Welcome to the Golar LNG Limited Q2 2022 Results Presentation. After the slide presentation by CEO Karl Fredrik Staubo and CFO Eduardo Maranhão, there will be a question and answer session. Information on how to ask a question will be provided then. At this time, all participants are in a listen-only mode. I will now pass the floor over to Karl Fredrik Staubo. Karl, please go ahead.
Thank you, and welcome to Golar LNG's Q2 earnings results presentation. My name is Karl Fredrik Staubo, the CEO of Golar LNG. Before we get into the presentation, please note the forward-looking statements on slide two. I'm accompanied today by our CFO, Mr. Eduardo Maranhão, to present this quarter's results. Turning to slide four, this provides an overview of Golar today. Following a group simplification and sale of about $6.8 billion of assets during the last 18 months, we are now a focused FLNG owner and operator. We own two FLNG vessels, the Hilli, which has been in operation since 2018 under a contract with Perenco in Cameroon. She is the best performing FLNG globally with 100% operational utilization since delivery. Secondly, we have the FLNG Gimi, currently 86% complete under construction at Keppel Shipyard in Singapore.
She will start a 20-year contract for BP on the Tortue field located offshore Mauritania and Senegal, and will unlock an EBITDA earnings backlog of $3 billion to Golar or $151 million of EBITDA annually from next year and until 2043. We are focusing our efforts on FLNG growth projects and have developed three different FLNG designs. All three designs are based on the same proven liquefaction technology and maritime interface. However, they differ in liquefaction capacity and shipyard location. The Mark I has a liquefaction capacity of up to 2.7 million tons per annum. Both our existing units, Hilli and Gimi, are Mark I design FLNGs, and they're based on conversion of existing LNG Moss tankers. The Golar Gandria remains a Golar-owned conversion candidate for potential future incremental Mark I units.
The Mark II design has a liquefaction capacity of up to 3.5 million tons. Mark II is also based on converting an existing LNG carrier, but instead of adding liquefaction equipment to the width of the ship, Mark II places the liquefaction topside on a new ship midsection added to an existing carrier. This allows for larger liquefaction capacity and reduces the conversion construction time. Lastly, our Mark III newbuild design is one we have worked to develop for more than a decade. Mark III has a liquefaction capacity of up to 5 million tons, and it's based on a newbuild hull, which allows for increased storage and deck space. As a result of the corporate simplifications we've undertaken in the last 18 months, we also own three significant listed positions.
We currently own about 6% of New Fortress Energy, valued at around $700 million at yesterday's close. We own 31% of Cool Company, the shipping spin-off we established during Q1 of this year. We own about 24% of Avenir LNG, a small-scale LNG shipping and terminal business. The total value of these investments amounts to over $850 million. Turning to slide five. As a result of the corporate simplification and FLNG concentration, we now have a balance sheet positioned for FLNG growth. At quarter end, we had a cash position of $602 million. Add to that our listed securities that we just went through. We have a total liquidity of around $1.5 billion or approximately $14 per Golar share.
Our net debt position was reduced from $1.7 billion last quarter to around $1 billion at quarter-end Q2. This is a result of the vessel disposals and scheduled amortization. Hence, we currently have a net cash position of $500 million. We expect EBITDA generation from our existing FLNG portfolio to quadruple from 2021 levels into 2024. This could meaningfully increase further once additional FLNG growth projects are announced. We now have cash and debt capacity to facilitate FLNG growth from internal resources, which will be the key focus for the next phase of the company. Lastly, we have no debt refinancings until 2025 and expect to generate significant quarterly cash flow to equity from operations going forward. I'll now hand it over to Eduardo to present our Q2 numbers.
Thanks, Karl, and good morning, everybody. I'm very pleased to provide an update on our group results for the second quarter of 2022. Turning over to slide number seven, I wanted to show some of the highlights of this quarter. Starting with our FLNG units. Our first vessel, Hilli, continues to operate with an excellent performance, delivering 100% uptime this quarter. We continue to benefit from strong tailwinds from high Brent and TTF prices, which generate incremental earnings to our commodity-linked tariff at no incremental OpEx to us. As a result of that, our share of Hilli's distributable adjusted EBITDA has increased considerably to $62 million this quarter, an increase of close to 150% on year-over-year basis.
