Q2 2022 Excelerate Energy Inc Earnings Call
to send one.
And then July .
We signed an MOU with a subsidiary of Ingro Corporation to study gas marketing opportunities in Pakistan. This agreement builds on the momentum we have established by extending our reach downstream of our existing terminal to key re-gasified LNG markets.
We also advanced several of our key growth projects during the quarter.
The Finland regasification project remains on schedule and is progressing according to plan.
And we have advanced our negotiations with the government with Bangladesh for our MLNG expansion and PYRA LNG projects.
I will talk about these projects in more detail later. And just this week, we signed a letter of intent with Hyundai Heavy Industries for a new 170,000 cubic meter FSRU to be delivered in 2026. This new FSRU, when delivered, will be a critical tool used to support the execution of our integrated projects.
Before turning to market dynamics, I want to spend some time on our downstream business model and how it supports our strategy.
As an established company, we've been successful in adopting our growth strategy to maximize value for stakeholders in a myriad of economic conditions.
Today, our strategy is focused on strengthening our positions in existing markets and opportunistically offering our customers increased capacity and downstream integrated services.
By going downstream after we open a new LNG market, we expect to capture a larger percentage of the economics along the value chain.
Whether it's through our E-FIT flexible terminal offering, or actually selling molecules downstream of our terminals via onshore pipelines,
We have created a business model capable of significantly enhancing our growth trajectory.
We are confident that going downstream will position Xcelrate to thrive, not only in the currently tight LNG supply environment, which is attractive for FSRE charters,
but also in a less constrained market as new LNG volumes come online in 2025 and beyond.
Now I'd like to share with you some perspectives on the current state of global LNG market.
Since our last earnings call in May, we've continued to see strong demand for flexible LNG infrastructure across the globe as countries seek energy security and independence.
This is not isolated to Europe , although the energy crisis in Europe and war in Ukraine have indeed increased the necessity for flexible access to LNG.
As European countries continue to displace unreliable Russian pipeline gas deliveries, they are accelerating their efforts to secure flexible LNG infrastructure and available LNG supply.
The increased competition for LNG supply has only exacerbated an already tight market, further elevating spot pricing amid strong demand from European countries, and driving increased competition between Europe and non-Elysees countries.
The uncertainty around future flows of Russian pipeline gas and the increased European demand for regasified LNG is likely going to keep Dutch TTF gas pricing at an elevated level heading into the winter season.
And with exposure to further curtailments in Russian pipeline volumes, European governments are implementing measures to help manage winter demand. These measures include curbing natural gas demand.
Mandating natural gas storage fill by October .
switching from gas to coal for some power plants, and of course increasing imports of LNG.
Notably, in June of this year, US LNG imports in Europe exceeded the amount of Russian pipeline gas that flowed to the continent for the first time in history.
We support Europe's efforts to enhance its energy security through increased access to global LNG supply.
This is why we have made securing access to Europe's gas sales market a priority for Accelerate Energy.
During the quarter, we expanded the scope of our Albania project to include broader opportunities for gap sales in Europe's southern gaps corridor.
The planned Vlora terminal is situated to meet not only the gasified LNG needs of Albania, but also to deliver volumes both east and west via existing natural gas infrastructure in the region.
In July , we signed an MOU with Overgas, Bulgaria's largest private natural gas distribution company.
relating to the sale of gas-wide LNG downstream of our planned VLRA LNG terminal.
We have entered into negotiations with Overgas to sell them up to 1 billion cubic meters per year over gas-fired LNG for 10 years using the proposed Vlora-Fear pipeline.
Integrated LNG projects like the planned VLORA terminal are a logical solution to help meet the urgent energy needs of countries linked to Europe's southern gas corridor, including Italy, Greece, Bulgaria, and Turkey.
Our deployment of the FSRU Exemplar to Finland remains on track and is expected to commence in Q4.
