Welcome to the Golar LNG Limited Q3 2022 results presentation. At this time, all participants are in a listen-only mode. After the slide presentation by CEO Karl Fredrik Staubo and CFO Eduardo Maranhão, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I will now pass you over to Karl Fredrik Staubo. Karl, please go ahead.
Thank you, operator, and good morning and good afternoon to all. Welcome to Golar LNG's Q3 earnings results presentation. My name is Karl Fredrik Staubo, CEO of Golar LNG. I'm accompanied today by our CFO, Mr. Eduardo Maranhão, to present this quarter's results. Please note our forward-looking statement on slide two. Slide three provides an overview of Golar. We own two FLNGs, the Hilli, operating for Perenco in Cameroon, and the Gimi that will start a 20-year contract for BP next year. We are focusing our efforts on FLNG growth projects, and we have developed three different FLNG designs. All three designs are based on the same proven liquefaction technology and maritime interface, but differ in liquefaction capacity. During the quarter, we have placed orders for long-lead items for a new MKII FLNG with a total liquefaction capacity of 3.5 million tons.
The most notable change in the company overview since our last quarters are share sales totaling $430 million, reducing our CoolCo shareholding from 31.3% to 8.3%, and the sale of NFE shares, reducing our shareholding from around 6% to just shy of 3%. Turning to slide four and the highlights of the quarter. Hilli generated an EBITDA to Golar of $64.1 million, a 2.6x increase from Q3 last year. Perenco declared its 0.2 million tons of production increase from January 2023 to end of contract in July 2026, meaning that we will maintain production at 1.4 million tons per annum for the period. The incremental volume has a tariff linked to TTF gas prices.
During the quarter, we entered into hedges for 50% of our Q4 2022 exposure at $70 per MMBtu. We hedged 100% of our 2023 exposure at $50 per MMBtu, and we hedged 60% of our 2024 gas exposure at $51.2 per MMBtu. In total, these hedges provided cash flow visibility for EBITDA to Golar of around $260 million. As of today, the TTF hedges are currently about $75 million in the money. Turning to Gimi, she is now 90% complete and remains on schedule. We have engaged our pre-operations and will have a maritime crew of about 120 persons mobilized on board the vessel by year-end. On FLNG growth, we continue to see increased client interaction and strong progress on potential new FLNG projects.
During the quarter, we have been working with an upstream partner for a very attractive potential integrated FLNG project. We have also signed two development agreements, one with a super major and another with an independent E&P company. Under these development agreements, both parties commit to deliver a defined scope of work within set deadlines to progress potential new FLNG opportunities and agree on key steps to reach FIDs. We believe that securing attractive delivery of our next FLNG unit will increase Golar's ability to drive value with prospective FLNG clients. This is the reason why we have ordered the long-lead items to secure delivery within 2025. On corporate activities, we have sold 8 million CoolCo shares and 6.3 million NFE shares.
The share sales resulted in net proceeds to Golar of $430 million, and is in line with our communicated strategy to reduce our shareholding in financial investments to fund FLNG growth. We also bought back 400,000 shares in the quarter at an average price of $23.25 per share, and our share count now stands at 107.5 million shares. We have committed to invest up to $10 million in Macaw Energies, a newly established small-scale LNG liquefaction company targeting land-based stranded gas and associated gas resources, as well as biogas.
We're excited about the strong track record of the Macaw Energies team and believe Golar's liquefaction expertise, combined with the small scale land focus of Macaw, can create a successful combination for small-scale liquefaction opportunities. We are also opportunistically considering strategic partnerships or M&A throughout the LNG value chain. I will now hand the call over to Eduardo to present our Q3 results.
Thanks, Karl, and good morning, everybody. I'm very pleased to provide an update on our group results for the third quarter of 2022. Turning over to slide number six, I wanted to show some of the financial highlights of this quarter. Our operational performance continues very strong. We recorded total FLNG tariffs of $109 million, up 181% compared to Q3 of 2021 on a year-on-year basis. FLNG tariff is comprised of total revenue from liquefaction services and also realized gain on oil and gas derivative instruments. This quarter, we recorded an adjusted EBITDA of $85 million. When compared on a year-on-year basis, this represented an increase of 63% compared to Q3 2021.