We're also very pleased to announce that Perenco exercised its option to increase production for an incremental 0.2 million tons of TTF-linked production from 2023 until 2026. Construction of our second FLNG unit, the Gimi, continues in Singapore and is now 86% technically complete. We have agreed initiatives with Keppel Shipyard to safeguard sail away of the unit within the first half of 2023. We have also advanced a number of initiatives towards the development of a new Mark II unit, capable of producing 3.5 million tons of LNG, and which could be delivered as early as 2025. We'll talk a bit more about that on this presentation. We reiterate the target to announce a new FLNG project within 2022. Moving on to shipping. The last steps of the spin-off of our TFDE fleet were completed this quarter.
The last four vessels were sold to Cool Company, and the transfer of our shipping and FSRU management organization is now complete. In line with our simplification efforts and to focus our business on FLNG, we've been awarded a conversion contract for Golar Arctic for EUR 269 million and sold our FSRU Tundra for $350 million to Snam. All those initiatives and divestments released net cash proceeds of close to half a billion dollars this quarter and allowed us to reduce our contractual debt from $1.7 billion to $1 billion at the end of the quarter. We have also continued our share buyback program, repurchasing 0.2 million shares this quarter, and now have 107.8 million shares outstanding after that. Moving on to slide number eight.
Due to strong commodity prices and incremental earnings from Hilli, our total FLNG tariffs have almost doubled to $108 million this quarter, compared to $55 million in Q1 of last year. This quarter, we recorded an adjusted EBITDA of $101 million. When compared on a year-on-year basis, this represented an increase of $153 million compared to Q2 2021. We recorded net income of $230 million in this quarter, including $122 million gain from discontinued operations, including the sale of Golar Tundra to Snam and remaining vessels, plus management companies to Cool Company. $182 million gain on TTF-linked derivatives and swaps. A $76 million dollar impairment of Golar Arctic.
$49 million lost on NFE shares, valued at $39.57 in Q1 2022 versus $42.61 in Q1 2021. Our balance sheet continues to strengthen and deleverage. Our share of contractual debt at the end of Q2 was $1 billion, a significant reduction of more than 54% when compared to the same quarter last year when we had $2.2 billion of debt. Total cash at the end of Q2 was $604 million. Further to that, when considering the value of our listed shares in NFE Cool Company in Avenir, we have a total liquidity position of close to $1.5 billion and a net cash position of $500,000 when deducting our share of contractual debt.
We estimate that this could allow us to fund two new FLNG growth projects. Moving on to slide number 10. We would like to provide a bit more color into the breakdown of our earnings from Hilli. The FLNG continued its perfect operational track record since delivering in 2018, market leading for FLNG operations globally. The Hilli tariff comprises of three components: a fixed tariff, a Brent-linked tariff, and a TTF-linked tariff that started up on first of January this year. Due to increasing commodity prices, we continue to see a strong increase in Hilli's EBITDA generation, up two and a half times year-over-year or 9.5% quarter-over-quarter, a trend we expect to continue into 2023, and which will be further explained on slide number 11. Interesting to note that this increase in earnings came with no additional OpEx to us.
While the base tariff stood in line with previous quarters, we recorded $29 million from Brent-linked revenues and close to $20 million from TTF-linked revenues in Q2. I'll now hand over the call to Karl, which will talk a bit more about that.
Thank you, Eduardo. Turning to slide 11. As Eduardo mentioned, Perenco exercised their option to produce the 0.2 million tons from 2023 to 2026. Hence, Hilli will continue with three components to its EBITDA generation. In 2021, Golar share of Hilli EBITDA amounted to $95 million. For 2022, we expect Golar shares to come in at around $270 million. The earnings increase is caused by higher Brent prices and the start-up of the TTF-linked production. For 2022, we have hedged the TTF price exposure for Q3 at $25.37 per MMBtu. Generating $19 million of TTF-linked EBITDA to Golar for the quarter. We remain open for Q4 2022. At current Q4 forward prices, we expect to make an EBITDA of around $47 million for Q4 alone.