As a reminder, last quarter we reached an agreement with the Government of Finland for the exemplar to provide up to 5 billion cubic meters per year of regasified LNG capacity through a new regasification terminal in southern Finland.
This flexible LNG terminal will bolster the energy security of and diversify supply to its Retain Muhammad prepared
while also serving more broadly the needs of the Baltic Sea region.
In Bangladesh, LNG remains critical to the country's economy.
Our two FSRU terminals currently deliver approximately 20 percent of Bangladesh's total natural gas supply needs.
Due to current LNG price volatility, Bangladesh has minimized importing LNG from the stock market as it looks to relieve the effects of high stock prices on its economy.
The country is advancing plans to sign new long-term LNG supply purchase agreements to guarantee more affordable and predictable LNG pricing.
The pricing we are seeing for long-term LNG supply remains affordable when compared to the spot market.
This strategic action by Bangladesh dovetails with the gas sales agreements we are currently negotiating for the MLNG expansion and PIRATE projects.
Bangladesh also celebrated a major milestone in June , the opening of the Padma River Multipurpose Bridge.
This is the largest national infrastructure project in Bangladesh's history.
Prior to the completion of this four-mile long bridge, the only way to cross the Padma River was by ferry.
Now, the Western half of Bangladesh has...
greater connectivity to the country's east, which historically has outpaced the west in terms of economic development and growth.
The Padma River Bridge is expected to serve as a catalyst for economic growth in southwest Bangladesh.
sort of region with a population of over 30 million people and home to major urban centers.
such as Bereshall and Colman, the third largest city after Dhaka and Chittagong.
This rapid economic growth in southwest Bangladesh will further increase energy demand in the region and advance the critical need for gas-fired LNG as a fuel source.
Through the PIRATE project, Accelerate will play an important role in providing the energy to fuel economic growth in the region for years to come.
Now let's turn to the key updates on our growth projects.
During the quarter, we advanced the commercial negotiations for our Moskaliy LNG expansion and PYRA LNG projects and our proposed long-term LNG supply agreement.
As you know, these projects received their formal approval and principle by the Bangladesh government earlier this year.
The Ministry of Energy has since formed a proposal processing committee.
or PPC for short, for each of these projects.
Similar to the approval and principle, the establishment of these committees is an important milestone and it's part of a predictable, defined process by the government for the implementation of large scale energy projects.
The PPCs are tasked with managing the formal commercial negotiations.
for projects and have the authority to finalize definitive contracts.
The PPCs held their first meetings in July .
And we expect negotiations for Moshkale LNG expansion, PYRA, and our LNG supply agreement to advance in the coming months.
In August ,
We officially engaged HSBC as our financial advisor to assist us with all financial aspects related to the PYRA project.
Once realized, long-term sales of regasified LNG into Bangladesh will significantly increase the scale of our global operations.
Before I turn the call over to Dana, we'll walk through our financial results in more detail. I want to leave you with the following key takeaways.
First, our base business has proven to be resilient and continues to drive strong financial results.
Our downstream strategy, which is extending our reach into new and existing markets,
enables us to capture a larger percentage of the economics along the value chain.
Having the option to deploy FSRUs for time charters or to use them in support of our gas sales business ensures that they accelerate this position well to grow through a variety of market cycles.
Securing access to Europe's natural gas sales market is a focus area for us in the current global LNG market.
Our deployment of the FSRU Exemplar to Finland remains on schedule for the fourth quarter of 2022.
And the commercial negotiations for Bangladesh projects are advancing as planned.
With that, I'll now turn the call over to Dana.
Thanks, Stephen, and good morning, everyone.
Overall, we're pleased with the financial results we delivered for the second quarter, which were in line with our expectations.
For the second quarter, we reported a net loss of approximately 4 million.
The net loss reported for the quarter was driven by an expected IPO-related one-time charge of $21.8 million.