We recorded net income of $141 million for this quarter, including $51 million of unrealized gains on NFE shares, $25 million of unrealized gain on interest rate swaps and also other derivative instruments, $12 million of unrealized gains on TTF-linked derivatives, as well as $10 million in net earnings from other equity method investments. Our share of contractual debt at the end of Q3 was $993 million, a significant reduction when compared to the same quarter of the last year when we had $2.1 billion of gross debt. Moving on to slide number seven. We continue to strengthen our balance sheet, which will allow the company to pursue future FLNG growth projects. Our cash position currently stands at more than $1 billion today.
Total cash at the end of Q3 was $612 million. Further to the end of the quarter, we sold, as Karl mentioned before, 8 million Cool Company shares and 6.3 million NFE shares, raising additional net proceeds of around $430 million. We now have total cash in hand of more than $1.04 billion. When we take into account the value of our listed securities in NFE, Cool Company, and Avenir, our total liquidity position stands just shy of $1.5 billion. When considering our contractual debt, as I said before, of $993 million, we now have a net cash position of $452 million.
As you can see on the right-hand side of the slide, we have no significant debt maturities until 2025, which is when our $300 million bonds mature. Turning to slide number eight, we'd like to provide some further insight into our earnings from Hilli. I think just by way of recap, so the Hilli tariff is comprised of three main components. We receive a fixed tolling tariff. We also have a Brent-linked tariff, as well as a TTF-linked tariff, which has started in the beginning of this year.
Also, as Karl mentioned before, we have managed to hedge our TTF production at a very attractive level, and as a result of that, we continue to see a very strong increase in Hilli's EBITDA generation, which this quarter totaled $64.1 million, which is 2.6 x the same amount that we had a year before. Moving on to slide number nine, I wanted to provide some further updates regarding our hedging arrangements. We have entered into swap arrangements to hedge our exposure to TTF, including 50% of Q4 2022 at a level of $70 per MMBtu, which has secured $28 million of distributable EBITDA to Golar.
We have also hedged 100% of 2023 and 50% of our 2024 TTF-linked production at levels of around $50 per MMBtu and $51 for 2024, which in total have secured an additional $233 million of distributable adjusted EBITDA to Golar. Based on that, our share of Hilli's EBITDA generation is expected to reach $295 million in 2023. When we consider that our share of the debt service for next year is expected to be around $50 million, we see an expected free cash flow to equity of around $245 million just from Hilli. I'll now hand over the call to Karl, who will talk a bit more about our future FLNG projects.
Thank you, Eduardo. Turning to slide 11, an update on Gimi construction update. The unit is now 90% complete and remains on schedule for sail away during first half of next year and contract start up during second half. We expect to start booking commissioning revenues during second half and contract start up in Q4 of next year. As a reminder, Gimi will generate $151 million in EBITDA to Golar every year for 20 years once contract start up. On slide 12, we elaborate a bit about what we are doing in terms of the scale of the Gimi construction project. We now have a construction team consisting of an average daily workforce of 4,600 with 24/7 activities. We have worked 26 million man-hours to date.
We have done 37,000 tons of new steel and equipment installed on board. We have installed 1,500 km of cables. That's equivalent to the distance between London and Rome. Pre-operations are initiated, and we will have a crew of more than 120 people mobilized to the vessel by year-end. Once in operation, the unit will produce about 2.2 million tons of LNG per year, enough to power more than 3 million U.S. homes. Turning to slide 13 and an update on the long lead and commercial developments for new FLNG projects. Based on strong client engagement for FLNG growth projects, we are of the view that securing attractive delivery for a new FLNG unit increases our ability to drive value with prospective FLNG clients.