For 2023, we have just entered into a TTF price swap for 50% of the TTF exposure at $49.5 per MMBtu. That's the energy equivalent of crude Brent prices at $291 a barrel. With TTF at $49.5 for 2023, this will generate approximately $160 million in EBITDA to Golar, where 50% of that is now secured in terms of locked in the price. Combined with the Brent forward price for 2023, which currently stands at $88 a barrel, we expect to generate $305 million in Golar's share of Hilli EBITDA next year. Total debt service for Golar's share of Hilli is $50 million.
Hence Hilli alone will generate free cash flow to equity of $255 million for 2023 or $2.35 per Golar share. Turning to slide 12 and Gimi. Gimi is now 86% technically complete for its conversion into an FLNG at Keppel Shipyard in Singapore. We have currently worked over 22 million man-hours on the conversion with a daily construction team currently amounting to 4,200 workers. The remainder of the build is mainly around construction, installation and testing of equipment ahead of the 2023 sail away, which will unlock $151 million in annual EBITDA to Golar for 20 years. During the quarter, Golar and Keppel Capital, together the owners of Gimi, agreed to a $50 million incentive payment to Keppel Shipyard for initiatives to safeguard sail away within the first half of 2023.
Incentive payment is payable at certain milestone and part of the amount is retractable if milestones are not met on agreed dates. Since Golar is a 70% shareholder of Gimi, $35 million of the $50 million incentive payment will be covered by Golar. Gimi is on track to sail away from the shipyard during the first half and for contract start-up during the second half of 2023. Turning to slide 13 and some of the most interesting developments that happened to Golar during the quarter. We have seen a significant pickup in interest from new clients investigating FLNG solution for gas field developments. Current and forward gas commodity prices combined with energy shortage seems to have fueled efficiencies in gas field development decisions.
This is also reflected in our existing pipeline of FLNG growth projects that have seen a very strong progression during the quarter, both for tolling and integrated projects. On the back of this, we've taken active steps to confirm yard availability and updated CapEx pricing for our three different FLNG designs. We received confirmed price and yard availability for both Mark one and Mark two designs, and we are now in discussions with the Mark three shipyard for price and availability of a 5 million ton new build. Despite busy shipyards and an inflationary cost environment, we are happy to announce that we can deliver FLNGs during 2025 if we commit to a project during the second half of this year.
The CapEx numbers received have seen inflation but remain within the $500-$600 million of CapEx per ton of liquefaction capacity, which we think is highly attractive compared to other maritime and shore-based liquefaction solutions. This also compares very well to Eni's recent announcement to acquire the Exmar Tango FLNG for an implied price of between $950 million-$1.1 billion per ton of liquefaction capacity. Approximately exactly double of where we would have a CapEx. Furthermore, with the acquisition of the Exmar Tango, Golar is now the only service provider of FLNGs with a proven track record globally. We've also received financing term sheets for construction and long-term lease financing for potential FLNG new builds from an existing relationship lease counterpart.
As Eduardo alluded to, we maintain our target for FLNG project announcements within 2022, and we believe our organization and balance sheet are set up to execute up to 2-3 FLNG projects in parallel, subject to the details of each project. Turning to slide 14 and further elaborating on actions taken in the quarter. On the back of the growing pipeline of FLNG growth projects, we are ramping up both engineering activities and plan to order long lead items for a Mark II FLNG within the second half of this year to safeguard 2025 vessel delivery. The majority of the long lead items in discussion can also be deployed to our other FLNG solutions. The Mark II design has a liquefaction capacity of up to 3.5 million tons, and as described, is based on a conversion of an existing carrier.
We have identified and inspected a suitable vessel candidate for that conversion. The yard selection is concluded and the financing term sheet has been received. That term sheet is also not dependent on a charter or long-term offtake if it's an integrated project. We're excited about the progress made on the Mark II project and the attractive delivery window that we have gotten confirmation. Together with the interest from charters, which includes ongoing discussions for an integrated field development project and multiple clients for charter alternatives, we're confident that proceeding with Mark II is the right way for the company going forward. Elaborating on the delivery timeline and why we think early is important, you can see on slide 15. As discussed on previous quarterly calls, the gas market was tight before the geopolitical situation in Europe.
