've given there in the bullet points, and the differences in LNG carriers required per million tonnes of LNG, you can see that even if with an assumption of the Panama passage, you've got 1.5 LNG carriers per million tonnes per year. Just taking the first 5 projects that we think are the most likely to go ahead, that's 60 million tonnes per year and obviously, that's a lot of vessels. So it's very good news to see Freeport LNG becoming the second project to receive their permit. Obviously, we can't predict how the DOE is going to handle subsequent permits, but we remain very optimistic on U.S. LNG exports and their impact on carrier demand.

Turning to Slide 16. Again, showing the Golar Group portfolio, including the Golar LNG Partner vessels. As we can see, as the quarters go by, that top section of LNG Partners, the vessel count, is going up and Golar LNG Limited is going down. And that's just a sign of the success of what we said we would do with this corporate structure and utilize it as a capital-raising vehicle for our newbuild program. I will say that we're very proud, again, of our operating performance in the quarter. All of those vessels, excluding those that are currently going into layup and excluding planned drydock time, the MLP, obviously likes very low risk to its operating performance and its revenue, and our technical operators have responded with a less than 1% downtime on the operating assets.

I'd also say that the LNG industry, where safety is a paramount factor with, obviously, for ourselves and with our charters, Golar's superior safety performance continues. Our 12-month rolling long-term incident frequency is set at 0. This effectively means we've had 0 serious incidences in the last 12 months, which is excellent.

Moving on to Slide 17. Showing our -- have open positions coming up in the next years. Again, as I say, as we go through this rebalancing period, through a little bit of volatility in the market, we are still very optimistic. Why? Well, as you can see, we have most of our existing modern vessels chartered through 2013 and '14, with only the Golar Viking being the open position, and we believe we can work that vessel into the market.

The other 3 vessels, Hilli, Gandria and Gimi, of course, as many of you know, we're working on, always working on conversion opportunities, including attractive floating LNG opportunities, conversion of these vessels, so that's the destination for those vessels. And we're optimistic to turn value -- turn those assets into valuable assets. So the rest of the fleet, the vast majority of the fleet, are ultramodern tri-fuel diesel engine vessels, which have a greater fuel efficiency and better boil-off performance than the vast majority of the rest of the fleet. So we're quite optimistic about how these vessels will perform in the market. And as I say, as the new large quantities of LNG production come into the market, more and more longer-term charter opportunities will present themselves.

Over to Slide 18. FSRU business continues to roll along very well. The FSRUs that are operating, again, are part of that, less than 1% downtime equation I told you about, so very good performance there. In terms of new projects and our 2 newbuild FSRU orders, of course, we announced that we were selected as the preferred bidder for the Kingdom of Jordan FSRU project. Those discussions had gone on very well, to finalize agreements. In fact, the agreement is in final form, and it's about to make its way through the Jordanian government approval process, which we hope will happen quite quickly. And that project will go firm.

They are planning to put the FSRU into operation by the end of 2014 or early 2015, which is when we would expect to deliver the FSRU to them. That vessel is the Golar Eskimo, which is the smaller of the 2 FSRUs. The smaller and later delivery of the FSRU, it's the 160,000 cubic meter FSRU. The larger, 170,000 cubic meter vessel, the Golar Igloo, is still available. It will be delivered this fall to us. It is the only uncommitted FSRU available before 2015. So as you would expect, there's a great deal of interest on it. We haven't closed on anything firm for the vessel, but we're certainly in serious discussions with a couple of promising developers.

Gas Atacama, we are in discussion with that project. Certainly, as many of you know, we had suffered some significant delays from its intended go-firm date of the end of last year. It's certainly working through its requirement to sign up a long-term power purchase agreement on the other side of their power plant before they can go ahead. We remain the exclusive provider of that FSRU, but the only way to describe the timing of that project is that it's in indefinite delay.

The FSRU market continues to expand and increase. Certainly, the Middle East and South America are key development areas. India, itself, has multiple projects that are moving forward in various stages, so we expect that FSRU demand will continue, and we expect that Golar will continue to grow its FSRU fleet.

So moving on to Page 19. That's -- that wraps up my part of the presentation. Again, we've had an excellent quarter in terms of results. We essentially hit the targets that we expected to, with the exception of a little bit of an extension to the drydock period for Golar Spirit, but we had excellent uptime on our operating assets and continued superior safety performance.

