Q1 2024 New Fortress Energy Inc Earnings Call

Speaker Change: [music].

Operator: Good morning, everyone, and welcome to the New Fortress Energy First Quarter 2024 Earnings Conference Call. Today's conference is being recorded, and all phone participant lines are in a listen-only mode, but later we will have an opportunity to ask questions. To get us started today with opening remarks and introductions, I am pleased to turn the floor over to Managing Director of Strategy and Investor Relations, Mr. Chance Pipitone. Please go ahead, sir.

Good morning, everyone and welcome to the New fortress Energy first quarter 'twenty 'twenty four earnings Conference call. Today's conference is being recorded and all phone lines. All phone participant lines are in a listen only mode. But later, we will have an opportunity to ask questions to get US started today with opening remarks and introductions I am pleased to turn the floor over.

Managing director of strategy and Investor Relations Mr. Chance Pepitone. Please go ahead Sir.

Chance Pipitone: Thank you Lisa and good morning, everyone. Thank you for joining today's conference call, where we will discuss our first quarter 2024 results. The call is being recorded and will be available by replay on the investors section of our website under the subheading events and presentations at the same location you will find the presentation that we will walk through on today's call.

Chance Pipitone: Please review this as it includes important information, including disclosures and risk factors with that I'll now hand over the call to our chairman and CEO Wes Edens, great. Thanks, Jack and welcome everybody as usual please refer to the materials that we sent out and that's what we'll be using to kind of walk through the the.

Chance Pipitone: Great. Thanks, Chance, and welcome, everybody.

Wesley Robert Edens: <unk> financial presentation for the day, so flip to page number three and our first let's start with our results quarterly results were very solid $340 million in EBITDA right on top of our estimates still tracking on our guidance for the year. So financially a very very good quarter for us financial results for exact exactly as expected in the past with the rest of the year.

Wesley Robert Edens: As usual, please refer to the materials that we sent out. That's what we'll be using to kind of walk through the financial presentation for the day. So flip to page number three, and first, let's start with the results. The quarterly results were very solid. $340 million in EBITDA, right on top of our estimates, still tracking on our guidance for the year, so financially a very, very good quarter for us. Financial results were exactly as expected, and the path for the rest of the year is now very clear.

Wesley Robert Edens: Now very clear are.

Wesley Robert Edens: Our business now is one that is fully focused on generating long-term, sustainable, and growing results, and we've never felt better about it than we do today. Now, let's turn to page four, and I'll talk about each of the three major updates that we'd like to talk about and introduce them for you, and then turn them over to the guys that run each part of these businesses. Brannen McElmurray runs our Puerto Rico operation, Andrew Dete runs the Brazil operation, and then Chris Ginta, our CFO, who's also in charge of our Crest Energy project.

Wesley Robert Edens: Our business now is one that is fully focused on generating long term sustainable and growing results and we've never felt better about it than we do today.

Now, let's turn to page four and I'll talk about each of the three major updates I would like to talk about and introduce them for you and then turn them over to the guys that run each part of these businesses are brannen Mcelmurray, who runs our Puerto Rican operation Andrew D. D runs the Brazil operation and Chris <unk>, Our CFO, who is also in charge of a brass LNG projects. So, let's turn to page number four and talk about.

Wesley Robert Edens: So, let's turn to page four and talk about it. First, Puerto Rico. Let's just put where we are today into context. We went to Puerto Rico in the fall of 2017, three days after Hurricane Maria.

Brannen McElmurray: At first Puerto Rico, Let's just put where we are today into context, we went to Puerto Rico and the fall of 2017 three days after Hurricane Maria saw the devastation of the islands saw the need for a for power and for cheaper power and went to work both the logistics chain to bring gas and power into the island opened our terminal in the June of 2002.

Wesley Robert Edens: We saw the devastation of the island, saw the need for power and for cheaper power, and went to work. We built the logistics chain to bring gas and power into the island, opened our terminal in June of 2020, right in the middle of COVID, and entered into a contract for roughly 25 TBTUs to provide gas to San Juan for the first time. This is a big first step for us. Three years later, in 2023, in response to a FEMA process, we did, and successfully were awarded, the contract to build two additional power plants, 425 million megawatts of power in total for FEMA and the Army Corps. We did so in record time.

20, right in the middle of Covid, and and and entered into a contract for roughly 25 GB to use to provide gas to San Juan for the first time. This is a big first step for us.

Brannen McElmurray: Three years later in 2023 in response to a female.

Brannen McElmurray: Process, we did successfully and were awarded the contract to build two additional power plants 425 megawatts of power in total for FEMA and the Army Corps.

Brannen McElmurray: We did so in record time.

Wesley Robert Edens: The power has been dispatched 98% of the time, so it's been highly reliable. It's provided a critical 15% of the margin to the system. It's had a massive impact on the island, and this has been a very powerful economic result for us, as you know, as well. But the most asked question we get is how this transition will affect us and what our long-term future for us with respect to this and other gas opportunities on the island. Today, we have that answer.

Brannen McElmurray: Power's been dispatched 98% of the times has been a highly reliable he's provided the critical 15% in the margin to the system has had a massive impact on the island. This has been a very powerful economic result for us as you know as well, but the most asked question. We get is how well this transition would be the long term future for us with respect to this and other gas.

Brannen McElmurray: Gas opportunities on the island.

Brannen McElmurray: Today, we have that answer the government has done exactly as we said that we thought that they would when fever decided to end the contract decision that was made and I'm only keep the power plants on and keep them using gas, but to also greatly expanded use of natural gas around the island.

Wesley Robert Edens: The government has done exactly as we said, as we thought that they would, when FEMA decided to end the contract, the decision that was made to not only keep the power plants on and keep them using gas, but to also greatly expand the use of natural gas around the island. The goal from the Puerto Rican government is very simple. First, replace distillate fuels, diesel, and fuel oil, with gas.

Brannen McElmurray: The golf and the Puerto Rican government very simple fares.

Brannen McElmurray: Replace distillate fuels diesel and fuel oil with gas it's much cheaper it's much cleaner and it can be done throughout the island with our extensive logistics chain. So when the government terminated agreement. They also put out for bid a contract to provide gas for roughly twice as much fuel as what being used by FEMA. The 40, TV skews that they were using.

Wesley Robert Edens: It's much cheaper, it's much cleaner, and it can be done throughout the island with our extensive logistics chain. So when the government terminated the agreement, they also put out for bid a contract to provide gas for roughly twice as much fuel as what is being used by FEMA. The 40 TPTUs that they were using previously now go to 80, and the term that they were using them for extends from one year to four.

Brannen McElmurray: <unk> now goes to 80.

Brannen McElmurray: The term that they are using it for extends from one year to four twice as much feel much longer duration. What we said before is exactly what we expected to happen sell more fuel at a lower price. So we make less money on the margin, but we make it up on volume Brandon will walk through in detail, but in simple terms the need for on the portfolio across the arms.

Wesley Robert Edens: Twice as much fuel, much longer duration. What we said before is exactly what we expected to happen; sell more fuel at a lower price, so we make less money on the margin, but we make it up on volume. Brannen will walk through in detail, but in simple terms, the need across the island for the portfolio is for a total of about 300 TBTU. We detail that in the presentation. So even with this new contract, we are now at 105 TBTU. So think of 25 from the original contract and another 80 from this contract.

Brannen McElmurray: For a total of about 300 <unk>, we detailed out in the presentation. So even with this new contract.

Brannen McElmurray: We're now at 105 T V T O.

Brannen McElmurray: <unk> 25 from the original contract. Another 80 from this contract that's approximately 2 million tons of LNG is a very significant downstream customer for us, but it only represents only about one third of what the current need is so it's really an amazing outcome for us and an amazing outcome from Puerto Rico simply switching fuel from distillate fuels to gas well to save them.

Wesley Robert Edens: That's approximately 2 million tons of LNG, so it's a very significant downstream customer for us, but it represents only about one-third of what the current need is. So it's really an amazing outcome for us and an amazing outcome for Puerto Rico. Simply switching fuel from distillate fuels to gas will save them billions at no capital cost to the island and cut emissions dramatically. And this then paves the way for the next leg of this, which is exactly what we expect them to do now, which is to go out and build new, efficient generation plants to replace the old power plants. This will dramatically increase the reliability of the system.