This one-time charge was incurred as a result of the extinguishment of the Excellence lease as part of the FSRU acquisition that was closed concurrently with the company's initial public offering in April 2022.
Excluding the one-time charge, our adjusted net income was $20.4 million.
As Stephen mentioned, our adjusted EBITDA was $75 million for the second quarter of 2022, up about $4 million versus the first quarter, driven primarily by the commencement of regasification services at Bahia Blanca in May, and the SSRU expressed resuming operations under its long-term regasification charter in early April .
along with higher gas sales volumes at the Bahia terminal in Brazil, partially offset by higher vessel operating costs.
In comparison to the second quarter of last year, this year's second quarter adjusted EBITDA was up 10 million, an increase of about 15%.
The year-over-year increase was driven primarily by gas cells in Brazil, which commenced in December of 2021.
Now let's turn to our liquidity and balance sheet.
As of the end of June 2022, Accelerate had $386 million of cash and cash equivalents on hand. Our second quarter operating cash flow was $16 million. And we spent $56 million in cash capex in the second quarter, of which $50 million was for the two SSRUs acquired in conjunction with the IPO.
Our leverage ratio, which we define as total debt plus finance leases, divided by trailing 12 months adjusted EBITDA, was 2.7 times as at the end of June 2022.
We have historically taken a conservative approach to capitalization and as a result, we are realizing the benefits of having a strong balance sheet and the financial flexibility to fund our growth. We are also recognizing the benefits of having a strong balance sheet and the financial flexibility
Our strong cash position in combination with our revolving credit facility provides us with ample liquidity to fund our ongoing operations.
near-term CapEx needs, debt service obligations, and our anticipated quarterly dividend payments.
As Stephen mentioned earlier, on August 5, our Board of Directors approved our inaugural dividend as a public company.
The dividend payment, which is equal to 2.5 cents per share or 10 cents on an annualized basis, will be paid on September 7 to holders of record as of August 19.
Based on the commercial momentum we've established to date and our results midway through 2022, we are reaffirming a full year financial guidance.
For the full year 2022, we still expect our adjusted EBITDA to range between $249 million and $269 million, and our adjusted EBITDA to range between $285 million and $305 million.
With that, we'll now open up the call for Q&A.
Thank you. So if you would like to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. When preparing to ask a question, please ensure you follow the meter locally.
So the first question comes from Devon McDonagh from Morgan Stanley . Please go ahead Devon, your line is now open.
So my first one is on Avora, and it's good to see the additional opportunities there in terms of gas sales and the agreement with Bulgaria. What I wanted to ask, though, is just an update on where we stand in getting formal approvals for that terminal and reaching FID on the project, and then also how much gas is needed locally for the PowerGen and any other local sales within Albania, and then how much is left elsewhere.
this immediate and pressing need.
for power that is only being exacerbated by the other actions in Europe .
That does give us the confidence as we're advancing on the other negotiations, but really I'd open that one up for Daniel, if you want to, our Chief Commercial Officer, to weigh in. Sure. Devin, as the pressing news and with the goal of delivering by the end of 2023, we're advancing the project in several fronts in parallel, engineering, permitting, and negotiations. This is a tough flying fullyheastern path.
So our ability to deliver will not be based on developing the project in a linear way. We have an FID, we're taking early actions to secure the timing, and we continue seeing the project in the second half of 2023 to start deliveries.
In terms of gas, that's a very good question.
Our goal
is to have an interconnector that will allow us to deliver up to 5 BCM per year to Europe .
The capacity of the FSRU is roughly the same, but just to give you a better proportion, we expect about 1 BCN.
to be dedicated to the Albanian market.
and for BCM and some of the peaking capacity to be dedicated to the European market.