We have therefore placed orders for main long lead items required for a new MKII 3.5 million ton FLNG, with total commitments of around $300 million. Included in that, we have engaged more than 200 engineers from the topside provider, shipyard, a third-party engineering company, and Golar, all working on MKII development and to secure attractive delivery within 2025. On the commercial side, we are working together with an upstream company to develop an attractive integrated FLNG project. As mentioned, we have signed paid development agreements with new prospective clients for potential FLNG deployment on large proven gas reserves on behalf of a super major and an independent E&P company. We see FLNG economics remaining attractive for both the integrated and tolling fee discussions we are currently having.
Turning to slide 14 in support of the value of near-term liquefaction capacity. In August, Exmar announced the sale of its FLNG Tango, which is a 0.6 MTPA liquefaction unit, which was sold to Eni for a price ranging between $572 million and $694 million. This implies a price of around a billion dollar per ton of liquefaction capacity. In September, Kinder Morgan sold 25.5% of their Elba liquefaction plant, also at an implied value of close to a $1 billion per ton. This compares to the CapEx per ton that we have guided on of between $500-$600 per ton.
We see that the attractiveness from charters, but also from people looking to acquire, liquefaction assets are valuing near-term cash flows, which is further giving support and confidence to why we have placed the, long lead items. Turning to slide 15, we have prepared an overview of historically, liquefaction FIDs by year. As you can see from the overview, so far in 2022, there's been 26 million tons of liquefaction capacity entered into. One could argue that that's somewhat surprising given the geopolitical scene and the gas prices both in Europe and Asia. We are less surprised by this development because we know how long the FLNG projects take in terms of environmental sign-off, governmental approvals, and just the sheer size of the engineering required for large offshore infrastructure projects.
We are, however, very encouraged by the activity, and we agree to S&P Connect's view that next year we'll see significant uptick in liquefaction FIDs, and hopefully a significant part of that will be FLNGs. Interestingly, U.S. is driving the majority of new supply growth with 95 million tons of the 148 million tons of new liquefaction capacity forecasted until 2030. Turning to slide 16, we continue to mainly focus on African LNG projects for three reasons. When you do an FLNG project, you have three key cost inputs, source gas, liquefaction cost, and shipping distance to end users. We believe we can source African gas reserves at around $1-$2 per MMBtu versus current Henry Hub prices of $6.
If 65% of new liquefaction projects have a cost of 2x-4 x our input cost from the outset, we think we're advantaged. As alluded to, our CapEx per ton is cheaper than competition, both maritime and land-based liquefaction solutions. West Africa happens to be closer to end users, both in Europe and Asia. If you have a business model with three key cost inputs and you're lower on all three, we think that's a good competitive advantage from the outset. To summarize, turning to slide 18, a familiar slide from all of our quarterly presentations, but yet summarizing the company in one slide. In 2021, we had adjusted EBITDA in the company of $74 million. Add to that the oil upside and the TTF linkage that Eduardo explained.
We see a commodity link production adding another $200+ million. Delivery of Gimi will add another $151 million of contracted EBITDA, bringing our adjusted EBITDA at current market rates to well north of $400 million. As explained, we now have a cash and listed securities position of $1.4 billion, where $1 billion is cash and the rest is listed securities. Our contractual debt stands at just shy of $1 billion, leaving us with a net cash position of around $500 million . We believe we're uniquely positioned for FLNG growth, as highlighted on slide 19. We have three FLNG designs ranging from 2.7 million to 5 million tons. On one slide to the right, you can see the track record of FLNGs globally.
Stability and production reliability is key for any liquefaction project, and you can see that Hilli has had a very stable production since startup, which has not been the case for other FLNG solutions in the same time period. We have the lowest CapEx per ton, and we also have the lowest carbon footprint per ton of liquefaction produced, which altogether gives this a compelling story for people considering FLNG. To summarize, we are focused on attractive FLNG growth projects and have now placed orders for MKII long-lead items. We expect our earnings growth to quadruple from 2021 to 2024 levels. We have $1.4 billion of cash and listed securities. We have a book value of $2.8 billion and building as we continue to generate healthy free cash flow to equity.