Brannen McElmurray: No capital costs and cut emissions dramatically and this then paves the way for the next leg of this which is exactly we expect him to do now which is now to go out and build new efficient generation plants to replace the old power plants. This will increase the reliability of the system dramatically. It will extend the term of our contracts and save even more money for Puerto Ricans, what's left for us.

Wesley Robert Edens: It will extend the term of our contract and save even more money for Puerto Rico. What's left for us in Puerto Rico in our business is simply long-term, highly sustainable, highly predictable gas contracts for us all, which is amazing. That's the outcome that we are looking for, and with this today, we can see the path to getting there exactly as we predicted. The last piece of the FEMA situation is the economic resolution of the early termination of the contract.

Brannen McElmurray: In Puerto Rico, and our business is simply long duration highly sustainable highly predictable cash gas contracts for at all which is amazing. That's the outcome that we were looking for and with US today, we can see the path to getting there exactly as we predicted.

Brannen McElmurray: The last piece of the FEMA situation as the economic resolution of the early termination of the contract. There are clear contractual obligations that now will be not this is an ongoing process that should be resolved in the near term and under terms that are agreeable to both parties Brandon will detail. This but it's a very very good outcome for us and a good outcome for that mill.

Wesley Robert Edens: There are clear contractual obligations that will now be met. This is an ongoing process that should be resolved in the near term and under terms that are agreeable to both parties. Brannen will detail this, but it's a very, very good outcome for us and a good outcome for them. We will complete, this will complete the transition for us. I'll be able to provide much more clarity to you in the coming quarters as to the marginal economics of Puerto Rico, just as we have marginal economics in each of our major markets. The second item on my agenda that I wanted to highlight is Brazil.

Brandon: We will complete this will complete the transition for us I'll be able to provide much more clarity to you in the coming quarters as to the marginal economics of Puerto Rico.

Brandon: We have marginal economics of each of our major markets.

Wesley Robert Edens: Brazil is without question the greatest gas-to-power situation in the world when we're in a dominant position to transact, is every element you could possibly wish for, is large. The size of the country is large and significant, 200 plus million people, one of the biggest energy markets in the world. Number two, need.

Brandon: Second item up they don't want to highlight is Brazil.

Brandon: Brazil is without question the greatest gas the power situation in the world and when we were in a dominant position to transact every element you could possibly wish for its large size of the country is large and significant 200, plus nine people one of the biggest energy markets in the world.

Brandon: Number two need 75% of their power in their system as renewable which is great. It provides baseload production from the very very low cost, but it is not entirely reliable in all situations. So what they need is baseload dispatch will power the balance of system when the Sun doesn't shine the rain doesn't fall they have been running capacity auctions for.

Wesley Robert Edens: 75% of their power in their system is renewable, which is great. It provides baseload production at a very, very low cost, but it is not entirely reliable in all situations. So what they need is baseload dispatchable power to balance the system when the sun doesn't shine, and the rain doesn't fall. They have been running capacity auctions for nearly 20 years in Brazil, so the term structure and the plumbing of how they auction off this capacity are very, very well known.

Nearly 20 years in Brazil, so the term structure and the plumbing of how they auction off this capacity is very very well now to Dave Dave auction nearly 30 gigawatts of power and they have recently announced another eight gigawatts to be auctioned off later this summer.

Wesley Robert Edens: To date, they have auctioned nearly 30 gigawatts of power, and they have recently announced another 8 gigawatts to be auctioned off later this summer. The duration, the duration of these power assets that we have there is very, very long term, 15 and 20 years in total, 18 years on average. Very, very long term, very easy to predict, and predict economics. Next, credit quality. These are direct obligations of the Brazilian government, basically sovereign risk directly from the government, which is the largest country in South America.

The duration the duration of these tower assets that we have there is very very long term 15 to 20 years in total 18 years on average very very long term very easy to predict protect economics.

Wesley Robert Edens: So it couldn't be better in terms of the need, the duration, and the credit quality of the contracts we enter into. And lastly, and of course, from a market perspective, the most important thing is that we have a massive competitive advantage. We have two huge LNG terminals that are completed and are operational today. They're delivering gas into the system as we speak. The way the auctions are structured, you need to provide power immediately if you are called.

Brandon: Next credit quality. These are direct obligations with the Brazilian government basically sovereign risk directly from the government, which is the largest country in South America. So it couldn't be better in terms of the need the duration the credit quality.

Brandon: The contracts, we enter into and lastly, and of course market perspective.

Brandon: Most important is we have a massive competitive advantage here.

Brandon: Have two huge LNG terminals that are completed are up and running operationally today, they're delivering gas into the system as we speak.

Brandon: The way the auctions are structured Egypt provide power immediately a call capacity simply means that when the sun doesn't shine and the rain doesn't fall. They can call. You went through 72 hours you asked them to provide the power to that the only way to do that is to have standby gas and power. The only way you can have standby ghassan powers of the LNG. The only LNG terminals that are down to their own <unk>.

Wesley Robert Edens: Capacity simply means that when the sun doesn't shine and the rain doesn't fall, they can call you, and within 72 hours, you're asked to provide the power to them. The only way to do that is to have standby gas in power.

Wesley Robert Edens: The only way you can have standby gas in power is with LNG. The only LNG terminals that are down to their own privately are the ones by us. It's a massive competitive advantage. And this is not just a theoretical opportunity for us. What we've accomplished to date down there is incredible. We have both terminals operating.

Brandon: They are the ones by us it's a massive competitive advantage and this is not just a theoretical and the future opportunity for us what we've accomplished to date down there is incredible we are both terminals operating we have won 2.2 gigawatts of power that is under construction today and will be delivered next summer in the summer afterwards on the books is five.

Wesley Robert Edens: We have one 2.2 gigawatt of power that is under construction today. It will be delivered next summer and the summer after that. On the books is $500 million of highly predictable and long-duration cash flow, wholly owned by us, fully funded, and has the potential for it to grow significantly with these auctions this summer, which we have an incredible competitive advantage to talk about. We're now in the middle of the process of thinking through how to bring this value to our shareholders and are in the middle of the process of doing two things.

Brandon: $100 million of highly predictable and long duration cash flow wholly owned by US fully funded it has the potential for it to grow significantly with these auctions. This summer we should have been incredible.

Brandon: Competitive advantage due to talk about we're now in the middle of the process to thinking through how to bring this value to our shareholders and are in the middle of a process to do two things one to bring in a partner or partners to buy a piece of the business. Both returned capital from our original investment and also to validate the value of the business both of which we think are aren't going to happen, we think that'll that'll be.

Wesley Robert Edens: One, to bring in a partner or partners to buy a piece of the business, both to return capital from our original investment and also to validate the value of the business, both of which we think are going to happen. We think that'll be a process that culminates this summer.

Brandon: A process that culminated this summer it will be shown at an attractive valuation to us and provide liquidity to us back on our original investment.

Wesley Robert Edens: It'll be shown to attract valuation to us and provide liquidity to us back on our original investment. And two, we expect to file this company for an IPO this summer, probably in July or August. We'll see how the auctions transpire in the fall and then get this into the equity markets. We think the valuation proposition for investors is tremendous, and obviously, the derivative of that is the valuation to us. It's an incredible opportunity.

Brandon: Two we expect to file this company for an IPO. This summer probably in July or August, we'll see how the auctions transpire in the fall and then gets us into the equity markets with its evaluation proposition for investors is tremendous and obviously the derivative of that is the valuation to us. It is an incredible opportunity as an incredible portfolio of assets that exist today.

Wesley Robert Edens: It's an incredible portfolio of assets that exist today. It's an incredible management team with huge growth opportunities, and that translates into huge value for our shareholders. The third item on the list is the FLNG update. Today, the liquefier is mechanically complete. We are in the final stages of commissioning it, and we expect gas in a matter of the next several days, not months. We expect the first cargo in June. This is the culmination of many years of hard work.

Brandon: It's an incredible management team with huge growth growth opportunity and that translates into a huge value for our shareholders.

Brandon: Third item on the list is just as the LNG update today.

Brandon: Fire is mechanically complete and we are in the final stages of commissioning that we expect gas and that in a matter of the next several days not.

Brandon: Not months, we expect the first cargo in June. This is a culmination of many years of hard work represents a huge accomplishment for our team both here and in the field represents an incredibly valuable asset for us that we can then finance in a matter of all other LNG projects. Once it is completed and operations, putting finance against this will allow us to repay a significant amounts of <unk>.