Got it. That's very helpful. And then just sticking with Europe more broadly, in terms of expanding the presence or opportunities there, can you talk a little bit more about the types of opportunities beyond Finland and Albania? And then specifically I'm thinking about the access to additional open FSRU capacity you have over the next two years in your portfolio and whether or not converting an LNG carrier, I think you mentioned you have a kit for that.
could be an option for faster time to market. Absolutely, we've talked for some time about
different approaches we're taking to tonnage certainly. We made an announcement yesterday on one way we're growing the fleet. We're going to continue to look at the possibility of conversions. You typically want a very specific opportunity there because it needs to be kind of bespoke in nature. We continue to see opportunities coming down the pike in Europe . We have...
our team over there pretty much constantly. I think everybody spent the summer in Europe . But I think all I can really say is the events on the ground, the continual pressure that's being put on everyone in Europe , the growing insecurity about the coming winter has not slowed the pace of interest that we are receiving. But we haven't highlighted.
any of those opportunities is moving to the mature opportunity pile at this point but we are definitely seeing the continuation of the interest that we've seen since March.
Understood. Great. Well, look forward to more updates on that in the future then. Thanks for taking my questions.
Thank you, Devon, appreciate it.
Our next question comes from Michael Bloom from Wells Fargo. Please go ahead Michael, the line is now open. Thank you.
Thanks. Good morning, everyone.
I wanted to ask about this LOI for potential new build FSRU. I guess my question is would you be moving forward in purchasing this before you have have.
a contract and a specific use for the vessel or would you first secure the contracts? Just want to understand the sequencing of how that would work and then assuming you go forward what would be the cost and timing to deliver.
Thanks, Michael. We are absolutely moving forward to that and what I can tell you is that's for our fleet.
We're limited in what we can disclose with Hyundai. We've obviously been looking at this.
Since the spring, as I just told Devin, we've obviously been looking at conversions as well. We're pleased.
amidst all of the
Can all of the.
order book filling that's going on globally tied to the FIDs that are being taken on liquefaction and the corresponding need for additional LNGCs.
To push that, we're glad to be able to have a 2026 delivery.
The idea on this is it's going to be another best in class asset.
that we will use as we've always used our fleet. Our fleet has been used on a portfolio basis. It's part of why we've succeeded over the years.
The idea will be, frankly, that this will go and in all likelihood displace.
one of our existing vessels with a customer so that we can take exactly the right asset with combination of characteristics to the new opportunities that are assuredly coming with the supply balance on this asset class.
What you should see from this is that while most owners of FSRUs seem to be in a mood to sell and capture short-term uplift, we assuredly intend to grow this fleet. So I can tell you we've been looking at this for some time, we've evaluated all the possibilities.
We're happy to go with Hyundai, the largest shipyard in the world, shipbuilder in the world, and 2026 for a bespoke best-in-class vessel is, we believe, an outstanding timeline. But we intend to move forward with this.
Great, thanks for all that. Very helpful. My second question I just wanted to ask about the CAPEX budget for this year. Can you just remind us, I guess, does that change at all or just remind us where that stands for 2022 and then potentially any early reads into 2023? Thanks.
Michael, I've got to look across the table at Dana, our CFO , because I don't recall that we gave CAPEX guidance. Yeah, we did not. We did not, and we're not giving guidance on...
to CAPEX right now.
Thank you.
Okay, thank you.
Our next question comes from Matt Taylor from Tutor Pickering Holt and Cole. Please go ahead Matt your line is now open.
Thanks for taking my questions here. I wanted to go back to that southern gas opportunity because I think it could be quite significant. So you got capacity at the terminal of five BCM a year. You mentioned one of that could be for Bulgaria, but can you clarify how much of the four remaining will be for Albania? And then the rest you highlighted various potential countries, but one that screens pretty attractively, at least to us, is Italy.
which you signed an MOU last year with SNAM on that Flora Fier pipeline. So any more color you can provide would be helpful.
Thanks for joining us, Matt. Appreciate it.