Golar has been around for 75 years, 50 of which in LNG, where we have been a market leader in FLNG, both with our proven design and strong operational track record. Combined, this is what gives us confidence to focus our growth efforts on FLNG. That concludes the prepared remarks, so I'll hand it over to the operator for any questions.
As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Each participant may ask up to two questions. Please stand by while we compile the Q&A queue. Our first question comes from the line of Chris Tsung from Webber Research. Please go ahead. Your line is open.
Hi. Good afternoon, Karl. How are you?
Good, thanks.
Just touching on the divestment of CoolCo and NFE shares to, I guess, finance the FLNG project. Do you plan to divest the rest for future projects, or will there be some percentage of these companies you plan to hold on to? What about Avenir?
I think what we have previously said and definitely stand by is that we view our all of our shareholdings as attractive financial investments. We will reduce financial investments to focus on core growth, if and when we have core growth. We feel like with our current cash position, we are very comfortable to fund the MKII project that we're now undertaking. It's safe to say that we don't need to sell any of our shares to fund that project. If we do other growth initiatives, we will consider to further reduce our shareholdings. At the moment, as we have previously communicated, we're happy to be shareholders in all those names and view being shareholders there as better than sitting cash.
Right. Okay, thanks. Another one is just I know that you, in this press release, you guys have ordered the long lead items MKII. Does that more or less secure timing of when it could be delivered in 2025, or does that depend on when you guys take FID?
That is what is required to ensure that you still can deliver in 2025. By definition, a long lead is the critical timeline. As long as you secure the delivery of those, you ensure that you can still take 2025 delivery. Of course, you need to progress MKII investments to safeguard that delivery. That means formal FID at some point as well. For now, we have done everything to ensure that we're on track for delivery in 2025.
Right. All right. Thanks. Just to confirm MKII, that's an integrated model, right?
The unit can be used on integrated and floating. It's not like a ship is customized to the commercial model of the ship. The ship is hardware at the end of the day. We have discussions MKII, both for integrated and floating. There are several attractiveness MKII. One thing is construction timing. The way the engineering has been put together, we have received very strong feedback on that design.
All right. Great. Thank you. That's it for me. Thank you, Karl.
Thank you.
Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Ben Nolan from Stifel. Please go ahead. Your line is open.
Yeah. Hi, this is Frank Galanti on for Ben. I wanted to actually dig into Chris's last question there, on MKII design, specifically around the vessel. Given that that's a conversion, have you sort of... Can you talk about what vessel type you need? Have you guys sort of already picked that out, and can you sort of talk around how much that's gonna cost?
Basically, you use a Moss-designed ship. You can take an existing carrier. There are plenty of Moss designs out there. One of the disadvantages of Moss as a shipping vessel is that they're all steam-fired, which means that especially with the new regulations coming into effect from 1st of January next year, these ships are far less competitive than the more modern ships for shipping activities. Meaning that you should be able to pick them up if you want to acquire them for conversion. We have inspected several suitable candidates, and we are discussing if and when we will acquire a ship for conversion. We can also use the Gandria, which we own, so we can also use that one. We're not 100% dependent on buying another ship.
We would like to buy one with somewhat higher storage capacity, but it's not a requirement.
Okay. That's helpful. Yeah. Great. I wanted to switch gears a little bit over onto the Hilli. Sort of obviously given extremely elevated global LNG prices, and sort of increased European demand, and can you sort of talk about the possibility of increasing production on the Hilli? Is there feed gas in the region that could be easily tapped? And is there sort of any updates you can give around the increasing Hilli production before the end of the current contract?