In Q4 of last year, we saw LNG prices above $50 per MMBtu. LNG demand is expected to continue as the world is looking to source stable sources of energy with attractive environmental attributes. There is very limited new liquefaction capacity coming on for the first half of this decade, while most of the incremental production comes on from late 2025 onwards. Hence, early delivery of an FLNG project is increasingly attractive, both from a demand and LNG price point of view. New liquefaction capacity from 2021 to 2030 currently stands at 130 million tons of FID or projects under construction. An additional 42 million tons of liquefaction projects are needed between now and 2030 if we are to meet the estimated demand growth for the period.
That's before taking into the account the possible effects of Europe and other regions reducing dependency on single-source Russian gas exports. Interestingly, if we break down the anticipated 130 million tons of new liquefaction projects coming online further, about 12 million tons of that volume is expected to be sourced from Russia, where the geopolitical situation is likely to add pressure to project execution and timelines. Furthermore, 65 million tons of the 130 million tons in total is expected to come online from U.S. exports. Source cost in the U.S. is currently at $8.5 per MMBtu, and long-term forward prices suggest $4-$5 in gas source cost before liquefaction. In addition to that, most of the U.S. volumes are sold on long-term offtake contracts. Turning to slide 16.
We're encouraged by this development, and we're furthermore encouraged by the lack of liquefaction projects from what we think is the cheapest gas resource in the world. We mainly focus on African proven or stranded gas reserves, as we see very favorable characteristics of the three key components driving delivered cost of LNG. That's source cost, liquefaction cost, and the shipping distance to the end user. We believe that you can develop a stable source gas price of anywhere between $1-$3 in lifting cost, dependent on the size of the field. That's significantly cheaper than current and long-term Henry Hub prices. Secondly, Golar's liquefaction technology has a lower CapEx per ton compared to other floating and shore-based liquefaction solutions. Lastly, African gas is physically a shorter sailing distance to end users, whether the clients are in Europe or Asia.
Hence, if you have lower input costs on the three key cost drivers of LNG, we see that as a compelling competitive advantage. If you elaborate that into numbers, and turning to slide 17, this is again a familiar slide that we have presented at earlier occasions. This time we've adjusted it to describe possible Mark II FLNG growth projects. If you assume a source gas for African project of $1 per MMBtu, a tolling fee similar to what we are charging BP, ranging between $2-$3 per MMBtu, and shipping cost at $1.50, you can deliver LNG to end users at around $5. If you compare that to both historical and current gas prices, this is a very solid economic proposition.
As an illustrative example, we have highlighted some Mark II tolling fee scenarios ranging from $2 per MMBtu in the low end, which is lower than for most, the most recent U.S. shore-based liquefaction projects. Yet, they would give Golar a CapEx to EBITDA of around 5x on capital employed, so 20% unlevered return. If we can achieve tolling rates similar to that of Hilli at current commodity prices, the CapEx to EBITDA multiple reduces to 2x capital employed. If you further go closer to the hydrocarbons and work on integrated projects at current gas prices, you currently have payback in less than six months. You can now understand our focus on early delivery and going towards the integrated section.
We think you can hedge out a lot of the volatility of hydrocarbon prices through forward price fixtures, similar to what we have done on our TTF exposure on Hilli. Shifting gears and for the last time giving an update on our FSRU business. On slide 19, we have highlighted the two asset disposals that was concluded during the quarter. First, we agreed to sell our steam LNG carrier called Golar Arctic to Snam for EUR 269 million. The transaction entails that Golar will undertake the vessel conversion and deliver the FSRU in Italy. The estimated conversion cost for the unit is around $160 million before the cost of the vessel and contingencies. We expect Snam to give final notice to proceed towards the end of this year or early next year.
This project is very similar to the previous vessel to FSRU conversion when we converted the Golar Viking and sold her to LNG Croatia. The second transaction we announced with Snam was the sale of the FSRU Tundra for $350 million. The transaction was announced and closed on May 31st, raising net proceeds to Golar of $193 million. We have agreed to charter Tundra back from the acquisition date until mid-November, and we expect to make an additional positive cash contribution during this period. We're also in the final stages of entering into a development agreement where Golar will assist Snam in minor vessel upgrades before the unit is expected to start FSRU operations in the first half of next year. This development agreement will likely add further value to Golar.