The beauty of it, and I think I'm looking across the table, I think Bulgaria, we're talking about a BCM a year there, so we can do the math on that. Obviously, Italy is an attractive component of this, but we shouldn't take our eye off of the markets to the east as well. I mean, this is an – at this part of the European market is integrated, though, as we know, parts of Europe are fragmented in their interconnectivity, but certainly, Italy
is a big part of what's driven our interest from the very beginning from the IPO and well before that. It's what drove our interest in Albania knowing that this upside was there. But I'm going to hand it to Daniel because he studied some of these individual markets.
The best must for the utilization of the terminal
out of the 5 BCM, 1 BCM for Albania.
We are in discussions for one BCM for overgas.
we're going to continue discussions for 3 BCM for the different markets.
There is capacity for physical delivery downstream to Italy and it is one of the markets that we are focusing. You aware the question?
As you mentioned, NAM is one of the critical players on the market and they are interested in our project, of course, as they show with the MOU. But also, the commercial reverse of TAP can bring a lot of attractive markets to the terminal. They are not be
More of Bulgaria of course, but also Greece.
and even Turkey.
our capacity to swap volumes.
in TAP is going to give us a lot of flexibility and that's what we are actively involved in negotiations not only downstream to Italy which again is one of the critical markets.
but also on commercial rebirth.
Great. That's helpful. And just to clarify too, when you underwrote this as you're going through the IPO, my understanding was you're focused on Albania and the rest of these opportunities with the upside. So I guess the question is that return you underwrote for the opportunity and kind of shared that would it be materially getting better here? Is there CapEx? No, I think maybe once in a while.
for this pipeline and other infrastructure required that would offset. Yeah, I guess you have a couple of questions there, Matt. Yes, what we were presenting in the proxy and the road show and our discussions throughout was the base LNG to power deal for Albania and some native gas demands there within Albania. Have you?
we always had on our horizon just as we do in any market, where can we go further downstream? And frankly, we've always thought, well, what's the logical downstream for Albania?
it's further into the European market.
You're welcome. Thank you folks.
So to your first question, yes, the base deal did not include this. This should be accretive. We're still working on the shares and stakes of any JV partnership for the pipe and the interconnector to tap.
There will be some capex
It will be fairly modest, I would say, and you will see some uplift from it. But we're not in a position to guide you further on that.
That's great. One more if I may. You mentioned Bangladesh has been load shedding due to elevated LNG pricing. And you've seen this demand reallocation across the world just given how high gas prices have become. But can you just share perhaps Stephen and Daniel what gives you confidence these countries you're targeting won't delay your projects and basically make a case for your projects even despite these prices that we're seeing on the screen?
Yeah, Matt, we've been calling this out for some time. I mean, I don't want to act like we're Nostradamus or anything, but we've been saying for some time that...
Hey, these sovereigns got a little too heavy into the spot game, and while it makes sense for a while to optimize their delivered costs, they're going to have to pay a lot of money
You know, it doesn't right now, and they're doing what's sensible. But at the same time,
Bangladesh economy's need for energy, and we've highlighted the Padma River Bridge, which we think is just going to be like throwing kerosene on top of the economy in the West.
It's chugging along and still needs this energy desperately. That's why we've been negotiating at length and continuing for long-term supply. And we've been approved as someone who can deliver that. And that's why we wanted to move with a critical component of the PYRO project to be long-term supply. Because the reality is, what's out there right now for long-term supply is...
affordable for the Bangladeshis. I mean they say it quite openly, but they need more of it and it's why Accelerate's been laser focused on being the critical linchpin with our infrastructure to be in position to offer that to them. So really.
This is unfolding in a very predictable way. The Bangladesh government is making a mature pivot, and one that we are wanting to be part of that pivot.
Thanks for taking my questions.
Thank you, Matt.
The next question comes from David Havens from SMBC. Nicole, please go ahead.
Great, good morning guys. Thank you. First question relates to the LOI for the heavy
I have a heavy contract for a new FSRU. Is there an option embedded with the contract as well for a second vessel?