Wesley Robert Edens: It represents a huge accomplishment for our team, both here and in the field, and represents an incredibly valuable asset for us that we can then finance in the manner of all other LNG projects once it's completed in operations. Putting finance against this will allow us to repay significant amounts of corporate debt, lower the cost of our debt, and extend the term, which are all very important, achievable financial goals for us as a company. So that's the update. So with that, let me turn it over to you. It starts with Brannen.

Brandon: Corporate debt lowered the cost of our debt and extend the term which are all very important and achievable.

Brandon: Initial goals for us as a company. So that's the update so with that let me turn it over to start with Brian Yes.

Brannen McElmurray: Yes, thank you, Wes. And I'll refer to page 7 in the presentation. And I appreciate you all joining us this morning. As Wes so often says, affordable, clean, reliable power is the cornerstone of economic growth. And in that regard, a majority of the world is underserved. For our business, we seek to address that need by providing infrastructure solutions that are responsive to needs today with technology that supports a desired future. Puerto Rico is a great example of executing on that strategy.

Brian: Thank you Ed and I'll refer to page seven.

Brian: And in the presentation and I appreciate you all joining us this morning, as what's often says affordable clean reliable power is the cornerstone of economic growth and in that regard a majority of the world is underserved for our business, we seek to address that need by providing infrastructure solutions that are responsive to needs today with technology.

Brian: That supports a desired future Puerto Rico is a great example of executing on that strategy as Wes said, we've been investing in Puerto Rico. Since 2017, we have a large and growing energy presence there and we've been growing our footprint and expanding our franchise for about six years today. Our portfolio includes a world class LNG terminal.

Brannen McElmurray: As Wes said, we've been investing in Puerto Rico since 2017. We have a large and growing energy presence there. We've been growing our footprint and expanding our franchise for about six years. Today, our portfolio includes a world-class LNG terminal, which is the only terminal in the north where most of the population is, and the demand center, so it's perfectly positioned on the island. In addition, we have logistics assets, which include off-island logistics chains, which are ships both large and small, on-island logistics chains, which are trucks, ISOs, and, of course, our outstanding operational personnel and expertise.

Brian: Which is the only terminal in the north where most of the population is in the demand centers. So it's perfectly position on the island. In addition, we have logistics assets, which include off island logistics chains, which are ships, both large and small on island logistics change, which is trucks and isos and of course, our outstanding operational personnel and.

Brian: Expertise this logistics chain allows us to reach each and every customer on the island of Puerto Rico and services through our existing terminal.

Brannen McElmurray: This logistics chain allows us to reach each and every customer on the island of Puerto Rico and service them through our existing terminal. In terms of customer contracts, we initially started with a 25-TBTU contract for San Juan 5 and 6, which itself has generated hundreds of millions of dollars of savings for Puerto Rican ratepayers. On March 15th of this year, we entered into an 80-TBTU island-wide contract, which allows us to serve Palo Seco-San Juan incremental power plus additional sites, which fold into our strategy in terms of gasification around the island.

Brian: In terms of customer contracts. We initially started with a 25 <unk> contract for San Juan five and six which itself has generated hundreds of millions of dollars of savings for Puerto Rican rate pairs in March of <unk> March 15th of this year, we entered into an ADT Btu Island wide contract, which allows us to serve palisade kos.

Brian: San Juan incremental power, plus additional sites, which fold into our strategy in terms of gasification around the island. In total. This is a 105 TV to you which is a significant portion of Puerto Rico's entire energy need, but it has room to grow from there and finally, we have our <unk> asset management.

Brannen McElmurray: In total, this is 105 TBTU, which is a significant portion of Puerto Rico's entire energy needs, but it has room to grow from there. And finally, we have our Hinera asset management platform, which today manages over 4,000 megawatts of installed power at 12 plants across the island. We have approximately 800 people, and we manage a budget of over $3 billion. In short, this particular platform allows us incredible visibility and also the ability to integrate with the transformational plan in Puerto Rico as the asset base transforms from distillate to natural gas over time. These assets, together with our people and expertise, position us perfectly to execute on our priorities, of which we have two.

For them, which today manages over 4000 megawatts of installed power 12 plants across the island, we have approximately 800 people and we manage a budget of over $3 billion. In short. This particular platform allows us incredible visibility and also the ability to integrate with the transformational plan in Puerto Rico.

Brian: As the asset base transforms from distillate to natural gas over time.

Brian: These assets together with our people and expertise position us perfectly to execute on our priorities of which we have two one accelerating the transition from distillates to natural gas in short as Wes mentioned earlier this transformation would save Puerto Rican rate payers of $1 billion a year to put that in perspective, that's the.

Brannen McElmurray: One, accelerating the transition from distillates to natural gas. In short, as Wes mentioned earlier, this transformation would save Puerto Rican ratepayers billions of dollars a year. To put that in perspective, that's the equivalent budget for the Department of Education, and it spends on teachers every year.

Brian: Equivalent budget for the department of Education, and it spins on teachers every year. So this kind of savings year over year is incredibly impactful in this jurisdiction.

Brannen McElmurray: So this kind of savings year over year is incredibly impactful in this jurisdiction. The second priority is adding more reliable generation to the system. In addition to saving money, what reliable generation allows us to do is also accelerate the transformation to renewables on the island and fundamentally take the asset base now, retire old and inefficient units, and replace them with natural gas-fired units that, over time, will support batteries and solar as the island transitions in line with its public policy to a net zero grid. Put simply, NFE is uniquely positioned to drive the transformation of the Puerto Rican energy system because of Turning to page eight.

Brian: The second priority is adding more reliable generation to the system. In addition to saving money what reliable generation allows us to do is also to accelerate the transformation to renewables on the island and fundamentally take the asset base now retire old and inefficient units replace it with natural gas fired units that over.

Brian: Time will support batteries and solar as the island transitions inconsistent with its public policy to a net zero grid.

Brian: Put simply unique NFC is uniquely positioned to drive transformation of the Puerto Rican energy system because of the existing infrastructure on the ground organization and market knowledge.

Brian: Turning to page eight.

Brannen McElmurray: As Wes also mentioned, a majority of the power in Puerto Rico still runs on diesel and heavy fuel oil. This is a very unique situation for the U.S. and its territories. Big picture, less than 1% of the power in the mainland U.S. runs on distillate, versus approximately 60% in Puerto Rico. This energy mix for Puerto Rico contributes to it having the highest price for electricity and the worst..., you know, worst electricity in terms of service in the U.S. and its territories.

Brian: As <unk> also mentioned a majority of the power in Puerto Rico still runs on diesel.

Brian: And heavy fuel oil. This is a very unique situation for the U S and its territories big picture less than 1% of the power on mainland U S runs on distillate versus approximately 60% in Puerto Rico. This energy mix for Puerto Rico contributes to it.

Brian: Having the highest price for electricity and the worst.

Brian: Worst electricity in terms of service in the U S and its territories.

Brannen McElmurray: This creates an incredible situation for NFE, and with this opportunity, we intend to, you know, push forward with our existing assets. Our goal here is to transform the grid from one that relies on diesel and HFO today to renewables and gas in the future. So how are we doing that?

Brian: This creates an incredible situation for NFC and this opportunity we intend to push forward with our existing assets. Our goal here is to transform the grid from one that relies on diesel and <unk> today to renewables and gas in the future. So how are we doing that in March we took that step by entering into an <unk>.

Brannen McElmurray: In March, we took that step by entering into an 80 TBTU island-wide contract, as Wes mentioned, adding to our existing 25 TBTU portfolio, bringing us to 105 TBTU. If you look at the graph on the left or the chart on the left-hand side of the page, it's interesting to think about it from a demand perspective. We've bucketed our opportunity into four categories. First, gas now, and those are assets that exist and run on gas, or exist, could run on gas, and just need supply, for example, the 80 TBTU contract that we just entered into. In total, that's one gigawatt. The second category is gas ready, which are assets that could run on gas today.

Brian: PBT you island wide contract as Wes mentioned, adding to our existing 25, <unk> portfolio, bringing us to 105 TV to you. If you look at the graph on the left or the chart on the left hand side of the page. It's interesting to think about it from a demand perspective, we bucket it our opportunity into four categories first gas now and those are at.

