Golar LNG, the maverick of the liquefied natural gas (LNG) world, is on the cusp of a transformation. While analysts focus on the imminent arrival of the colossal FLNG Gimi into commercial operation and the looming redeployment of its sister ship, the Hilli, a subtle, almost overlooked detail in Golar's recent earnings call reveals a potential game-changer: Macaw Energies.

This seemingly insignificant, fully-owned subsidiary, specializing in land-based "flare-to-LNG" technology, might be the silent engine driving Golar's aspirations towards becoming a multi-billion dollar LNG behemoth. While Macaw Energies currently operates on a smaller scale, its potential impact on Golar's growth trajectory is undeniable.

Here's why Macaw Energies is poised to be more than just a side project for Golar LNG:

Time is Money, and Macaw Delivers Quickly

The oil and gas industry thrives on rapid returns. Macaw's modularized F2X units, capable of capturing and liquefying flare gas, can be constructed and deployed within 10-12 months. This speed, unmatched in the world of large-scale LNG projects, translates into a phenomenal CapEx to EBITDA ratio of 3-4 times. This means that for every dollar invested, Macaw can generate three to four dollars in earnings before interest, taxes, depreciation, and amortization.

The Billion-Dollar Flare Gas Problem

Globally, trillions of cubic feet of natural gas are flared annually, representing a colossal waste of resources and a significant contributor to greenhouse gas emissions. Macaw's technology offers a solution, turning a costly environmental burden into a revenue-generating asset.

The Numbers Don't Lie: Massive Potential for Scalability

Golar's Q1 2024 earnings call reveals that "several large potential clients" are actively conducting due diligence on Macaw, with some expressing interest in off-take agreements for "multiple units." This signals a high probability of rapid scaling, potentially deploying a fleet of F2X units across various flare gas sites.

Unlocking Synergies: Leveraging Golar's LNG Expertise

Golar, with its extensive experience in operating floating LNG facilities, brings invaluable technical expertise and operational know-how to Macaw. This synergy allows for accelerated development, efficient deployment, and robust operational performance of the F2X units.

Strategic Spin-Off: Igniting Macaw's Independent Growth

Golar's plan to potentially list Macaw as a separate entity in 2024 demonstrates a clear vision for its future. This strategic move will not only unlock Macaw's independent growth potential but also free up Golar's resources to focus on its core FLNG business.

The Hypothesis: A Self-Funding LNG Powerhouse

Macaw's rapid capital turnover and high profitability make it an attractive candidate for generating the capital needed for Golar's ambitious FLNG expansion plans. Imagine a scenario where Macaw's revenue stream becomes a self-funding mechanism for the construction and deployment of additional FLNG units like the Mark II.

Consider this:

Golar is contemplating ordering a third FLNG unit, a Mark II with a liquefaction capacity of 3.5 mtpa, costing approximately $2.1 billion ($600 million per mtpa). Macaw, with its 3-4x CapEx to EBITDA ratio, could potentially generate the necessary capital for a Mark II unit within a few years of operation, assuming a conservative EBITDA margin.

Projected EBITDA Generation for Golar LNG

The following chart illustrates Golar LNG's projected EBITDA generation, including the contributions from Hilli, Gimi, and Macaw Energies (hypothetical).

If this hypothesis holds true, Golar LNG could become a self-funding LNG powerhouse, rapidly deploying both large-scale floating LNG units and smaller, more agile land-based F2X systems. This combination would position Golar as a dominant player in the global LNG market, capable of capturing opportunities across various scales and geographies.

"Fun Fact: Did You Know... Golar LNG's journey began in 1946 as a shipping company transporting general cargo. The company's foray into the LNG market began in the late 1970s, marking a significant pivot towards the energy sector."

While the FLNG Gimi and the Hilli may be the current stars of the Golar LNG show, Macaw Energies, with its potential for rapid scaling and high profitability, could become the surprise champion, propelling Golar towards a future as a multi-billion dollar LNG empire. This is a narrative that investors would be wise to follow closely.