Turning now to corporate and the earnings potential from our existing asset portfolio. Again, a familiar slide, but increasingly simplified as we are selling off the non-core assets. Our 2021 adjusted EBITDA comprised of Hilli earnings less G&A, giving us an EBITDA of $74 million. Add to that the commodity upside on Brent and TTF linked production from Hilli. We expect earnings for Hilli to increase by $220 million on 2023 over 2021 levels. Add to that the contracted EBITDA from Gimi from start up in second half of next year. We expect to have a run rate EBITDA of north of $400 million and subject to commodity prices ranging between 400-500. Our net debt position is negative, so we have a net cash position of half a billion dollars.
Hence, we think the company is in a very good shape, both on cash flow basis, debt basis, and liquidity basis to be positioned for growth. Finally, to summarize the company highlights on slide 22. Our key focus is on FLNG growth, and we are targeting an FLNG announcement within 2022. Before growth, we expect our EBITDA earnings to quadruple from 2021 to 2024. We have cash and listed securities of $1.5 billion targeted to fund FLNG growth projects and have significant free cash flow to equity generation in the interim. Our book value stands at $2.7 billion, again, expected to continue to increase as we are free cash flow to equity positive.
Golar has a proud history celebrating 75 years of existence this year, 50 of which in LNG, where we have been a proven market pioneer being a first mover on FSRU, FLNG, and integrated FSRU to power projects. This concludes our Q2 earnings presentation. Thank you for taking time to listen in, and we'll now hand it over to the operator for any questions.
Thank you. We will now begin the question and answer session. If you wish to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. We ask you to limit your questions to two per person. Please stand by while we compile the Q&A roster. We will take our first question. Your question comes from the line of Chris Tsung from Webber Research & Advisory. Please ask your question.
Hi. Good afternoon, Karl and Eduardo. How are you?
Good, thanks. You?
Good. Thanks. I wanted to just touch on the Gimi. You see the target sail away date.
Sorry, you're breaking. Any chance you can try to speak closer to the speaker?
Is this better?
Yes, please.
Yes, sorry. I was saying we've seen the target sail away date for the Gimi slide from Q1 2023 to first half of 2023, and now with the $50 million incentive payment to Keppel to maintain that first half 2023 date. Can you provide some color if the risk of Gimi was being further delayed in terms of like months or was it quarters?
I think, if you listen to Kosmos Energy earnings call, on the eighth earlier this week, I think they also provided some updates on where they are, both on the FPSO progress, which is somewhat delayed, but reiterated the contract start up date. I think the combination of to answer the question, it is a combination of making sure we build the best quality unit and to align the schedule with BP. We do not expect any further delays. As we have been highlighting on several of our previous quarterly calls, we have taken very active steps to ensure the current timeline, which is basically the driver of the $50 million cost increase, which then safeguards that timeline.
We are very happy with the progress we're making basically on a daily basis and feel very comfortable with the current delivery date.
Great. Thanks. It wasn't something that was systemic to conversion projects. It was just one-off in aligning the schedule with Kosmos.
Yes.
Okay. Sorry, this is my second question and last one. Just when would you need to reserve slots at the yard for Mark I and II? Like, would you risk losing it if the order isn't placed this year?
I think what we have confirmed on the call today is that we have agreements in place with the shipyard that would construct the Mark I and Mark II, where we have also secured the available slot space. As we've highlighted a few times, we are targeting to make an FLNG announcement within the second half of this year. I think it's possible to lock in the slot for somewhat longer than just this year, but if you delay a day, you also delay delivery, and for us early delivery is gonna be important going forward.
Sure. Thanks, Karl, for the color. I'll take on it here.
Thank you.
Thank you. We will take our next question. Your question comes from the line of Ben Nolan from Stifel. Please ask your question.
Thank you, operator, and hi, Eduardo. I wanted to ask first just to make sure that I understand with respect to ordering an FLNG conversion. Am I right in understanding that you guys would be willing to order a conversion on spec or without a contract, if that's the implication here?