Brian: Assets that exist in Reno and gas exist could run on gas and just needed supply for example, the ADT Btu contract that we just entered into.

Brian: In sum total that's one gigawatt.

Brian: The second category is gas ready, which are assets that today could run on gas.

Brannen McElmurray: But today they run on diesel, and so need both infrastructure and a little bit of work on the units to make them gas ready. But these are projects that could be done in under six months. Today, that's about 600 megawatts. Then there are additional conversion opportunities, which add up to about 1 gigawatt. And as Wes mentioned, there are plans on the board and active steps being taken on the procurement side to build a new generation, partly responsible, Hinera's responsibility for about half, and then partly responsible for the P3 and an ongoing procurement.

Brian: But today run on diesel and so need both infrastructure and a little bit of work on the units to make them gas ready, but these are projects that can be done in under six months. Today. That's about 600 megawatts. Then there are additional conversion opportunities, which roll up to about one gigawatt and as Wes mentioned their plans on the board and active.

Brian: Steps being taken on the procurement side to build new generation, partly responsible.

Brian: <unk> responsibility for about half and then partly responsible for the P. Three in an ongoing procurement, but altogether. This will rollout eventually to be about one gigawatt of additional power that'll be there long term. This illustration to the right basically points out a very simple fact, which is once the distillates are pushed out of the system, which we are.

Brannen McElmurray: But altogether, this will roll up eventually to be about 1 gigawatt of additional power that will be there in the long term. This illustration to the right basically points out a very simple fact, which is once the distillates are pushed out of the system, which would also include coal that's being operated by a private operator, all in the chart on the left, including new generation, if dispatched at 80% is approximately 300 TBTUs for the island.

Brian: It also include coal that's being operated by a private operator, all in the chart on the left including New generation. If dispatch at 80% is approximately 300 TVT used for the island that encompasses today's demand and then where we expect and hope Puerto Rico will grow as their economy expands the in state of this as we.

Brannen McElmurray: That encompasses today's demand and then where we expect and hope Puerto Rico will grow as its economy expands. The end state of this is we expect all oil and HFO power on the island to be retired, and the island to be powered simply by natural gas supplemented with solar and battery, and that is going to be Puerto Rico's future. Our business is perfectly positioned to capture this growth, and our job is to drive that transition as fast as possible.

Brian: Expect all oil and <unk> power on the island to be retired and the island to be powered simply by natural gas supplemented with solar and battery and that is going to be Puerto Rico's future our.

Brian: Our business is perfectly positioned to capture this growth and our job is to drive that transition as fast as possible. What is unique about Puerto Rico is there's complete alignment between our strategy public policy and just the sheer economics of what will happen and so this is simply a question of time and our job is to accelerate that time is.

Brannen McElmurray: What is unique about Puerto Rico is that there is complete alignment between our strategy, public policy, and just the sheer economics of what will happen, and so this is simply a question of time, and our job is to accelerate that time as fast as possible and to convert these cash flows into long-term durable earnings that further increase the value of our franchise. Moving to page 9.

Brian: Fast as possible and to convert these cash flows into long term durable warning earnings that further increase the value of our franchise.

Brian: Moving to page nine.

Brannen McElmurray: As Wes touched on, we had an incredibly successful year last year from an installation and execution perspective by responding to a FEMA mandate to install emergency power. We built 425 megawatts of fast power across two sites. Both projects were done in less than 120 days, both based on two-year contracts with Weston and the Army Corps. Both projects were viewed as incredible success stories from our side, the federal government side, Puerto Rico's side, and the repair side.

Brian: As Wes touched on we had an incredibly successful year last year from an installation and execution perspective by responding to a FEMA mandate to install emergency power. We built 425 megawatts of SaaS power across two sites. Both projects were done in less than a 120 days both based on two year contracts with.

Brian: Western and the Army Corps, both projects are viewed as incredible success stories from our side the federal government side, Puerto Rico side and the repair side. This is a highly unique situation given the success of this project and given the real world on the ground impacts our contract ended on March 15th we then.

Brannen McElmurray: This is a highly unique situation given the success of this project and given the real-world, on-the-ground impacts. Our contract ended on March 15th. We then switched to a longer-term contract with the government of Puerto Rico for gas on the 16th of March, and on the same day, we sold the power plant to the government of Puerto Rico. So this 425 megawatts that started off as temporary power will effectively become permanent. Discussions are ongoing with Weston and the Army Corps on terms of our settlement.

Brian: Switched to longer term contract with the government of Puerto Rico for gas on the 16th of March and on the same day, we sold the power plants to the government of Puerto Rico. So this 425 megawatts that started off as temporary power will effectively become permanent discussions.

Brian: Discussions are ongoing with western and the Army Corps on terms of our settlement they have been incredibly constructive and positive.

Brannen McElmurray: They've been incredibly constructive and positive. We're finalizing our claim submission, and the recovery is expected to be significant. Just for perspective, the gross amount owing under the remaining term for both contracts is over a billion, and we expect those discussions to progress and end constructively as well. Meanwhile, we continue to invest in Puerto Rico and expand our franchise there by adding essential infrastructure. These projects and the experiences they bring can be readily applied to other markets addressing similar challenges, creating opportunities for NFE and other jurisdictions seeking solutions to accelerate the energy transition and driving value for NFE as a solution provider and, of course, for our shareholders. I will now turn it over to Andrew to talk about Brazil.

Brian: We're finalizing our claims submission and the recovery is expected to be significant just for perspective, the gross amount owing under the remaining term for both contracts is over $1 billion and we expect those discussions to progress and constructively as well, we continue to invest in Puerto Rico and expand our franchise there by adding our central infrastructure.

Brian: These products these projects and the experience that they bring can be readily applied to other markets addressing similar challenges, creating opportunity for NFC and other jurisdictions seeking solutions to accelerate the energy transition and driving value to NFC as the solution provider and of course to our shareholders I will now turn it over to Andrew talk about Brazil.

Andrew Dete: Great. Thanks, Brennan. Thank you, everybody, for joining us this morning.

Andrew: Great. Thanks Brendan.

Andrew: <unk> you everybody for joining us this morning excited to be talking with you about Brazil. There are three main points I'm going to go through here. The first is an update on our two LNG terminals, which are now online.

Andrew Dete: I'm excited to be talking with you about Brazil. There are three main points I'm going to go through here. The first is an update on our two LNG terminals, which are now online, are contracted for the long term, and we're making rapid commercial progress. The second is to describe the near-term growth opportunity, mostly at our Santa Catarina terminal, around the announced power auctions in Brazil and growing LNG supply through that terminal. And then the third one is to update you on our capital plan for Brazil, which Wes mentioned a little bit.

Andrew: Our contracted for the long term and we're making rapid commercial progress the second as I described the near term growth opportunity, mostly at our Santa Catarina terminal around the announced power auctions, Brazil and growing LNG supplied through that terminal and then the third one is to update you on our capital plan for Brazil, which Wes mentioned, a little bit so turning to page 11.

Andrew: Yeah.

Andrew: We've talked a few times about this in the last calls and updates, but just to kind of level set where we are in Brazil. Today. So in February we turned on to LNG terminals one in <unk>, one in Santa Catarina, the Fsrus hooked up to the pipeline, we finalized commissioning and now we have 12 M Tpa of LNG import capacity in.

Andrew Dete: So turning to page 11, we've talked about this a few times in the last calls and updates, but just to kind of set the level where we are in Brazil today. So in February, we turned on two LNG terminals, one in Bacarena and one in Santa Catarina. The FSRU is hooked up to the pipeline. We finalized commissioning, and now we have 12 MTPA of LNG import capacity in Brazil. That's over 600 million tons of carbon dioxide a year.

Brazil, that's over 600 GB to use a year.

Andrew Dete: We also have contracts for 2.2 gigawatts of contracted power with an average duration of 18 years and 50 TBTUs of base load gas supply, also with an average duration of 18 years. That leads to 500 million contracted EBITDA on a run rate basis in 2026. And we have, you know, effectively completed our regional strategy of bringing critical infrastructure for Brazil online that would deliver on both the power and the energy needs of these regions in the country as a whole. Flipping to page 12, we want to give you a little bit more of a deep dive on the Bacarena terminal and how we're constructing the commercial portfolio here. So, first, there is our Norse Hydro agreement.

