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Revenue (Tables) | 9 Months Ended
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Sep. 30, 2023
Revenue from Contract with Customer [Abstract] |
Disaggregation of revenue | The following table represents a disaggregation of revenue earned from contracts with customers during the nine months ended September 30, 2023 and 2022. Liquefaction services revenue is included under our “FLNG” segment while Vessel management fees and other revenues under our “Corporate and other” segment.
| Nine months ended September 30,
(in thousands of $) | 2023 | 2022
Base tolling fee (1) | 153,376 |  | 153,376 |
Amortization of deferred commissioning period revenue (2) | 3,081 |  | 3,081 |
Amortization of Day 1 gains (3) | 9,380 |  | 19,442 |
Accrued overproduction revenue/(accrued underutilization adjustment) (4) | 4,074 |  | — |
Incremental base tolling fee (5) | 3,750 |  | 3,750 |
Other (6) | (676) |  | (1,335) |
Liquefaction services revenue | 172,985 |  | 178,314 |
Management fees revenue (7) | 15,558 |  | 20,322 |
Service revenue (8) | 13,798 |  | 5,144 |
Other revenues | 220 |  | 604 |
Vessel management fees and other revenues | 29,576 |  | 26,070 |
(1) The LTA bills at a base rate in periods when the oil price is $60 or less per barrel and at an increased rate when the oil price is greater than $60 per barrel. The oil price above the base rate is recognized as a derivative and included in “Realized and unrealized (loss)/gain on oil and gas derivative instruments” in the unaudited consolidated statements of operations (note 7). (2) Customer billing during the commissioning period, prior to vessel acceptance and commencement of the contract term was deferred (notes 19 and 20) and recognized evenly over the contract term. (3) Day 1 gain results from amount established on the initial recognition of the FLNG Hilli’s oil derivative instrument embedded in the LTA and the FLNG Hilli’s gas derivative instruments pursuant to the third amendment to the LTA (“LTA Amendment 3”) (notes 19 and 20). These amounts were deferred on initial recognition and amortized evenly over the contract term. (4) In March 2021, we signed an agreement with the Customer (“LTA Amendment 2”), to change the contract term from one linked to fixed capacity of 500.0 billion cubic feet to one of a fixed term, terminating on July 18, 2026. This amendment also permits billing adjustments for amounts over or under the annual contracted capacity in a given contract year (“overproduction” or “underutilization”, respectively), commencing from the 2019 contract year. Amounts for overproduction were invoiced at the end of a given contract year, while amounts for underutilization (which is capped per contract year) will be a reduction against our final invoice to the Customer at the end of the LTA in July 2026. Pursuant to LTA Amendment 2, we have billed and recognized overproduction revenue in relation to excess production over contracted annual base capacity during contract years 2020 and 2021. Pursuant to the fourth amendment to the LTA (“LTA Amendment 4”), we have agreed with our Customer to increase contract year 2023 annual contracted capacity by 0.04 million tonnes (from 1.4 million tonnes to 1.44 million tonnes) resulting from the inclusion of contract year 2022 underutilization into contract year 2023 annual LNG production. To the extent that the increased 2023 contracted capacity of LNG is produced during the year, the 2022 underutilization will be offset against 2023 increased production and no underutilization for contract year 2023 will result. However, if the increased 2023 contracted capacity of LNG is not produced during the year, any underutilization will continue to be treated as a reduction against our final invoice to the Customer at the end of the LTA. For the nine months ended September 30, 2023, we assessed the probability of our production of the contracted 1.44 million tonnes for contract year 2023 and concluded that it was probable. We estimated how much of this 1.44 million tonnes was produced during the nine months ended September 30, 2023 and offset a pro-rata amount of $6.6 million against the underutilization liability recognized as of December 31, 2022 for 2022 and an offsetting increase to estimated overproduction variable consideration which is bifurcated between “Liquefaction services revenue” and “Other operating income” line items in the consolidated statements of operations, amounting to $4.1 million and $2.5 million, respectively. (5) In 2021, we entered into LTA Amendment 3 which increased the annual capacity utilization of FLNG Hilli by 0.2 million tonnes of LNG, for the 2022 contract year. In July 2022, the Customer exercised its option pursuant to LTA Amendment 3 for 0.2 million tonnes (out of 0.4 million tonnes) from January 2023 to the end of the LTA. The combined effect results in annual contracted base capacity of 1.4 million tonnes of LNG from January 1, 