Yes. This would be similar to how we would view Hilli when she was first ordered. She was not ordered against the contract, but with a clear view as to where the unit would likely end up. At that time, that was a bigger risk because it was an unproven technology. We see now with the scramble to secure new liquefaction, as late as the move by ENI to acquire an idle FLNG at a very high price, that time is the key attribute of the market and also all of the chartering discussions we have. We think negotiating power would slightly move to us if we move ahead on this basis. We have a very clear view of where it will end up.
Okay. That's helpful.
Whether the contract is secured before, simultaneously or in the not too distant timing just after, we feel very confident about where we sit right now.
Okay. That's helpful. I'm gonna try to squeeze two into one here. As it relates to sort of those contract negotiations, I know one of the things that you have called out is wanting to have some element of commodity exposure, similar to what you have on the Hilli, but less so in the Gimi. First, I guess, is that something that gas owners are willing to do or increasingly willing to do relative to where we might have been earlier? Sort of connected with that, you call out specifically a Mark II, but I know that you already own the Gandria.
Is there a reason why it seems like there's a little bit more of a Mark II focus versus a Mark I that might be, you know, a little bit more bird in hand?
Yeah. Okay. That's two questions. To answer the first part, yes, we think that it's easier to have commodity-linked production discussions now than earlier. I think the gas fields that we are targeting are either stranded or associated gas. We don't think that the owners of those resources have many, if any, alternatives to utilize those fields. Hence, it's either an FLNG or it's not monetizing the unit. With the amount of pressure to secure new liquefaction right now, we think that it's an easier environment to have those negotiations. I think it's also fair to say that the more oil major you go and the longer duration you go, the less they are incentivized or wanting to give commodity exposure.
We think we can obtain attractive commodity exposure to solid counterparties. The second part of your question, I think, as we highlighted, we have confirmed price and yard availability for both Mark I and II. What we see as a key attraction of the Mark II is the fact that you have somewhat higher liquefaction capacity, somewhat higher storage capacity, and due to the way the vessel is converted, a quicker conversion time. We also have a fairly good view of the FLNG growth pipeline, and we're confident that ordering a Mark II presents a very attractive risk reward, and that's why we want to proceed that. Saying that, we would not rule out building another Mark I with the starting point from Gandria, but Gandria is not suited for a Mark II.
All right. I appreciate you taking both, albeit somewhat different questions. Yes. Thank you.
One, good one.
Thank you. We will take our next question. Please stand by. Your question comes from the line of Craig Shere from Tuohy Brothers. Please ask your question.
Hi. Good morning, New York time.
Good morning.
As far as future capital availability and liquidity,uh first question is it reasonable to assume that you could cash out over half a billion dollars combined in low-cost refinancings for both the Hilli and Gimi? And then could you opine on the timing and size of liquidity needed for an initially FID spec build versus one that's contracted upfront?
To answer the first part, yes, we can. I think we can expect more than $ 500,000 if we were to refinance Hilli and Gimi today. I think the way we see it is that we have a healthy uh cash and listed securities position, and we think we can further optimize the debt on those two units once construction risk is taken out of Gimi and once recontracting risk is taken out of Hilli. That's why we are not pushing forward on that right now. We have a sufficient cash at hand together with the term sheets received for both Mark I and Mark II new builds to proceed with the spec build without having to use anything but our cash position and available credit or received term sheets for potential new credit facilities.
Even if you build on spec, the shipyard will let you kind of put in your equity over time, so you don't have immediate issues as far as needing more liquidity?
That's correct.
Thank you.
Thank you. We will take our next question. Your question comes from the line of Sean Morgan from Evercore. Please ask your question.
Hey, Karl. As we step up in terms of the volumes for a Mark II to Mark III with the 5 MTPA, is that gonna require, I guess, preceding offtaker work? Or do you think that the E&P partner that you select for the development of that project would be able to basically take full offtake at 5 MTPA?
Just to confirm, we would not do a Mark III on spec because that's a large volume and it's a bigger impact. That's more towards tolling arranged contracts, where we would expect that the offtaker would lock in some of the production volume.
Okay. You know, you talked about in the presentation about the kind of low cost of the asset development off of the west coast of Africa and the proximity to Europe. You know, it would indicate that Europe be the primary market for these projects. Have you been surprised at all of kind of the slowness of Europe to sign long-term SPAs on sort of the percentage of SPAs signed in 2022 since the war started relative to, say, Asia? You think is that carbon driving that or what's causing sort of this the delay in heavy European contracting?