Andrew: We also have contracts for 2.2 Gigawatts of contracted power with an average duration of 18 years and 50 TV to use a baseload gas supply also with an average duration of 18 years that leads to do 500 million contracted EBITDA on a run rate 2026 basis, and we have effectively completed now are regional.

Andrew: <unk> bring your online critical infrastructure for Brazil that will deliver on both the power and the energy needs of these regions in the country as a whole.

Andrew: Moving to page 12, we want to give a little bit more of a deep dive on the Buck Arena terminal and how we're constructing the commercial portfolio here. So so first is our Norsk Hydro agreement. So 15 year gas supply agreement. That's fully started we are ramping up that contract now as we commission each boiler and calciner in the alumina refinery for North <unk>.

Andrew Dete: So, a 15-year gas supply agreement that's fully started. We are ramping up that contract now as we commission each boiler and calciner in the alumina refinery for Norse Hydro, and we hope to expand. This is the sort of classic NFE project, but done at scale. So, you know, we have benefits for Norse Hydro in terms of cost, especially with a more volatile oil market.

Andrew: And we hope to expand this is the sort of classic NFC project, but done at scale. So we had we have.

Andrew: Benefits for Norsk hydro in terms of cost.

Andrew: Especially with a more volatile oil market, we've got benefits Norsk hydro in terms of maintenance using gas versus distillate fuels is much cleaner and then we've got huge benefits to the region on emissions and on local air quality. So we're seeing immediate benefits.

Andrew Dete: We've got benefits from North Kaido in terms of maintenance, using gas versus distillate fuels is much cleaner. And then we've got huge benefits for the region on emissions and on local air quality. So we're seeing immediate benefits. This is exactly what the mission of the company is.

Andrew: Exactly kind of what the mission of the company is and we're really happy to be in this long term agreement and we're working to expand and related power the whole facilities, our hope at some point in the future.

Andrew Dete: And we're really happy to be in this long-term agreement, and we're working to expand and really power the whole facility is our hope at some point in the future. Second is the Baccarina Power Plant. So 630 megawatts, 25-year PPA. This project is about 60% complete under a fixed price, date certain EPC contract with Mitsubishi and Toyo Satal. That'll come online in July 2025.

Andrew: Second is the bok rate of power plant. So 630 megawatts 25 year PPA. This project is about 60% complete under a fixed price date, certain EPC contract with Mitsubishi and toy is a tall that'll come online in July 2025.

Andrew Dete: And then the third big contract here is the Porto Sen power plant. That's 1.6 gigawatts. So on December 23rd, 2023, we announced the acquisition of this PPA. Between December 23rd and, I think, March 17th, we effectively completed the transfer of this PPA from a state in Brazil called Serra to our site adjacent to the Bacarena terminal. We have also, during that time, signed a fixed price, date certain contract for construction with Mitsubishi and Andrade Gutierrez.

Andrew: And then the third big contract here is the Protos and power plant.

Andrew: That's one six gigawatts. So in December 23rd of 2023, we announced the acquisition of this PPA between December 23rd and I think March 17, we effectively completed the transfer of this PPA from a state in Brazil called <unk> to our site adjacent to the Buck Arena terminal. We have also during that time sign a fixed price date Sir.

Andrew: Contract for construction with Mitsubishi and Andres Gutierrez, and we have financed the project at the asset level and started construction.

Andrew Dete: And we have financed the project at the asset level and started construction. So really rapid progress here in terms of being able to use our existing infrastructure to acquire this project and really begin construction. This will turn online in July 2026, which is why you see most of our numbers kind of on a run rate 2026 basis when these three big contracts are online.

Andrew: So really rapid progress here in terms of being able to use our existing infrastructure to acquire this project and really begin construction. This will turn online in July 2026, which is why you see most of our number is kind of on a run rate 2026 basis. When these three big contracts or online. We've also signed two other small contracts at the port for almost one <unk>.

Andrew: But important contracts to us with emeritus and alloy bar who are.

Andrew Dete: We've also signed two other small contracts at the port for almost one TBTU, but important contracts to us with Imerys and Alobar, who are located right next to Norsk Hydro. So just pausing on Bacarena for a second, and if you see the graph on the right, you know, this is, for us, really the footprint of what a great LNG terminal looks like. We've got our terminal there, in yellow at the top, so it's an extended jetty on the FSRU.

Andrew: Located right next to Norsk hydro.

Andrew: So just pausing on about granite for a second and if you see the graph on the right.

Andrew: This is really.

Andrew: For us the footprint of what a great LNG terminal looks like we've got our terminal there in yellow at the top so extended Jedi in the Fsrus, we've got the Norsk Hydro facility on the right side of this page, where we're supplying gas long term and then we've got the two sites for building power that we owned the left if you think about the overall portfolio composition, we have one MSR you with fixed empty.

Andrew: M T J F capacity, we've got 2.2 Gigawatts of power and we're basically today reserving for MTA of contracted LNG supply one M. GPA of that is for base load supply under the 18 year duration agreements that we talked about and then three M. Tpa of that is reserved for when these power plants dispatch and that prices connected to.

Andrew Dete: We've got the Norsk Hydro facility on the right side of this page, where we're supplying gas long-term, and then we've got the two sites for building power that we own to the left. If we think about the overall portfolio composition, we have one FSRU with six MTPA of capacity.

Andrew: The <unk> spot price plus a very significant premium and so this is really set up with a combination of base load supply contingent supply and then long duration fixed capacity fees from the power plants.

Andrew Dete: We've got 2.2 gigawatts of power, and we're basically today reserving four MTPA of contracted LNG supply. One MTPA of that is for baseload supply under the 18-year duration agreements that we talked about, and then three MTPA of that is reserved for when these power plants dispatch, and that price is connected to the JKM spot price plus a very significant premium. And so this is really set up with a combination of baseload supply, contingent supply, and then long-duration fixed capacity fees from the power plants. On page 13, I want to provide an update on our Santa Catarina terminal. So exciting developments here.

Andrew: But the new page 13.

Andrew: An update on our Santa Catarina terminal so exciting developments here first is that we signed our first commercial contract in Santa Catarina, which is with the trends Bolivia gas pipeline system, which we referred to as T. BG.

Andrew: We have a we've signed up to different products with TPG first is just based on gas supply, which will be used in the pipeline system to run the compression and then second is a really important thing that'll that'll become more of a theme for us in South, Brazil, which is we're providing balancing to the pipeline system. So basically all of that.

Andrew Dete: The first is that we've signed our first commercial contract in Santa Catarina, which is with the Trans-Bolivia Gas Pipeline System, which we refer to as TBG. So basically, you know, on a daily basis, we will help the system inject gas to balance out customers, which basically, you know, as they supply almost, you know, almost 200 customers on the pipeline system, we'll be able to help them balance their daily needs against some of the domestic gas that's also in that system.

Andrew: On a daily basis, we will help the system inject gas to balance our customers.

Andrew: Which basically you know as they supply almost I think its 200 customers on the pipeline system will be able to help them balance their daily needs against some of the domestic assets also in that system, so really providing the flexibility that's necessary for this pipeline system.

Andrew Dete: So really providing the flexibility that's necessary for this pipeline system. The second big opportunity here is the announcement of the 2024 power auctions in Brazil. So those were announced in March for an August 30th auction and really represent a huge commercial opportunity for Santa Catarina and for the power system in the south of Brazil, which we'll talk about here on page 14. So Wes alluded to this a little bit, but Brazil is really, really unique for us because we can't find another market that has the following three things. Majority of the time, intermittency.

Andrew: The second big opportunity here is the announcement of the 2024 power auctions in Brazil. So those were announced in March four on August 30th auction.

Andrew: And really represents the huge commercial opportunity for Santa Catarina and for the power system in the south of Brazil.

Andrew: Which we'll talk about here on page 14, so well.

Andrew Dete: So Brazil is over 80% hydro and renewable at scale. Brazil is over 200 gigawatts of grid. So I think the seventh largest electric grid in the world, 200 million plus people. And then we can't find a market like this that is mostly intermittent at a huge scale and also continuing to grow.

Andrew: As alluded to this a little bit, but Brazil is really really unique for us because if we can't find another market that has the following three things majority intermittency, So Brazil is over 80% hydro and renewable.