Yeah, sure. Perenco took up the 0.2 , so we're now producing 1.4. The two constraints in terms of increasing capacity is the size of the existing gas reserve, and the second is the gas flow from the wells. I think it would be in everybody's interest to increase production. It would benefit us, it would benefit Perenco. The offtaker, which used to be Gazprom, has now been nationalized by Germany and changed name to SEFE. SEFE stands for Securing Energy for Europe. All else equal, Europe wants more energy, not less energy. It could be a triple win where SEFE gets more volume, Perenco and we increase production. It's really down to the upstream part of it, which is under Perenco's control.
For now, it's standing at 1.4 million tons. I think it's fair to say that we're all trying to encourage increased production and see what's possible. I don't think it's right of us to give any guidance on whether or not we think that can happen because it's a bit too early to say, but it's certainly a potential upside.
Perfect. Thank you very much.
Thank you.
Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Craig Shere from Tuohy Brothers. Please go ahead. Your line is open.
Good morning, New York time. With MKII, you're now preparing necessarily be targeted to one of the prospective super major independent E&P FLNG customers you're negotiating with? Or in a really best case scenario, is there a way you could envision perhaps 3 FIDs over the next 18 months?
Let's do one at a time. For sure, like, our business is to do FLNG and FLNG growth. We like the development both of prospective clients and projects. We are ramping up activities, as we have shown, both from ordering long list, but equally important to engage a significant engineering team. We would certainly not rule out that it could be more than one. I think let's do one at a time 'cause these are large projects. I think, let's focus on one at a time. For yeah, we're here to move on this opportunity. We have a balance sheet to support it, we have an organization to support it, and we have focus across the company.
When you rightly point out these are large projects and you don't wanna, you know, get too far over your skis, you also noted that the negotiations included both integrated and, you know, tolling arrangements, the latter looking a little more like your BP Gimi, I presume. I guess my question is, given your successful execution on construction of these things, shipyard interest and potential for another, highly rated, you know, investment grade, you know, decades long toll, how do you think about your capital funding options if you were to get a long-term attractive toll? I mean, could that lift a lot of the investment considerations off your shoulders, given the ability to lever that far better than your original Gimi contract?
Yes. It's the short answer. I think a couple of things. We obviously have $1 billion in cash. We have $450 million or so in listed securities. I think it's fair to say that there is significant refinancing potential on both Hilli and Gimi in particular, post-delivery, that could free up cash and improve terms. If you read the Q2 presentation when we also spoke about FLNG growth, we have received term sheets for financing of FLNG growth projects even during construction at attractive terms and a healthy LTV. We do not see any balance sheet constraints for FLNG growth, for up to the unit we can do. Engineering and operations is basically what puts a cap on capacity and not balance sheet.
Thank you.
Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Liam Burke from B. Riley Financial. Please go ahead. Your line is open.
Thank you. Good afternoon, Karl. Excuse me.
Good afternoon.
Karl, on slide 16, you highlight the production source African gas, vis-a-vis Henry Hub. When you look at the FLNG production, just the process itself, are your next generation FLNGs more efficient, and can they reduce the production cost per MMBtu vis-a-vis Hilli or Gimi?
Like anything, like when you build a new model of a car, you make it, you know, when you have a facelift model of a car, it tends to be somewhat more efficient than the previous one. We constantly do improvements. It's slightly more efficient. I don't think at the end of the day that's what's gonna make it or break it. When it comes to operational costs, MKII is 3.5 million tons versus around 2.5 million tons for MK I's. There is some economies of scale because you don't need to staff up accordingly. If you like, operating costs per MMBtu produced will be somewhat more efficient by economies of scale and slight efficiency improvements over the time.
Do you see any competitive development by anyone else in developing FLNGs? It seems that you're increasing production, you're increasing efficiency, and you seem to have a great deal of interest from the energy majors and independent E&P companies.