Looking forward to Q2, there are some upcoming drydockings, which we've talked about, which will be coming up. And longer-term, of course, as I've discussed, as the newbuild fleet starts to hit the market a little bit ahead of the new production, we will see some volatility in shipping rates.

We have grown the dividend this quarter, again, highlighting the Board's confidence in the company's performance. And the Board certainly does have the firm intention to maintain current levels.

The financing of the newbuild delivers -- deliveries progresses positively. We've got offers in excess of what we believe is the financing requirement for the newbuild fleet, so we're quite confident that when we get to closing the financing deals ahead of deliveries later this year, that we will have more than sufficient access to finance.

FSRU opportunities continue to expand. We expect the Jordan approvals to come through imminently, and we can announce that we are firm on that project and we are shortlisted on another 2 projects with our other vessel.

And of course, our exciting announcement today, that on the Douglas Channel project, our first entry into the liquefaction business, which we expect will be a major value-adder to the Group, with that project, add-ons to that project, in future in that region and other similar projects worldwide. We will, of course, as I said, schedule a launch of our new entity to pursue these types of projects. We will line up that launch of that entity when we see the materiality of funding requirements for the Douglas Channel and other projects starting to rise, and when we are more complete with our FEED project with Keppel, so we have our FLNG vessel conversion costs and schedules more solidified. So that wraps up the presentation part of power [ph] for today. I'll now turn it over to the moderator for questions.

Question-and-Answer Session

Operator

[Operator Instructions] We will now take our first question from Jon Chappell of Evercore Partners.

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Doug, my first question is about the cold comments you made about the shipping potential with the FLNG business, both Douglas Channel and any new potential opportunities there. How does the Golar arrangement work with your ownership stake in the structure? Do you get right of first refusal for shipping requirements or even for FSRUs? Is it up for competitive bidding? Are there any advantages to being partner in the project when it comes to the shipping or maybe the FSRUs?

Doug Arnell

Yes, I think it's fair to say that it's more of a soft opportunity than a hardwired right to put ships in, Jon. I think it is a separate part of those projects generally. So if the offtake is being shared by other partners, then Golar will have an opportunity to put shipping into the project but at market rates, obviously. So we won't be able to do anything except what the market would otherwise provide. Now obviously, when we're in the mix of a partnership and there's things that other people are providing and contributing to the deal, Golar will be seen as the provider of shipping. So it does give us a leg up just that we're in the partnership, but I wouldn't say it's something that -- it's a contractual absolute right, because that's just hard to create without people being afraid that they're going to be pay greater than market rates. Obviously, if we're offtaking our own LNG, then that LNG will be on Golar ships.

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Right, okay. And then also, Doug, you made some commentary in between quarters regarding potential fitting for some of the LNG newbuilds with FSRU capabilities, but there wasn't any update in this call. You just had the 2, the Eskimo and the Igloo, in the fleet list. So are you moving forward with that, and how does that kind of set up versus the FSRU bidding processes that you see over the next 18 to 24 months?

Doug Arnell

Yes, we certainly were looking at what we could do, as some of these FSRU deals firmed up for the 2 existing orders. We were wanting to trigger a, potentially, a conversion of some of the later delivery carriers. I think the situation, in reality, is that for both of those FSRU vessels, as often happens, these FSRU projects just took longer than we had hoped to firm up. And we didn't really want to press ahead with those conversions to FSRUs until we had firm projects with the existing orders. So we just sort of timed out on that. But for the very last vessel, we are still kind of holding out a view that we may be able to convert that last vessel, which is Hull number 2056 for a conversion to an FSRU. But again, we probably won't pull that trigger until one of the other deals is firm.

Jonathan B. Chappell - Evercore Partners Inc., Research Division

Okay, it makes sense. And then I'll just ask one more and then I'll turn it over. There's been a lot of headlines regarding the softening of the market, and I think a lot of the numbers tend to focus on steam turbine engines. You mentioned, again, the fuel efficiencies of the dual-fuel or the tri-fuel diesel electric engines. Is there any way to kind of quantify when we think about looking at the current market rates, and then what your ships may be able to earn as they're delivered with this new technology, the actual kind of spread as far as TCE is concerned with that new technology?