Andrew: At scale, Brazil has over 200 gigawatt grid.

Andrew: Grid, so I think the seventh largest electric grid in the world and 200 million plus people and then we can't find a market like this that is majority of intermittent at huge scale and also continuing to grow so on the right side of this page you can see how overall energy consumption in natural gas consumption per capita really lagged behind the developed world.

Andrew Dete: So on the right side of this page, you can see how overall energy consumption and natural gas consumption per capita really lag behind the developed world in a very significant way and represent a huge opportunity for Brazil to continue growing. So this really is the market set up as we head into these power auctions. And what we're going to see is that what we really need, and flipping to page 15, is we need firm capacity in Brazil. This page 15 shows not our forecast, but the actual Brazilian regulator forecast.

Andrew: And a very significant way and represent a huge opportunity for Brazil to continue growing. So this really is the market set up as we head into these power auctions.

Andrew: And what we're going to see is that what we really need and flipping to page 15, as we need in Brazil firm capacity.

Andrew: This page 15 shows not our forecast, but the actual Brazilian regulator forecast Theres, a group called <unk>, which which does this work in Brazil, and what they forecast is a need for 20 gigawatts of firm power to be added to the grid by 2032, which includes eight gigawatts are gonna be auction. This year, what they do here they forecast the retirement of the existing firm.

Andrew Dete: There's a group called EPE, which does this work in Brazil, and what they forecast is a need for 20 gigawatts of firm power to be added to the grid by 2032, which includes 8 gigawatts that are going to be auctioned this year. What they do here is forecast the retirement of the existing firm power. They forecast the growth in power consumption in the country, and they want to maintain a 5% grid reserve, which is pretty low.

Andrew: They forecasted the growth in power consumption in the country and they want to maintain a 5% grid reserve, which is pretty low and thats. What shows is 20 gigawatts of need.

Andrew Dete: And that's what shows this 20 gigawatts of need. Brazil has actually done an amazing job of responding to the needs of the power system, which are effectively, you know, they need firm capacity. They need insurance in the fact that, as consumption grows and you have days where, you know, hydrocapacity and renewable capacity maybe aren't producing as much as you think, you have reliability.

Andrew: Brazil has actually done an amazing job of responding to.

Andrew: The needs of the power system, which are effectively they need firm capacity they need insurance and in the fact that as consumption grows and have you have days, where hydro capacity in renewable capacity, maybe isn't producing as much as you think you have reliability, you know Brandon mentioned, it but but the things you need if economic growth of our affordable and clean power, which Brazil has.

Andrew Dete: You know, Brannen mentioned it, but the things you need for economic growth are affordable and clean power, which Brazil has in spades, but what they really need to work on and what they're focusing on is reliability. So if we flip to page 16, the opportunity for us at NFE is really to provide that reliability in a really dedicated regional strategy from the Santa Catarina terminal. So today, there are over 3 12 gigawatts of existing power plants in the region that are connected to our pipeline system and do not have firm gas contracts or firm power contracts, and NFE is also developing a number of greenfield sites that we will bid into the auction, but what we really want the message to be and for people to understand on this call is that the scarce resource here is incremental fuel supply and then flexible fuel supply. In order to run these capacity contracts, you need to have power plants that can respond to the grid in a matter of hours.

Andrew: Stayed but what they really need to work on and what they are focusing on is reliability.

Andrew: Flip to page 16.

Andrew: The opportunity for us at <unk> as it relates to provide that reliability and a really dedicated regional strategy from the Santa Catarina terminal. So today, there's over three five gigawatts of existing power plants in the region that are connected to our pipeline system and do not have firm gas contracts or for empower contracts and if he is also developing a number of greenfield sites that we will.

Andrew: Bid into the auction, but what we really what the message to be in for people to understand on this call is the scarce resource here is incremental fuel supply and then flexible fuel supply in order to run. These capacity contracts you need to have power plants that can respond to the grid in a matter of hours.

Andrew Dete: That is what our LNG terminals allow because we can store gas and supply it throughout this pipeline system on an almost instantaneous basis, and so we're providing something which is, you know, a new import point and, crucially, storage, which the grid in Brazil and especially in South Brazil does not have today. There's a reason that all these power plants do not have PPAs, and that's basically because they don't have fuel and they don't have flexible fuel, and so that's what we're going to provide at Santa Catarina.

Andrew: That is what our LNG terminals allow because we can store gas and supply throughout this pipeline system on an almost instantaneous basis.

Andrew: And so we're providing something which is a new important point and critically storage, which the grid in Brazil, and especially in the South Brazil does not have today. There's a reason that all of these power plants do not have ppas and that's basically because they don't have fuel and they don't have flexible fuel and so that's what we're going to provide a santa catarina. So what we believe happens in the auctions. This year is that they will.

Andrew Dete: So what we believe will happen in the auctions this year is that they will auction off 8 gigawatts of new power contracts, all with 15-year terms for the new power plants and 7-year terms for existing power plants. We believe we can capture an opportunity of 2 12 gigawatts that will be both new-build power from NFV and also contracts where we supply gas to existing power plants for third-party owners. So that's what we have coming up in August of this year and what we're really positioning for the rapid development of the Santa Catarina terminal. Last page is page 17.

Andrew: <unk> eight gigawatts of new power contracts, all with 15 year terms.

Andrew: For the new power plants, and seven year terms for existing power plants.

Andrew: We believe we can capture an opportunity of two and a half gigawatts that will be both newbuild power from <unk> and also contracts, where we supply power.

Andrew: Sorry supply gas to existing power plants for third party owners. So that's what we have coming up in August of this year and what we're really positioning for the rapid development of the Santa Catarina terminal.

Andrew Dete: So I want to provide an update on our Brazil capital planning here. The unique thing we have in Brazil is we have a business that is highly contracted today. So 500 megawatts or 500 million of EBITDA on a 2026 run rate basis with just the contracts that we have today. And then we have a huge opportunity for growth. We think we can effectively double that with our Santa Catarina terminal and deliver almost 1 billion euros of EBITDA by 2028.

Andrew: Last pages page 17 so.

Andrew: To provide an update on our Brazil capital planning here, but the unique thing we have in Brazil is we have a business that is highly contracted today, so 500 megawatts or $500 million of EBITDA on a 2026 run rate basis with just the contracts that we have today and then we have a huge opportunity for growth. We think we can effectively double that with our Santa Catarina terminal and deliver almost $1 billion of EEP.

Andrew: By 2028, so we stand at a at a really important time for the business and what we want to achieve here is we want to capitalize the business for growth. We want to continue to grow very quickly when it continues to grow very capital efficiently and we have this opportunity we've been talking about the size of Brazil, the need for power capacity and then the really effective mechanism and local cap.

Andrew Dete: So we stand at a really important time for the business. And what we want to achieve here is we want to capitalise the business for growth. We want to continue to grow very quickly, and we want to continue to grow capital efficiently. And we have this opportunity.

Andrew Dete: We've been talking about the size of Brazil, the need for power capacity, and then the really effective mechanism and local capital markets that make this attractive. So we'll look at a minority sale here in the near term. And we'll also look at an IPO later in 2024 to help continue to fund this business and grow into the opportunity we see available in Brazil. Chris, I'll flip it to you. Thanks, Andrew. Good morning, everybody.

Andrew: Markets that make this attractive so we'll look at a minority sale here in the near term and we'll also look at an IPO.

Andrew: Later in 2024 to help continue to capitalize this business and grow into the opportunity we see available in Brazil, Chris I'll flip to you. Thanks Andrew.

Christopher Guinta: Let's flip to page 19 and talk through the FLNG projects. On this slide, we've included a recent photo of FLNG-1 offshore Altamira. And the positive news is we are in the absolute final stages of commissioning. We've fully commissioned all safety systems, power and utilities equipment, the gas treatment modules, LNG pumps, and the LNG transfer hoses. And we're working on the final system to be completed, which is the MR compressor. I do want to take a moment and confirm that we did experience an incident with a pipe fracture inside of our cold box last Friday, April 26th.

Chris: Morning, everybody, let's let's flip to page number 19 and talk to the LNG projects on this slide we've included a recent photo of F. N G. One offshore altamira in the positive news is we are in the absolute final stages of commissioning, we fully commissioned all safety systems power and utilities equipment, the gas treatment modules LNG pumps, and the LNG transfer hoses and <unk>.