Yeah. Right now, we are the only ones that do FLNG as a service. The only other FLNGs that operate in the world are oil and gas companies owning FLNGs on their own balance sheet for their own operations. The only one that is doing this as a service today is Golar. Based on what we see out there, you have other people pursuing that. I think most notably is what NFE is doing on their liquefaction solutions. We encourage that because we think it's needed in the industry to be able to provide shorter time frames and new liquefaction solutions. They too are focusing on producing hydrocarbons mainly for their own merchant and where they can use it in their downstream development or portfolio.
As a service, we see limited competition for the size of liquefaction solutions we have from credible competitors.
Great. Thank you, Karl.
Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Sean Morgan from Evercore. Please go ahead. Your line is open.
Hey, Karl and Eduardo. Thanks for taking the question. I think on the last call, for 2Q, we talked about a target date for a new FID announcement by the end of 2022, and, you know, we have a month and a half left, so obviously there's still a possibility for that. When you think about what the biggest bottlenecks are for reaching an agreement and, you know, I guess sort of FID-ing a new project, is it the upstream negotiations with partners that are extracting the molecules, or is it the nation-state that you kind of have to work with the national oil companies in these West African countries?
Just sort of what do you see as the major sticking points in terms of slowing down the timeframe for new announcements?
The key gating item for all this project is all of the, call it engineering upstream integration with midstream. Like technically planning the project and making it work. Once you have a plan that sort of everybody's comfortable with, then you need to get the governmental and environmental approvals. Subject to what jurisdiction, that can take very long, but it can also be somewhat more efficient. I think at the end of the day, the commercial terms are super important, but it's not the sticky bit. 'Cause if all the other things work, it's a matter of sort of dividing the cake. The one thing that takes time is to bake the cake, not to divide it, to put it that way.
In terms of timing, I think what we see is that, and we're trying to highlight that a bit in this presentation, is it's important to secure the attractive delivery, and we really see that, our ability to drive value with these clients is more significant. If you have more people wanting something than there is available, that tends to drive value in our favor. For now, I think we're most focused on the correct execution to drive value as opposed to have a firm deadline and having to be painted into a corner.
Yeah. Yeah, I mean, I think that kinda goes without saying. You don't wanna sign up to bad commercial terms. And then, you know, obviously a lot of success selling forward some of your, I guess, floating exposure volumes on TTF and oil. Just kind of curious, you know, what's the limit on, I guess, and it's probably different for TTF and oil in terms of kind of forward selling some of that, commodity exposure you have. You've gone to 2024. As you kind of look out at the forward curves, like over the next few months, would you try and kind of sell forward more exposure at end of 2024, you know, end of 2024, 2025? And how far could that process really take you kinda from where we are right now?
The commodity linkages are on Hilli, and Hilli has the contract until July 2026. What we are looking to do is we can and probably will hedge TTF volumes all the way out there if we like the overall price. For us it's really a matter of weighing the price dynamics in the market with what we can then lock in and provide cash flow visibility for. You also have to have some relationship to the margin or value at risk that you have between now and the timing of when you start producing those forward volumes. With our balance sheet now, that's not a real constraint. On the Brent, we haven't hedged thus far.
Part of the reason is because we have a ceiling on the Brent tariffs at $102. If you do it, you need to do sort of a collar to make sure that you don't end up with too massive margin calls, and it's bigger potential margin volumes there. We are likely to do more TTF if we find the overall price level attractive. We are currently less likely to do anything on the Brent side, but that can change. Like, if we can lock in $102 at the long period, you do it because that's your max earnings anyway.
Okay. That's really helpful for understanding that. Thank you.
Thanks.
Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Greg Lewis from BTIG. Please go ahead. Your line is open.
Hey, thank you. Good afternoon, everybody. Karl, I had a question. You mentioned and realizing you have a pretty strong cash position at this point in time, but you mentioned around potentially you know refinancing existing projects on you know. As we think about the loan to value comment you made, and I can appreciate the slide earlier where you kinda were marking where other projects have been reselling, could we see potential financing based on a on implied value, which could be higher than the construction price?
