Schlumberger Ltd withdrew from its OneLNG joint venture with Golar LNG Ltd and Ophir Energy PLC due to financing issues for the Fortuna floating LNG project in Equatorial Guinea, Golar said.
During Golar's May 31 earnings call, the company said that despite efforts over the last 12 months, OneLNG and Ophir management had failed to finalize a debt financing package, and together with other capital and resource priorities, Schlumberger decided to end its participation in the project.
Golar, an independent owner and operator of marine-based LNG midstream infrastructure, teamed with oilfield service major Schlumberger to form the OneLNG joint venture in July 2016, with Golar getting 51% ownership and Schlumberger getting 49% ownership. OneLNG signed an agreement with Ophir Energy in October 2016 to establish a joint operating company to develop the Fortuna project. Through the deal, OneLNG and Ophir got 66.2% and 33.8% ownership of the joint operating company, respectively.
The joint operating company was to develop, finance and operate the Fortuna project in Block R, offshore Equatorial Guinea. A final investment decision was expected in the second half of 2017, and first gas was anticipated in the second half of 2020.
As a result of the funding issues, Golar and Schlumberger plan to wind down OneLNG and work on floating LNG projects as required on a case-by-case basis.
Golar said it will continue efforts to find the optimum capital structure that maximizes value for all Fortuna project stakeholders, including the government of Equatorial Guinea, but does not see extensive issuance of new equity at current share price levels as an attractive financing solution. New partners for the project are being considered, but Golar said there are no guarantees that attractive financing for the project can be achieved.
Golar LNG stocks plunged following the company's earnings report, which outlined a loss of $21 million in the first quarter against net earnings of $3.8 million in the prior quarter. Golar LNG shares on May 31 fell 25.09% on the day to $25.98 per share. Schlumberger was down 1.17% at $68.67 per share.