Doug Arnell

Yes, you can quantify it but there's variables. And we've talked about numbers of $20,000 to $40,000 a day, which I think is a fair assessment. There are parameters that you -- that are specific to the charter, which impacts on where that number is. And that is related to how the vessel is being used, how much idle time it's having. What -- at what speed do they want to use the vessel, is it slow-steaming a lot of the time or is it going at service speed a lot of time? So there's a lot of variables, that depending on how the vessel is going to be used, impact that number. And then, of course, the chartering community sees that savings and says to themselves, well, we'd like to capture that savings and have it be a savings to our total shipping costs. So that in effect, there's eventually some level of sharing that goes on between the owner and the charter of these perceived savings. Obviously as an owner, we're offering the ship with a better performance, so we're going to want to maintain the bulk of that savings. But obviously, we have to offer some level of that savings up to have them decide to contract for the vessel in the first place.

Operator

We will now go to your next question from Fotis Giannakoulis of Morgan Stanley.

Fotis Giannakoulis - Morgan Stanley, Research Division

I would like to ask a few more questions about the FLNG opportunity. And just to clarify, first of all, I thought that the total capacity of each FLNG is something like 2 million tonnes. When is this capacity is expected to come online? And where is it going to be supplied from?

Doug Arnell

So Fotis, I guess you're referring to the converted Moss vessel project, the Keppel project, is that right?

Fotis Giannakoulis - Morgan Stanley, Research Division

That is correct, yes.

Doug Arnell

Yes, okay. So of course, the capacity of these units is dependent on ambient conditions of wherever the vessel is located. So it's hard to pin down and say the capacity is exactly a specific number. But for planning purposes, you can think about a capacity for the vessel of up to 2.5 million tonnes per year. The design of the vessel will be modular, however. So there will be 4 trains of approximately 0.7 -- a little over 0.7 -- sorry a little under 0.7 million tonnes to get you to that 2.5 million tonne level. And the reason we're doing it that way is because the opportunities that we're seeing aren't necessarily for the full 2.5 million tonnes and the gas supply and the reserve levels that we're looking at aren't necessarily sufficient to use up all that capacity. So we want to be able to trigger whatever makes most sense for the first project when we build the first vessel. So our approach at this point is to -- we're trying to widen out the deal funnel just in terms of your question about where the gas is going to come from. We're going to widen out the deal funnel and look at as many opportunities as we can. And when we finish the FEED study in July, we'll look at the market and decide how quickly we want to start building the actual vessel related to how mature the opportunity set is. We certainly aren't focused on just 1 project right now to develop for the first vessel. And by the way, I mean, the West Coast of Canada could be -- a next project in Western Canada could be the first place for the vessel, or it could be somewhere else in the Americas or it could be offshore West Africa. So we've got multiple projects that we're looking at. All of them probably won't come to fruition but a subset of what we're working on now probably will. And again, we will look out at the market when we finish this FEED study and determine at what pace and what size to build the first vessel.

Fotis Giannakoulis - Morgan Stanley, Research Division

And just to understand, how does this FLNG connects with the Douglas Channel Project? I was under the impression that the Douglas Channel Project will use one of the FLNGs for the liquefaction. And also, you also mentioned about this $500 million cost. What is this cost about? Where does this $500 million go to?

Doug Arnell

Okay. The first phase of the Douglas Channel or the first project for Douglas Channel, this 0.6 million to 0.7 million tonnes will not be one of the converting Moss vessels. It's good question for us. We should clarify that. That will be a barge-based liquefaction plant, proven technology, all very standard equipment, but it will be barge-mounted, likely built in Asia and floated over to the Douglas Channel. And it will either -- actually, the decision hasn't been made yet, it's not really on a critical path, but the barge will actually potentially be grounded nearshore in the Douglas Channel or we will have the barge floating. But either way, pretty simple barge, the project is a little bit small to do the full conversion of the Moss vessel so the barge is just much more efficient. The $500 million, of course, will include that barge, a little bit of pipeline facilities, metering facilities, a new jetty, of course, and LNG loading facilities would be the major components in that capital cost. That cost, of course, that's one of the things we're going to be doing between now and final investment decision is to finalize the cost estimate and get down to a level of certainty that we're comfortable with and sign EPC contracts to go ahead with the project.

Fotis Giannakoulis - Morgan Stanley, Research Division

So given the fact that the total export license is 1.8 million tonnes, we should expect the second barge or expansion of the capacity of this particular barge? And what would be the incremental cost? Is it pro rata increase, or I would assume there are some savings for the additional capacity from the 600,000 tonnes to 700,000 tonnes per annum up to 1.8 million tonnes?