At this point, David, we will discuss that as part of the shipbuilding contract. I mean, we're focused on the specification and advancing the shipbuilding contract. If not, put that into the LOI at this point. Let's be transparent about that. But that is something that we will be discussing.
And the second question relates to Filipinos. I know in the last call you've talked about shifting that from 2023 to the very latter part of 2024, but do you have any updates as to the status of that project? I mean, obviously being an open access terminal, natural gas prices have a very defined effect on the capacity being signed up there. Can you give us an update on where that project stands?
Yeah, David, and I wouldn't...you point to it being an open access project, which you're right. We are unique in focusing on the fact that we think open access is the right.
play to make long term in Philippines.
But I would say that the other folks who are looking at projects that are tied to power generation are as sensitive to natural gas as you say as overall demand.
Daniel, I know you've just been in contact with that team, but you might elaborate on some of the steps they're doing on right now.
Sure, yeah. There is Philip Dences.
is fairly unique in Asia. It has a very mature wholesale power market with private companies actively playing on it and also on the long term contracting for power.
The disadvantage is that it is a fairly small market.
And Stephen pointed out, when you try to bring international prizes and you are a single player, it can be very difficult, particularly with the prizes that we are experiencing.
I think that is putting some dumping on the ability to develop the projects. Philippines needs acrime.
the power, they need the gas.
And we believe that the government is going to move towards facilitating access to LNG.
Our bet is still the same. We believe that a terminal
that serves the whole market is the best bet. We believe that the fundamentals that we are seeing will support that.
Okay, thank you.
The next question comes from Cameron Lockridge from Stevens. Please go ahead, Cameron. Your line is now open.
Hey, good morning guys. Thanks for taking my questions.
So I want to start on the.
VLORA, terminal, as well as the MLNG expansion, the back cap at 23. You know, obviously in the case of VLORA in Albania, plenty of upside there in terms of potential gas sales, you talked about the 4 BCM of capacity that you still have.
In terms of those two projects, both of them coming on in the back half of 23, any early indications are just kind of with the base earnings potential of those projects could be. Forgetting about the upside of gas sales, just how should we think about the earnings power? I mean you guys have been pretty steady at, call it, you know, 250 to 260, 270 and EBITDA over the past several years. How, you know,
What kind of upside to those numbers could we see from these two projects?
those numbers could we see from these two projects.
I think what we've continued to tell the analyst community over the summer and even before that
you know, on anything we're bringing to the table right now, you should really be thinking in terms of
CapEx deployed something like a three to five times multiple of EBITDA. And the reason we've seen that is historically, historically the FSRE business might have been around an eight times multiple, but we really see the advantages of going downstream, aggregating additional services, whether it's gas sales or...
or anything else is helping us reach that three to five.
times multiple. So I don't think we're really prepared to give any better indications than that right now.
But that's certainly what we're targeting.
Got it. That's super helpful. Thank you, Steven. And then I guess just one more question. This is kind of nuanced, but any color you can give on either average realized pricing for the gas sales, I mean, over the second quarter, first half, or just volume sold. I mean, you've beat substantially on the top line for the past couple of quarters. So just any help that we could get in terms of volumes or pricing on the gas sales would be very helpful.
patients get in line to get vaccinated.
This is principally.
And Dana, you're going to have to jump in here, because I don't remember.
I don't remember how we included some of the Q1 sales into New England, but I think this is largely a question about Brazil.
Yeah, yeah for Brazil, I mean definitely if you look quarter over quarter the revenue increase is driven by Brazil, obviously higher volumes there, but as we said on previous calls, we negotiate a fixed margin rate on our gas self-contract in Brazil, so even though the revenue will be somewhat lumpy and somewhat volatile depending on how prices move, our margin rates in our EBITDA will be relatively constant on a rate basis, and so we'll see the benefit of that obviously as those increased volumes, but you won't see as much.
volatility in the margins of the revenue.