I'm not surprised by it because we know what it takes to kick an FLNG project off the line, and offtake is only part of the puzzle. I think if you secure the offtake, you still need to have the development plans, the regulatory approvals, everything that's needed to produce the gas. I think to some extent, to the contrary, I think the European countries have been very swift to move on FSRU, fairly swift on the LNG carriers. I think right now they're actively working on how to crack increased gas production. I think a further testimony to that is when Senegal is invited to G7. At least last time I checked in the previous meeting, Senegal wasn't invited to G7.
I think they're starting to get what's going on here. I don't think it's really down to just the offtake. It's way more. You have to sort of embrace the full project and all the scopes of it and not just think that tying up offtake solves the problem. I know that several European countries are looking at offtake and financing to help lift some of these projects. You also need a stable geopolitical environment in the country that you want to operate if you are to put billions of dollars of infrastructure there. Our advantage, of course, is that an FLNG is floating, so the infrastructure is mainly upstream. The unit can always be redeployed, and we are, as you know, a generic asset, so we are not customized to the specific feeds.
We think that our technology suits well for those type of projects.
All right. Thanks, Karl. Appreciate it.
Thank you.
Thank you. We will take our next question. The question comes from the line of Wayne Cooperman, who is an Individual Investor. Please ask your question.
Hi, guys. Two quick questions. On Hilli, did Perenco not take all the amount they wanted? Is there any chance that you can get more volume from somebody else, or does that really have to wait till their contract expires? Secondly, since you sold a third of the NFE at a lower price, I mean, is it the plan to continue to monetize that, especially now that their stock has gone up a lot?
Thank you. I think for the first part of the question, if you know the production on the incremental volume is linked to TTF. If you take a TTF cargo and deliver it spot into Europe today, you're looking at a fairly steep discount at somewhere between $5-$10. Hence, it wasn't in the interest of the offtaker from Perenco to meaningfully increase volumes at the agreed tariff. There was no incentive for neither Golar nor Perenco to go to the negotiating table to increase volumes beyond the 0.2 if that meant a renegotiating of the TTF link tariff. I think the way we have viewed this is that let's just see what happens to the option that was declared at 0.2.
I think there is a scope to increase production further, but that would likely be at a tariff to be negotiated. Theoretically, there is capacity to sell it away, from the current offtaker. Practically, that's gonna be very difficult. I think the solution to this is that the offtaker, Perenco and us, needs to sit around the table and see if there is a solution that works for all the three parties. If not, the current TTF prices take care of the earnings for Hilli, but, you know, I think everyone is aligned to see if there are ways where we can boost that further. When it comes to the second part of your question, it's correct that we sold a third of our NFE holding.
I think we've further said that we would rather sit NFE than cash. I think to date, that's been the right decision. We like the progress of NFE, and currently we have plenty of cash and available liquidity to execute our ambitions. For now, that position remains the same, but we obviously keep a close eye on the development of the company. We think they've been very successful executing large improvements to the company just in the last quarter. We like the development currently.
All right. Thank you, and congratulations.
Thank you.
Thank you. We will take our next question. The question comes from the line of Barry Haines from Sage Asset Management. Please ask your question.
Thanks so much and congrats on all the progress. My question is, you talked about having enough funding for two additional FLNGs. Would that include a Mark II and a Mark III? Could you fund a Mark III? And maybe just talk about the relative costs of, you know, 1 versus 2 versus 3, 'cause those numbers were not on that one slide where you laid out the differences. Thanks so much.
I think if you take the liquefaction capacity and multiply by the guided $500 million-$600 million a ton, I think you get to the price. That's your price. Sorry, what was the rest of the question?
Could you fund a Mark II and a Mark III with the existing-
Yeah, yeah. Basically, the answer to that depends on the project. For some of these projects, if you have long-term offtake, you get very attractive financing, and then you can easily do both. For some of the long-term contracts, we know that the charter would also like to take equity participation in the unit, especially if it's contracted for the life of the unit. Hence, that would enable us to lift those two projects. But I think for now, the most likely one to proceed is Mark II, and we have significant backlog of interested parties across all three designs. In total, we can run two to three of them. It's a matter of prioritizing the ones that have the most attractive economics and most attractive total scope.