Doug Arnell

Yes, so this same partnership that's going to pursue the first barge has also agreed to begin preparation for looking at the next train that would use up the rest of that export license, so you're looking at about a 1.1 million tonne per year project. There will likely be some common facilities that could be shared between the projects, but we'd have to work that out. It's likely much improved rather than pro rata for us, it'll be sort of the economic picture will certainly take advantage of some economies of scale on a project that's a little less than double the size of the original one be -- the cost won't be too dissimilar to the first project. That project does depend, I might add, on the expansion of the pipeline that we'll be using for the first phase [ph], so the plan is to take the pipeline that we're using for the initial project. The company that owns that pipeline is beginning preparations for an expansion of that pipeline. If that pipeline expansion is successful, that's what will trigger the new project.

Fotis Giannakoulis - Morgan Stanley, Research Division

And in relation to the FLNG, how do you view the funding of the FLNG? And is this a project that Golar intends to develop on its own, or we might see more partners? And what would be the final take that you think that Golar will have in this investment?

Doug Arnell

Are you speaking about the converted vessel again, Fotis...or?

Fotis Giannakoulis - Morgan Stanley, Research Division

Yes, I'm talking about the Keppel project, yes.

Doug Arnell

Well, we expect that there will be partners in certainly the first number of projects that we'll use to convert Moss vessels for. And certainly, Keppel is a potential partner as well. It's on the list. When you look at the Douglas Channel situation and the kind of hurdles you have to overcome to make one of these projects work, it's really important to leverage your position to draw in either partners or contractual parties or relationship with people who bring attributes that can get you over the line. These projects are very difficult. They're very difficult to get permitted. They're commercially complicated. There's a large degree of commercial risk to deal with. So we will look to strategic partnerships in almost every project to increase the chances that we're successful on every project. I would say 25% is about as low as we would go. And that's where we're at on Douglas Channel at a minimum. If the opportunity to increase that share comes up, we probably would do so. But that's out of our hands. But I would say, 25% is kind of a minimum participation that we would have and we'll probably look to be a little bit above that, generally.

Fotis Giannakoulis - Morgan Stanley, Research Division

And for this 25% minimum, which I understand that it can be higher than that, you think that you have sufficient cash on hand and funding capacity at the Golar level, or we might see some capital increase to fund this investment? And also, you mentioned about partners that you intend to bring along, including Keppel. Could these partners be also financial institutions that they will seek to invest directly into the Keppel project?

Doug Arnell

Well, first off, there's no intention to raise equity or issue equity at the Golar level to fund any of this. We do have an intention to create a separate entity through which we would raise funding for these projects. But how we do that, there's a menu of options how that entity would raise money, including project financing, vendor financing, separate equity raising specifically for this opportunity. So we're not, at the Golar LNG level, seeking to raise specific money for these projects. I'm not sure quite what you mean about direct investment in the Keppel project by financial institutions, I find that unlikely. We generally -- there's not -- I don't think we'll be restricted in access to funds to pursue these projects. But what we want to do is use our position and what we created with our project is to bring in partners. Yes, they will bring money, but that's basically to make sure they've got a vested interest in making things happen. Those partners will bring along, along with funding, they will bring along position or a skill set or something of the like that increases the probability of a successful project.

Fotis Giannakoulis - Morgan Stanley, Research Division

Doug, one last question about your shipping and FSRU activity. I don't think that you have given any guidance about the EBITDA of the Jordan project. Is this something that you can do during this call? And secondly, about the Viking that came out of contract?

Brian Tienzo

On that, Fotis, it's Brian here. I think, in respect of the EBITDA for Jordan, I think that we need to first get the full approval of the process, and that's going through the process now. Suffice to say though that the EBITDA of the project isn't dissimilar to some of the numbers you have seen that we've achieved in some of our FSRUs so far. So that should give you to some extent, some confidence [ph] of it.

Fotis Giannakoulis - Morgan Stanley, Research Division

And regarding the vessel that came out of contract this quarter?

Brian Tienzo

Yes, so in the outlook section of our press release today, we mentioned that, for Q2, there should -- investors should expect some downtime for the Golar Viking. We mentioned days of sort of 20 to 25 days. So to some extent, she is on hire for majority of the quarter but there is a bit of sort of commercial waiting time in there also, in between charters.

Operator

We will now take our next question from Michael Webber of Wells Fargo.

Michael Webber - Wells Fargo Securities, LLC, Research Division

Guys, I'll try to keep it to a couple. I wanted to go back and touch on Douglas Channel, which is pretty well-worn tread at this point. But you're coming in at a minimum of a 25% investment, and maybe I'm curious whether you can talk about what keeps that from being a majority stake and kind of how you arrived at kind of taking a minority interest but still taking on a risk in the project?