If I were looking at Brazil, Cameron, the real takeaway for me would be how the heck is it that Brazil continues to want to buy so much from us? Why has this not resulted in demand destruction there on the sales? And I think this just goes to the fact that, hey, the need for LNG, I think back in April and May, everyone assumed that every molecule would go to Europe . And what we're seeing is it's just not the case even at these prices.
And that's largely because everyone else has their own needs for energy security. We are understandably focused on Russia, but that takes our eye off of – or people's eyes off of the failures on supply from Bolivia and the fact that some of these other markets do need what we're offering.
So I thank you for bringing that up because
Brazil has been a pleasant surprise about the resiliency of demand in the face of what people thought would lead to demand destruction.
Yep, that's super helpful. Thank you both and I'll turn it back.
Thanks Cameron, appreciate it.
The next question comes from Mark Solicito from Barclays. Please go ahead Mark.
Hi, good morning. So maybe just staying on Brazil, just wondering if there's any update on a potential extension or expansion of the existing gas sales agreement there. Seems like a pretty strong demand picture, so just wondering how we should think about that market going forward.
Yeah, absolutely, Mark, and thanks for joining us today.
I think I've already commented on how happy I am to see this demand in the excess of what we anticipated in Brazil despite these prices. Daniel's regional teams in LATAM I know are busy on those negotiations. But any further poller you want to provide.
Sure. Mark, we see strong fundamentals for 2023.
and the rest of 2022 they now already commented and the bases are
A continuation of what we have seen is a combination of a strong Brazilian economy, although they are experiencing some headwinds inflation related as the rest of the world. Brazil strong position on commodity exports, both farming and energy have made the economy extremely solid and that shows on the demand and on their capacity to pay premium prices for energy.
and gas cells and the two products are in high demand.
Got it. Appreciate the color there. And then maybe just shifting to Pakistan, could you just expand a bit on the MOU with Anglo? What are the volumes being contemplated there, and would there be any investment on onshore infrastructure as part of that?
You know, I'm.
I think the thing, my takeaway on Pakistan and why
why you should pay attention to that.
This is a longer term play, Mark. The reality is...
I'm bullish on Pakistan. He's bullish on Pakistan. It's the world's fifth most populous country.
It has a lot of gas connectivity among people who are connected to the wire, excluding those that have no access to the wire. Their domestic decline curve and their long-term production, especially out of Balochistan, is...
continues to decrease. And so we see there to be a long term need for this.
Because of macro issues, you don't see a lot of people running to Pakistan right now. We know what Pakistan will do long term. We're doing the heavy lift now. And the government needs to continue to work on open access. But you should really see this as a
our commitments to go downstream to take early action. This one will not pay off in the next two or three quarters. This is a longer term project, but we believe in it. We are confident that the IMF issues will be worked out with Pakistan and we intend to be there in a cataract seat when the opportunity downstream further develops. But I can tell you as someone who's traveled to Pakistan, many times.
You can just see the unfulfilled need there for gas, and we intend to be taking steps like this partnership with Engrow, one of the most mature and respected public companies on the Karachi Exchange. So you can just see this as a long-term commitment by Accelerate to this market.
Got it. Appreciate the time. Thank you. Thank you.
Thank you, Mark.
to ask any further questions.
Please press star followed by one and telephone keypad.
It appears we have no questions at this moment so I'm going to hand it back to Steven Knops, Co-Host, President and CEO of Extra Energy for any final remarks.
Cool.
Hey, thank you again to everyone who joined us on today's call. I hope as you can see we're pleased with the progress we've made through the first half of the year and look forward to providing you with additional updates in the coming months.
Until then, if you have any questions, please feel free to reach out to Craig Hicks, our VP of Investor Relations. With that, thank you.
This concludes today's call. Thank you for joining and you may now disconnect.