Thanks so much.
Thank you.
Thank you. We will take our next question. The question comes from the line of Frode Morkedal from Clarksons. Please ask your question.
Thank you. Hi, Han.
Hi, Frode.
Yeah, just a question on. I saw that Exmar sold their Tango FLNG last week at a pretty good price, it seems. That is, of course, a barge, and it's smaller. So maybe if you could just compare if it's. If I just, like, extrapolate to a 2.5 million ton conversion candidate, it gives me quite compelling valuation potential. So curious if you can talk about the differences.
Yeah, I think if you look at the announcement, they're saying they're gonna pay between $572 million-$694 million subject to performance of the unit, and that's a 0.6 million ton. Hence, your $950 million to $1,150-$1,156 million, if you want to be specific, on price. If you compare that to a Mark I, let's say, that means that you can pay between $2.4 billion-$2.9 billion per unit or approximately exactly twice the CapEx that we are guiding on between $500-$600 million. You're also right that Tango is a smaller unit with less liquefaction capacity and significantly less storage compared to our FLNG technology, and also not with the same strong operational track record.
They did, of course, operate for YPF in Argentina, but she's been idle for some time after that.
Perfect. Thanks. That's good color. Seems to be quite significant upside potential then. Thank you.
Thank you.
Thank you. We do have a follow-up question. Are you happy to take that question?
Yes, please.
Thank you. One moment, please. You have a follow-up question from the line of Ben Nolan from Stifel. Please ask your question.
Yeah, thanks. Thanks for taking the follow-up. I didn't get quite enough out of my 2.5 questions last time. A little bit more on the potential opportunity to expand in Mauritania and Senegal. Just to be clear, are. My understanding was that that was likely to be a Mark III design. Do you have any further color on sort of the direction that that might be headed?
I think we don't normally comment on specific projects, but we would lean then on the quarterly earnings call that Kosmos held earlier this week, where they said that they are targeting concept select for the growth of the Tortue phase within Q3 of this year. It's interesting that last time they did a concept select, they ended on FLNG, which is the Gimi. With the CapEx per ton liquefied and the carbon footprints per ton liquefied that our FLNG technology can provide, we struggle to see how there are other liquefaction solutions that can be deployed on that site that will be competitive on those two parameters at least. We're looking forward to that concept select. I think that's what we would say.
whether they want to grow from 2.5, which is Gimi, to 5 with sort of two Mark Is or whether they want to add a Mark III, I think is a question better directed to Kosmos and BP. We did note that Kosmos was talking about both phase two and three of Tortue within 2024.
Yeah. That's helpful. Then again, sort of if I'm doing two on an unrelated topic. You guys did buy back some shares, a little bit of shares in the quarter. Maybe just thinking about capital allocation. As I recall, you're a little bit limited on your ability to pay dividends until the delivery of the Gimi. First of all, is that still the case? How are you thinking about sort of in the intermediate term capital allocation as it relates to shareholder returns?
You're correct, Ben. The only debt facility we have with such restriction is the $300 million unsecured bond, which prevents us from paying a cash dividend until Gimi delivers. We are, however, allowed to do an incremental $15 million of buyback from where we stand today. We are also allowed to dividend out either the 51% of the total equity value of Cool, our share in Cool Company, either through shares or cash. Since we sold two-thirds for cash and remained one-third shareholding, the entire CoolCo position could either be monetized and so distributed in cash or distributed in shares. When it comes to capital allocation, we are generating a healthy free cash flow from every quarter from now onwards.
I think we're having active discussions with the board to introduce cash dividends from when Gimi delivers. Currently, there are no plans to ask for an amendment to the unsecured bond or otherwise bring that dividend forward, as we think our key focus should be on FLNG growth, but subject to how that materializes over the next six to nine months, that could change.
All right. Perfect. I appreciate you taking the follow-up call.
I think we have a hard stop now basically in one minute. Thank you all for dialing in. If anyone has further follow-up questions, please do not hesitate to reach out to us. Thank you for listening to us this morning, and have a great day.
That does conclude our conference. That does conclude our conference for today. You may now disconnect.