Hi, Greg. This is Eduardo here. Yes. I think the short answer to your question is yes. We have, as Karl said, received indications from a few potential lenders to new FLNG projects, which have indicated that they could be willing to look and to fund for leverage beyond the actual construction price of the vessel. I think when we look at the Gimi, for instance, as we have a 20-year contract and with such a long duration, we do have the ability to look at leverage beyond what a usual lender would look like in terms of a regular loan to value or 70% or 75% LTV. I think in that case, we're effectively looking at the ability of the contract to serve the debt.
For instance, we believe that finances in excess of $1.5 billion-$1.6 billion could be feasible just looking at the Gimi alone. Other banks have a different approach and look at those assets on a loan to value basis. On those instances, we believe that levels at around 70%-80% of the value of the asset could be achieved.
Just to summarize, it's not driven for those that propose those type of financing, it's driven by the contract value, not the LTV on this deal.
Okay. Thank you for that. That's good to hear. I did wanna ask also around, you know, you highlighted the investment in Macaw Energies. Realizing that's, you know, small-scale LNG, is there any kind of, you know, timelines or framework you can kind of tell us where that stands? You know, I mean, in other words, could we see a project and, you know, from this company in the next two to three years, or could it be something sooner? You know, I guess, how active is Macaw? I'm just not really familiar with that company.
I think one of the attractions there is that what they are looking to do is modularized, shore-based, small-scale liquefaction. One of the advantages of building smaller-scale and in modules is that time to cash flow is shorter. You have plenty of examples of flare gas and stranded gas today. If you can liquefy the flare gas and use it to do something sensible, it's not only economically attractive, it's also environmentally the right thing to do. Those would focus mainly on the U.S. and Latin America. The plan there is to have the modularized design ready for sure within 12 months. Subject to how that design then performs, we will take the next steps on that one.
All else equal, it's exactly what we do on the floating side, just that we're based on smaller size.
That sounds super interesting. Then I just had one other question. You know, as a follow-up to a previous question around, you know, number of units, obviously, you know, today we kind of have been building, you know, doing one project at a time. Karl, as you think about the market, and you think make the decisions, you know, or have the opportunities, maybe is the right better word to do more than one project at a time. Or what are the gating factors? Are the gating factors the shipyards, supply chains, labor?
I mean, like as you think about that and the potential to have multiple projects in line, you know, under construction at the same time, any kinda color you can give us around that?
Yeah. It kind of yes to all of the above. You need all of that in order to push an FLNG project. At the end of the day, it's willing clients and a project that's mature enough that you're building it. The somewhat annoying thing, if you think about it, is all the time it takes to get to FID. From FID, the long lead item is the FLNG. It's not the upstream infrastructure. Therefore, that's part of what's driven us to place the orders for the MKII long leads because we see how close some of these projects are to development or FID.
If we then have an FLNG available significantly earlier than if you would then go out and place the order, you have an increased attractiveness of that delivery position.
Okay. Just so I understand this, the $300 million, the long lead time items is really specific to the MKII , where if it was a MKIII design, I guess you could always go down to the MKI , which would probably require less kit. If I needed that MKIII design, any kind of sense for how much those long lead time items would all-in cost?
The fact of the matter is that most of the equipment we have pre-ordered is interchangeable across our designs because they're based on the same topsides.
Sure.
What we have moved forward with, if you're very interested, is centrifugal compressors, gas turbines, cold boxes, and heat recovery steam generators, which are the long lead items, longest lead and biggest components, of the top side package. We are ordering them with the MKII in mind because that's where we see the strongest customer pull. If for whatever reason we had to put that equipment onto a MKI or MKIII, the absolute vast majority of it can be put on either of those two designs.
Okay. Super helpful. Thank you very much.
More for MKIII, of course, but because it's bigger liquefaction size, but it's the same.
Sure. Okay. Thank you.
Thank you.
There are no further questions at this time, so I'll hand the call back to you for closing remarks.
Thank you all for listening in to our Q3 results. Have a good day and speak to you all soon. Bye-bye.
This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.