Doug Arnell

Well, I think, that going forward, there's 4 partners here and various rights to invest, or not to invest, so the opportunity is there if some of the other partners or 1 or more of the other partners do not subscribe to their full entitlement for the investment that Golar would have the opportunity to step up. Yes, it is a minority stake, but there's also no one partner here with a majority stake. So there's already agreed a fairly fair and comfortable governance methodology, which we are very comfortable with. The project participants here, the way we've got this structured is really good alignment between the partners, so interests of the parties are generally going to be not in conflict. So we're quite comfortable with being able to manage our risk, given a 25% stake.

Michael Webber - Wells Fargo Securities, LLC, Research Division

Got you. So basically, there's kind of pro rata across the partners and there's opportunity if there's a void?

Doug Arnell

Yes.

Michael Webber - Wells Fargo Securities, LLC, Research Division

Okay. All right. Fair enough. Around, I guess, you talked to an FID in Q3, and I don't want to get kind of ahead of ourselves, but can you maybe, and 3 weeks notice before already but kind of way out of timeframe around when you and your partners would look to sell gas forward into the market?

Doug Arnell

I think that's something that I'll defer to just -- I think I'll defer on that one until we're able to be more open about who that other -- the large energy company is on the other side, which certainly factors into your question there. So I think that it's just at a point in time where we prefer to discuss that one when we're closer to -- or moved on a little bit down the path towards FID dates.

Michael Webber - Wells Fargo Securities, LLC, Research Division

Okay. That makes sense. I wanted to quickly, I guess, kind of touch on, I guess, the barge versus the Moss tank conversion solution, and I know they've been kind of going back and forth for a while and it seems like you settled on a barge solution, but -- and I guess if it's $500 million for the first investment and then another $500 million for a train 2, give or take, it seems like that would come in north of what you could provide with a Moss tank solution just based on what I believe of the conversion costs there or the ballpark conversion costs. Are there other factors that kind of drive you towards that barge solution? I'm thinking maybe environmental or what have you to kind of facilitate any expedited approvals from the Canadian government? I mean, is there other factor there besides just pure economics?

Doug Arnell

It's probably the biggest factor, Michael, is the second project requires a big expansion of that pipeline, which probably of all the risk factors of all the things that have to get permitted on this sort of packaged deals, that one is the one that we'll be watching the closest and most concerned about. So the timing of receipt of that permit for the expansion of pipeline, which would allow that second project to go ahead is, to be honest, a little bit uncertain at this time. So to build a vessel, which assumes that all that is going to happen and have it here in 2015, you may run a big risk of building way too much capacity for the amount of gas you can get there. So it's simply a matter of the fact that a prudent call was to just build what we need for that first phase, because it could be that, that's -- we don't think so, but it could be that, that's all that shows up in the end.

Michael Webber - Wells Fargo Securities, LLC, Research Division

Okay. All right. That makes sense. One more for me and I'll turn it over. I know you guys have kind of talked to this in the past and it might be a bit premature but the assets you would be providing towards Douglas Channel, are those going to be structured in an MLP-friendly way, is that something you eventually envision heading down to GMLP, provided all goes according to plan and any color there, maybe we can kind of divert that to the call on about, I guess, half an hour but any thoughts around that would be helpful.

Doug Arnell

Yes, I think that the way the deal is structured now is, if that is how we still look like that at FID, which is what we anticipate will happen. There will be some -- the asset investments certainly there would be likely MLP-friendly. It certainly goes into our thinking into how we try to structure the deal.

Operator

We will now take our next question from Urs Dür of Clarkson Capital Markets.

Urs M. Dür - Clarkson Capital Markets, Research Division

Doug, very simple of most has been touched upon. You mentioned in the call that you have, and it's good for investors, I get a lot of questions about this, that you have offers in excess of your debt requirements for your newbuilds, is that the entire program, or is that the upcoming 5, 6 or...?

Brian Tienzo

That's for the entire program. So obviously, it's taken us a little longer to get there but what we wanted to do is get a feel of the interest as far as the banking and ECA community is concerned. And over the past couple of weeks, as we mentioned, we've had positive developments and discussions on both sides of the ECA and the banking. And to the extent we've always targeted that, given that we've now paid up to $700 million of the $2.7 billion, we are probably looking at a $1.8 billion financing if you wanted to finance all of them. And so when I say in excess of -- in excess interest it's in excess of the $1.8 billion that we're looking to do.