Chris: We're working on the final system to be completed which is EMR compressor.

Chris: I do want to take a moment and confirm that we did experienced an incident with a pipe fracture inside of our cold box last Friday April 26. This is an extremely unfortunately, given that we're expecting first LNG a mere 72 hours later.

Christopher Guinta: This is extremely unfortunate given that we were expecting the first LNG a mere 72 hours later. The pipe incident caused the box's insulation material, a non-toxic volcanic sand called perlite, to be emitted all over the rig. Thankfully, no significant injuries were sustained, and as a result of our excellent team in the field, as well as our preventative measures, together ensured that no adjacent systems were damaged. While the incident looked like it was much more extensive than it actually was on account of the perlite dusting, the damage was isolated to one pipe and manifold within the box and is expected to be repaired by next weekend.

Chris: The pipe incident caused the boxes installation material a nontoxic volcanic sand called Pearl eight to be admitted all over the rigs.

Chris: Thankfully no significant injuries were sustained and as a result of our excellent team in the field as well as our preventative measures together ensure that no adjacent systems were damaged.

Chris: While the incident looked like it was much more extensive than it actually was on account of the perlite dusting. The damage was isolated to one pipe and manifold within the box and is expected to be repaired by next weekend. This is why commissioning is so important and why we've invested in excellent partners that have been overwhelmingly supportive as we try to move through the balance of the commissioning work and produce LNG.

Christopher Guinta: This is why commissioning is so important and why we've invested in excellent partners that have been overwhelmingly supportive as we try to move through the balance of the commissioning work and produce LMG. Moving on to slide 20, we talk about why we chose to in-source the production of LNG and demonstrate the value of the FLNG-1 asset. We estimate the value of the FLNG-1 unit exceeds $3 billion. This value is built up by a combination of one, the cost to replicate the liquefier, and two, the time value of having production in today's still elevated market for global LNG. We have talked with various EPC firms about what it would cost for a fully wrapped LNG project at a similar size, and we've been provided with a range of $1,300 to $1,500 per ton, excluding storage.

Christopher Guinta: This is just the cost paid to the EPC firm and does not include all of the project support expenses such as permitting, environmental studies, SG&A overheads, and, of course, interest earned on construction. The second reason is the fact that NFE's fLNG asset will produce approximately 280 TBTUs, or a little more than 90 cargoes, over the next four years, which is when the majority of the projects recently FID' The value of this LNG sold in the current market is worth another $1 billion.

Chris: Moving on to Slide 20, we talk about why we chose to in source the production of LNG and demonstrate the value of the LNG one asset.

Chris: We estimate the value of <unk> the unit exceeds $3 billion. This value is built up by a combination of one the cost to replicate the liquid fire into the time value of having production in today's still elevated market for global LNG.

Chris: We have talked with various EPC firms on what it would cost for a fully wrapped LNG project at similar size and we've been provided a range of 300 to $500 per ton. Excluding storage. This is just the cost paid to the EPC firm and does not include all of the projects support expenses, such as permitting environmental studies SG&A overheads and of course interest during construction.

Chris: <unk>.

Chris: The second reason is the fact that <unk> LNG asset will produce approximately 280 TVT us we're a little more than 90 cargoes over the next four years, which is when the majority of the projects recently F. I need will come on line the value of this LNG is sold into the current market is worth another $1 billion. So when you combine the 2 billion.

Christopher Guinta: So when you combine the $2 billion paid to the EPC with the carrying cost of developing the asset and the time value of LNG now, you have an asset worth well in excess of $3 billion. Let's flip to the next slide and talk about this in a little bit more detail.

Chris: <unk> paid to the EPC with the carrying cost of developing the asset and the time value of LNG now you have an asset worth well in excess of $3 billion, let's flip to the next slide and talk about this with a little bit more detail.

Christopher Guinta: On slide 21, in last quarter, we talked about how the LNG supply market is dominated by investment-grade participants, and our FLNG solution is intended to be responsive to the needs of our customers now. As a result, Enafee built an asset that has meaningful near-term cash flows, as well as provides us with long-term operational confidence. The graph on this page shows the value of having LNG production in the current market as opposed to an ordinary course SPA, which is priced around 115% Henry Hub plus $250.

Chris: On slide 21 in last quarter, we talked about how the LNG supply market is dominated by investment grade participants and RF LNG solution is intended to be responsive to the needs of our customers now as a result, and if he built an asset that is meaningful near term cash flows as well as provides us long term operational confidence.

Chris: On this page shows the value of having LNG production in the current market as opposed to an ordinary course, SBA, which is priced around 115% of Henry hub plus $2 50.

Christopher Guinta: Over the next four years, which is about when a new SBA would begin providing cargoes to the buyer, our first fast LNG unit will produce around 280 TBTUs of supply worth an estimated $1 billion using the forward TTF price less shipping. The sheer in-the-money value of the LNG is remarkable, but the operational benefits are also important to recognize. First, it gives us certainty of supply and ensures that we are not at the behest of producers with competing interests.

Chris: Over the next four years, which is about when a new SBA would begin providing cargoes to the buyer or first SaaS LNG unit will produce around 280 <unk> use of supply worth an estimated $1 billion using the forward TGF price less shipping this year in the money value of the LNG is remarkable but the operational benefits are also important to recognize.

Christopher Guinta: Second, it provides increased flexibility to manage supply and demand imbalances at our terminals. And third, our location should see increased uptime as opposed to U.S. Gulf projects that have weather and congestion to contend with. So move to slide 22, and this is designed to share with you our plans for the FLNG capital structure moving forward. Our goal is to finance the assets on a secured basis with a project bond similar to what's been done in other LNG projects in the past.

Chris: First it gives us surety of supply and ensures that we are not at the behest of producers who are competing interests second it provides increased flexibility to manage supply and demand imbalances at our terminals and third our locations should see should see increased uptime as opposed to U S. Gulf projects that have weather and congestion to contend with.

Chris: So move to slide 22, and this is designed to share with you our plans for the LNG capital structure moving forward. Our goal is to finance the assets on a secured basis with a project bonds similar to what's been done in other LNG projects in the past granted it made sense to finance the asset on balance sheet using corporate debt, while it was under development, but we feel that this will be a.

Christopher Guinta: Granted, it made sense to finance the asset on balance sheet using corporate debt while it was under development, but we feel that this will be a better solution for us. We are targeting $1.5 to $1.75 billion in proceeds, which represents a low loan-to-value given the asset exceeds $3 billion, as we outlined on slide 20. This furthers the three primary objectives listed on this slide.

Chris: Better solution for US we are targeting one five to $1 75 billion of proceeds which represents a low loan to value given the asset exceeds $3 billion as we outlined on slide 20. This furthers. The three primary objectives listed on this slide first the financing structure will provide longer term with little or no amortization order match the tenor.

Christopher Guinta: First, the financing structure would provide longer terms with little or no amortization in order to match the tenor with the asset life. Second, the lower loan-to-value on an operational asset with a fixed cash flow stream should yield a lower borrowing cost than the corporate parent. And third, given that right now this asset is pledged to term loan B in the revolving credit facility, we would pay off both of these upon a successful financing, thus lowering our corporate debt.

Chris: With the asset life second the lower loan to value on an operational asset with fixed cash flow stream should yield a lower borrowing cost in the corporate parent and third given that right. Now this asset has pledged to the term loan b and the revolving credit facility, we would pay off both of these upon a successful financing thus lowering our corporate debt. This financing model of building with on balance sheet.

Christopher Guinta: This financing model of building with on-balance sheet financing using corporate debt and then refinancing with asset-level bonds is a path we intend to deploy in a similar fashion on future FLNG projects. So now, let's move to slide 24 and talk about the financial results for the first quarter. Total operating margin was $350 million from sales to customers through our downstream terminals, and we had another $34 million of operating margin from the ship segment.

Chris: Financing using corporate debt and then refinancing with asset level bonds in the past, we intend to deploy in a similar fashion our future LNG projects.

Christopher Guinta: The $34 million in ships' operating margin will be mostly flat for the balance of the year and then go down in 2025. When you back out SG&A, our adjusted EBITDA for the first quarter was $340 million. The majority of the change from Q4, 2023, is a decrease in the ship's margin as well as the early termination of the FEMA contract. We're happy to report that, as has been the case in all, of the second half of 2023. We had no material sales from open market cargoes.