2022 to the end of the LTA. The tolling fee is linked to TTF and the Euro/U.S. Dollar foreign exchange movements. The contractual floor rate is recognized in “Liquefaction services revenue” and the tolling fee above the contractual floor rate is recognized as a derivative in “Realized and unrealized (loss)/gain on oil and gas derivative instruments,” in the unaudited consolidated statements of operations (note 7). (6) “Other” comprised of: (i) accrued demurrage costs of $0.3 million and $0.9 million for the nine months ended September 30, 2023 and 2022, respectively, which we recognized in the period in which the delay occurred; and (ii) unwinding of deferred liquidated damages recognized prior to the commencement of the contract, evenly released over the LTA contract term, of $0.4 million and $0.4 million for the nine months ended September 30, 2023 and 2022. (7) Comprised of ship management, administrative and vessel operation and maintenance services. We entered into several agreements to provide ship management and administrative services to external customers. We also entered into a FSRU Operation and Services Agreement with a subsidiary of Snam for the Golar Tundra, pursuant to which we are required to provide FSRU operating and maintenance services in exchange for various payments. (8) In August 2022, we entered into a development agreement with Snam to provide drydocking, site commissioning and hook-up services for the Golar Tundra (the “Development Agreement”), which it acquired from us in May 2022. The Development Agreement includes contractual fixed payments recognized over the period of time that we provide the services to Snam. We completed the Development Agreement in May 2023 and recognized services revenue of $13.8 million for the nine months ended September 30, 2023. There was no comparable revenue recognized for the same period in 2022.
Contract asset and liability | The following table represents our contract assets and liabilities balances as of:
(in thousands of $) | September 30, 2023 | December 31, 2022
Contract assets (1) | 22,514 |  | 21,297 |
Current contract liabilities (1) (2) | (35,779) |  | (8,398) |
Non-current contract liabilities (2) (3) | (7,315) |  | (54,018) |
Total contract liabilities (4) | (43,094) |  | (62,416) |
(in thousands of $) | September 30, 2023 | December 31, 2022
Opening contract liability balance | (62,416) |  | (18,736) |
Deferral of revenue (5) | (2,325) |  | (62,223) |
Recognition of unearned revenue (1) (2) | 13,831 |  | 18,543 |
Recognition of deferred revenue (3) | 7,816 |  | — |
Closing contract liability balance | (43,094) |  | (62,416) |
(1) As of September 30, 2023 and December 31, 2022, we recognized a contract asset of $nil and current contract liability of $4.2 million, respectively, in relation to the Development Agreement. (2) Due to a production shortfall of the FLNG Hilli for the 2022 contract year, we recognized a non-current contract liability for this underutilization of $35.8 million as of December 31, 2022 (note 20). As further discussed in note 4, we reduced our underutilization liability by $6.6 million to $29.2 million and we reclassified the balance from non-current to current (note 19) reflecting our expectation that this amount will be recovered from increased LNG production in the 2023 contract year. (3) Pursuant to the Arctic SPA, upon receipt of a notice to proceed, we were to convert LNG carrier Golar Arctic to a FSRU which would lead to her eventual sale to Snam. The Arctic SPA included contractual fixed payments (recognized over the period of time that we would have provided the services to Snam) and as of December 31, 2022, we recognized a non-current contract liability of $7.8 million. In June 2023, Snam’s option to issue the notice to proceed lapsed and in accordance with the Arctic SPA, we retained and recognized the first advance payment and presented in “Other operating income” in the unaudited consolidated statements of operations (note 20). (4) Included within “Total contract liabilities” is the deferred commissioning revenue in relation to the FLNG Hilli of $11.5 million as of September 30, 2023 (December 31, 2022: $14.6 million) (note 19 and 20). We expect to recognize liquefaction services revenue related to the partially unsatisfied performance obligation at the reporting date evenly over the remaining LTA contract term of three years, including the components of transaction price described above. (5) Included in “deferral of revenue” as of September 30, 2023, is the deposit of $2.3 million received for the sale of the Gandria (note 4).

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- Definition Tabular disclosure of receivable, contract asset, and contract liability from contract with customer. Includes, but is not limited to, change in contract asset and contract liability. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-10 + Details
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