Urs M. Dür - Clarkson Capital Markets, Research Division

Excellent. And that's really all I have. I was wondering maybe if you could give me a call offline, I've got a couple of modeling questions on the deconsolidations. If you have time later, that would be great.

Brian Tienzo

Yes, sure.

Operator

We will now take our next question from Øyvind Berle of DMB Markets.

Øyvind Berle

My first question is regarding the Golar Viking, where you that will be 20 to 25 days off. Does that mean that, one, the vessel is going to charter, and if so, could you give us an indication of the rate on this vessel, please?

Brian Tienzo

We're not at liberty to give you rates, Øyvind, but I mean, gee, she came off chartered just towards the end of March, and then she went into sort of a voyage -- well, soon after that. She has been on sort of commercial waiting time for a few days. But the expectation is she now has an employment that will take her through most of June. So although she wasn't employed throughout Q2, she was certainly employed for most of Q2.

Øyvind Berle

Okay. My second question is there's lot of speculation here on the rates obtainable in the newbuildings, and the [indiscernible] charter coming off is probably one of the benchmarks that the market is looking for. What is your expectations of let's say 3 to 5-year rates for the newbuildings from this fall onwards? Where is the market right now, in your view?

Doug Arnell

Yes, I think that -- I mean, we can all take guesstimates of where we think the rates are going to be in 6 months time. I think we prefer to just do our talking through deals that we eventually sign up. Certainly, there's been 3 to 5-year deals on a newbuilding. There haven't been many of those, so it's really hard to say what's been done in the past. There's been some recent a bit longer-term rates, mid-80s kind of level. So -- but I mean, the market dynamic is going to change. That's the bottom line. And we just need to play it through. And so it's really difficult to lay out an expectation for you of specific numbers.

Øyvind Berle

So when you say volatility will go up, that means rates will go down or am I misreading you here?

Doug Arnell

It means the predictability of rates is going to be increasingly difficult.

Øyvind Berle

My final question is could you just remind us what is roughly the CapEx for barge solution versus add-ons on an LNG carrier compared to output of the vessel, please?

Doug Arnell

Sorry, which figures were you looking for?

Øyvind Berle

The CapEx for a barge FLNG solution versus your Moss solution, the add-ons on an existing LNG carrier? How much is roughly the CapEx for the unit itself and how much will the output of the unit be, please?

Doug Arnell

Well, the liquefaction facilities themselves, whether it's barge-mounted or added on to an LNG vessel are very similar. So for example, it would be for 1 million tonnes, it would be probably under $500 million either way. So -- and then you just -- the installation onto the vessel is another number but it's not as material. And then you're just left with whatever implied value the vessel itself has to give you the comparison.

Operator

We will now take our next question from Nathan Weiss of Unit Economics.

Nathan Weiss

Two quick questions. One, on Douglas Channel, will you be taking the engineering lead, will that project at least be partially based off the FEED work that you're currently completing?

Doug Arnell

We won't be taking the lead on that, Nathan. It'll be -- it's a shared responsibility within the project. We certainly will be participating in it with our partners. It does not specifically -- we can't use the FEED work to build the barge in Douglas Channel, but it's been extremely helpful to be going through the FEED at this point because it's very, very similar equipment and design that's going on to the barges going into our FEED study. So kind of an indirect way, we've been able to advance things along quite smoothly. And we'll be able to do so on Douglas Channel because of the FEED work.

Nathan Weiss

Assuming that will work both directions that your involvement there might also help your knowledge with other projects that you do later on?

Doug Arnell

Absolutely. And like I say, the next project in Western Canada could directly use the FEED work that we're doing in Keppel because we expect it to be a larger one that would be more fitting for the converted Moss vessel.

Nathan Weiss

Great. Second question, there's a lot of confusion in the marketplace about what your EBITDA generation or potential earnings of your liquefaction vessels could be. Can you spell out just a generic project in terms of, say, a 2 million tonne a year project, would you expect to deliver roughly 90 Bcf a year and we could then translate that at a given spread, say, a $5 spread will be $450 million EBITDA, or kind of how should we start to think about this?

Doug Arnell

Yes, I mean, we're trying to get our first sort of deal onto the -- firmly onto the rails and get it closer to an actual whole investment before we provide too much guidance in that way.

Nathan Weiss

Understandable. Am I a bad analyst because that's how thinking about the projects today?

Doug Arnell

Well, I mean, there are some markers out there in the market. If you take the single previous liquefaction project on the U.S. Gulf coast and look at that, which is essentially framed as a tolling deal, at rough figures, we understand $3 per million BTU of throughput. You can -- as far as an asset investment, that's a very good go-by to use for some of the things we're looking at.

Operator

We will now take our next question from Frohad Sheldry [ph] of Hardrock Capital.

Unknown Analyst

I have a question again on Douglas Channel. My understanding was that this project, the Douglas Channel and Energy Partners, which were effectively LNG Partners LLC and the Haisla Nation -- I mean, it was originally announced 2 years ago, as well as the whole barge solution was announced 2 years ago. They did a FEED study on this with Blackenridge [ph] and they've got the license in February 2012, and you guys are coming pretty late to the game on the Douglas Channel Project, and were effectively [indiscernible] was going to take the offtake, which was what you had announced earlier. And effectively, were either going to sell it to market or to some other, and hence get involved with the project with providing the transportation. So it sounds like the transportation is going to be at market rate, the offtake is going to be actually some big E&P presumably in Korea or Japan or something. And these guys, the Haisla Nation and LNG Partners LLC have been doing this for 2 years, have effectively done a lot of work on this already. What are you paying to get involved with the project for this 25% stake at this stage? And what is your FEED study regarding, if the FEED study has already been done on this project for these guys?

Doug Arnell

I think it's fair to say that the entrance of Golar and the other entity has allowed the project to take a fresh start. Yes, it had some things in place, some assets that had been developed by the original partners. But I can tell you that the project has been framed exactly how we want it. We're very happy with the structure. We're very happy having the other partner in there as well. And as I said, we will certainly trade equity down in return for mitigating execution risk on the project. And I think that's what we've done. I don't think we ever announced that we would be taking the uptake from the project. We certainly carved out rates to do so with our early interaction with the project and we held onto those rights and we levered them into a position that we're very happy with. Not sure if that answers your question, but that's...

Unknown Analyst

[indiscernible] Okay, so your answer is that the project was effectively dead, your involvement has revived it, now you're going to effectively bring it to fruition effectively. Is that the correct way to put it?

Doug Arnell

Well, you're paraphrasing. I never said the project was dead. They have some very valuable assets that we were interested in and we brought what we could bring, and the other partner brought what they did. And the package, I think, will allow us to take the project forward. It's attractive enough for us to -- and the rest of the partners to put some funding in to do the rest of the work required to take it to FID. There are some hurdles to get past and that's what there going to do. The amount of money we're putting in now is not very material in relationship to total investment. So I guess that's how I'd describe it.

Unknown Analyst

Okay. And that amount of money effectively -- to the 25% stake that you're going to get in the project, do you have to pay for this, or is that part of your involvement in the new -- once you do a spin-off or like you said, many different ways you could do the funding that will come later?

Doug Arnell

There's no premium being paid by Golar or the other partner to enter the project. Any money that's going in is deferred direct project cost.

Unknown Analyst

All right. Understood. On the question of the newbuild, I guess, I know you said that you will let the market dictate rather than speculate where the rate will be now or 6 months from now or et cetera. Can we get some idea of when we could expect an announcement on contracts. Presumably, you will need contracts to take delivery of the vessels and the funding in place kind of financing you want to do as opposed to take them on spot or anything?

Brian Tienzo

Just to answer that question, I mean certainly the financing structures that we're looking at, and which I've mentioned, is we have more than interest for, for what we're looking for, actually contemplates the vessels do not have charters. Now that doesn't mean of course that we'll just leave them there at spot and not charter them. But what allows us to do is keep some flexibility as to what kind of employment we put the vessels into. So chartering is not a requirement in the funding structures that we're looking at.

Unknown Analyst

The charter is not a requirement, but -- okay, so we should not expect -- I mean, you could take delivery of the vessel with the financing in place without having a 3 or 5-year term?

Brian Tienzo

Correct, yes.

Doug Arnell

Well, just to clarify, we can do that. It's not our goal. I mean, we're working hard to get employment for these vessels. It's just that we do have the luxury of being able to put this financing in place, not dependent on new charters.

Unknown Analyst

Okay. You said on the tri-fuel, like the efficiency savings, that you have to share with the charter, if you were to charter. I mean, if you were on spot, you would keep them all for yourself. Now -- and you said that it's a negotiating process. The experience from like eco-vessels and product or in other places also tells us that the charters end up taking most of the upside. I mean, would you say that the negotiating process is any different for LNG? Is it a better relationship as opposed to more to export market like dry bulk or et cetera?

Doug Arnell

Well, it's certainly a different market and dry bulk. I mean, you -- so -- and also, there's not a lot of historical experience to go by. I mean, the last time we had a big wave of vessels came through was -- started 10 years ago. So I guess the technology change at that time wasn't so great as it is now. But ships were getting bigger so it's really difficult to point at something. And that equation of how much savings you'll have to give up to the charter in order to get charters done will, quite frankly, be mostly influenced by how tight the market is and how many options they have at that time. So everyone knows the savings are there. If it comes a bit of a moot, it's because in the shipping discussion, it'll be a competitive process like always.

Unknown Analyst

All right. Understood. On the Gas Atacama, you said the project is indefinitely delayed. Most people were expecting earnings to kick in from Q1 '15. Any kind of color on that? When we could expect some result?

Doug Arnell

Really difficult to say. It's dependent on things that are well removed from anything that we have control over the project is tied to. I mean, it's an existing power plant that the FSRU would be supplying. In order to lock in LNG supply and to pay for the charter itself, the power plant requires new long-term power purchase agreements from the kind of large copper mines in northern Chile, and in order to -- for those power purchase agreements to be struck they are relying on expansions of those projects or expansion of those mines. And those expansion projects are all in the books. They've been talked about. They're visible but when they get triggered, it's something that we can't predict. So that's why our guidance is that we are kind of in an indefinite delay and the timing of when and if it does trigger, it's kind of triggered in plus-3 years would be the time that earnings would start to hit.

Unknown Analyst

All right. Those were all very helpful. Just one last question. We've seen with other liquefaction projects, whether in Australia or Southeast Asia or elsewhere or Africa, the delays and CapEx blowouts are extremely common. Well, what do you think could be done to guard against those?

Doug Arnell

Floating LNG vessels. It's pretty clear that one of the big advantages for floating technology is that you reduce your dependence on local labor. And that's exactly what happened for floating storage and re-gas units. That's why the existence of FSRUs has accelerated the pace of new markets being opened to LNG very greatly because of those type of advantages. You just have so much better cost control and financing alternatives. We just believe that the same impact will come on the liquefaction side. And Golar will be in there leading the way in our own way, in our own size of projects. We're not building Preludes. Shell won't go and do that. There will probably be other projects of that scale. But we believe that these small scale projects for us, there's multiple opportunities to do them. We won't be exposed to the kind of risk that the Australian projects have gone through.

Unknown Analyst

So on the barge, you will be able to get an EPC contract to protect you from CapEx loss?

Doug Arnell

Yes, that's for sure what we will do. That's the structure of the project as it is today.

Brian Tienzo

Sorry, before the moderator takes the next question. I'm aware that there's another presentation after this. So could we just have the next question as the last question for the Q1 Golar presentation, please.

Operator

We will now take our final question from Eirik Haavaldsen of Pareto.

Eirik Haavaldsen - Pareto Securities AS, Research Division

Just a quick one. You say you have -- and given your outside competitive advantage in the financing market where you have offers in excess of your funding requirement, as you say, will you use that advantage, perhaps, in order to do some investment from existing newbuilds or existing units under construction where the owners might not have that competitive advantage, so to say, or do you entirely focus on FLNG and FSRU investments going forward?

Brian Tienzo

Well, as far as -- I mean, for ourselves, I mean, obviously, we do have this hanging obligation over our head to try and finance it. And now to date, we've been pretty confident in making sure that it gets funded before the first delivery. And certainly, the positive outlook is that we will have it in place before then. I think, because the financing is predicated and secured on vessels, it's very difficult to over-finance yourself and use that for other strategic means. I think, more likely, if there are any sort of opportunities out there, then we will use other sources of funding from operations, for example, or sort of the bond market as mentioned earlier where the financing may not necessarily be secured in the vessels. Where the interest is, is more than what we're requiring, it's funding specific to the CapEx requirement in respect to the newbuildings, and it's predicated on the involvement of ECAs and the banking community.

Operator

That will conclude today's question-and-answer session. I'd like to turn the call back to speakers for any closing or additional remarks.

Brian Tienzo

Thank you, moderator, and thank you very much, everyone for your participation in this quarter's results. As always, we look forward to, again, speaking to you again during our second quarter results some time in August. Thank you, and goodbye.

Operator

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.

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