Chris: So now let's move to slide 24, and talk about the financial results for the first quarter.

Chris: Total op margin was $350 million from sales to customers through our downstream terminals and we had another $34 million of operating margin from the ship segment, the $34 million as ships operating margin will be mostly flat for the balance of year and then it goes down in 2025, when you back out SG&A, our adjusted EBITDA for the first quarter was $340 million the majority of that.

Chris: Change from Q4 2023 is a decrease in the ships margin as well as the early termination of the FEMA contract. We're happy to report that has that as has been the case in all of the second half of 2023, we had no material sales from open market cargos all of the earnings are coming from our downstream customers through our terminals our vessels.

Christopher Guinta: All of the earnings are coming from our downstream customers through our terminals or vessels. Move to slide 25, and this shows GAP's net income for the quarter, which was $54 million, or $0.26 per share on a diluted basis. However, as Wes mentioned, this does include some noise associated with a loss incurred on the sale of the turbines to PREPA. So when you add back the non-recurring charges, it results in a net income for the quarter of $138 million, or $0.67 per share.

Chris: Move to slide 25, and this shows GAAP net income for the quarter, which was $54 million 26 per share on a diluted basis. However, as Wes mentioned. This doesn't include some noise associated with the loss incurred on the sale of the turbines to PREPA. So when you add back the nonrecurring charges that results in net income for the quarter of $138 million or <unk> 67.

Chris: Per share the funds from operations for the first quarter was $189 million or <unk> 92 per share when backing out the nonrecurring losses as mentioned in the bullet on the right. The bulk of the non recurring charges related to the sale of the turbines to PREPA and part of the termination of the <unk> as part of the termination of the emergency power contract as a refresher we sold 14 TM 'twenty.

Christopher Guinta: The funds from operations for the first quarter were $189 million, or $0.92 per share, when backing out the non-recurring losses. As mentioned in the bullet on the right, the bulk of the non-recurring charges are related to the sale of the turbines to PREPA as part of the termination of the emergency power contract. As a refresher, we sold 14 TM2500s for a total price of $303 million. Of the units sold, NFE owned 11 and purchased 3 of the units that we were leasing.

Chris: 500 for a total price of $303 million of the units sold in the owned 11 and purchased three of the units that we're releasing the way that the accounting treatment applies here is we have to include a cost basis and the turbines that we own plus the purchase and pay off of lease obligations. Additionally, we included some maintenance obligations in the carrying value all.

Christopher Guinta: The way that the accounting treatment applies here is that we have to include a cost basis for the turbines that we own, plus the purchase and payoff of lease obligations. Additionally, we included some maintenance obligations in the carrying value. All of this leads to a loss of $78 million recognized in the quarter and will be further detailed in the 10-Q filed later this afternoon.

Chris: This leads to a loss of $78 million recognized in the quarter and we further detailed in the 10-Q filed later this afternoon.

Christopher Guinta: Finally, when we settle out the remaining components of the claim in Puerto Rico, as Brannen and Wes discussed, those proceeds will be recognized in earnings. And quickly on slide number 26, a comment about our financing strategy for the rest of the year. Now that terminal development has been virtually complete, and FLNG has been successfully deployed and is soon to be operational, we are focusing on financing assets at the project level and using proceeds to reduce corporate debt.

Chris: Finally, when we settle out the remaining components of the claim of Puerto Rico's Brandon and West discussed those proceeds will be recognized in earnings.

Speaker Change: And quickly on slide number 26, a comment about our financing strategy for the rest of the year now of the terminal development is virtually complete and <unk> has been successfully deployed and soon to be operational we are focusing on financing asset to the project level and using proceeds to reduce corporate debt, we met with the rating agencies over the past couple of weeks and we will work with them on a review and update of our corporate credit rating.

Christopher Guinta: We met with the rating agencies over the past couple of weeks, and we will work with them and update our corporate credit rating, which we believe should sit squarely in the WB to WB plus range with a strong path to improvements over the next 12 to 18 months. As such, our goal is to, one, get upgraded and refinance the $875 million notes due 2024, pushing out the near-term maturities, and, two, execute on the previously mentioned rated bond deal secured by FLNG-1 assets with estimated proceeds of $1.5 to $1.75 billion, which we will use to repay Terminal B in the revolving credit facility. This ensures we have a fully funded capital plan with robust free cash flow generation and sound financial policy.

Chris: We believe should we sit and sit squarely in the double B double B plus range with a strong path to improvements over the next 12 to 18 months as such our goal is to one get upgraded and refinance the $875 million notes due 2020 for pushing out near term maturities and to execute on the previously mentioned rated bond deal secured by <unk> asset with <unk>.

Chris: Estimated proceeds of one five to $1 $75 billion, which we will use to repay the terminal b in the revolving credit facility. This ensures we have a fully funded capital plan with robust free cash flow generation and sound financial policy.

Christopher Guinta: That'll turn the call over to Wes for some comments. Great. I mean, that's the update.

Speaker Change: With that I'll turn the call over to.

Speaker Change: West for so Paulo.

Wesley Robert Edens: Great. I mean, so that's the update.

West: So that's the update of savanna, an incredible quarter for US is an incredible time in the life of the company.

Wesley Robert Edens: It's been an incredible quarter for us. It's an incredible time in the life of the company. We're all very focused on our core initiatives, as we've just detailed. This will be the most productive summer of our lives if we continue to achieve what we're focused on in the near term.

West: All very focus on our core initiatives as we've just detail this will be the most productive some of our lives.

Speaker Change: To achieve.

West: Achieve or focused on and very near term. There's one additional adjacencies is worth mentioning that we're also focused on is perhaps no need or no no greater growth needs in the world than Datacenters and there is no greater need and the data centers for core <unk>.

Wesley Robert Edens: There's one additional adjacency that's worth mentioning that we're also focused on. There's perhaps no greater growth need in the world than data centers, and there's no greater need in data centers for core dispatchable power. Power is a core competency of ours. Rapid development of highly reliable power is what we do extremely well, and we have demonstrated that in a number of markets. We've received numerous reverse engineering queries in our core markets in Puerto Rico, Brazil, and Ireland on situations where people are looking for us to help provide the solution to allow them to develop the data centers. There's nothing to report today, but stay tuned on this.

West: Dispatched for power power as a core competency of ours rapid development of highly reliable power is what we do extremely well and have demonstrated that a number of markets. We've received numerous reverse inquiries in our core markets of Puerto Rico, and Brazil and in Ireland.

West: Situations, where people are looking for us to help them provide the solution to allow them to develop the data centers Theres nothing to report today, but stay tuned on this.

Wesley Robert Edens: This could evolve into a direct adjacency of our core capabilities, and we're very focused on this opportunity. The company or companies that help solve these needs will benefit greatly. We're clearly focused on our core businesses. This is a direct adjacency that we think will also have a material impact on us in the future. This is just something I wanted to highlight. With that, I'm going to turn it over to Chancellor for questions.

West: Moving to a direct adjacency to our core capabilities and we're very focused on this opportunity.

West: The company or companies that help solve these needs will benefit greatly we're clearly focused on our core businesses. This is a direct adjacency that we think also has material impact for us in the future. So it's just not something I want to highlight that I'll turn it over a chance for questions.

Speaker Change: Thank you operator, if you would let's open the lines up for questions.

Operator: Thank you, sir. If you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. And we'll take our first question from Craig Shere on the Tui Brothers. Please go ahead. Your line is open.

Speaker Change: Thank you Sir if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Speaker Change: On a speaker phone please make sure to mute your mute function is turned off to allow your signal to reach our equipment.

West: Again press Star one to ask a question.

West: And we will take our first question from Craig Shere with Tuohy Brothers. Please go ahead. Your line is open.

Wesley Robert Edens: Hi, good morning. Thanks for taking the question. Can your incremental Puerto Rico growth beyond the 80 TBTU PREPA contract also be linked to liquid fuel pricing to afford acceptable spreads during sustained elevated LNG market pricing? And can you update us on current spot LNG spreads to perhaps 73% of landed Puerto Rican diesel? And finally, any thoughts on hedging out LNG to liquid spread risk?

Craig Shere: Hi, good morning, Thanks for taking the questions.

Craig Shere: So Ken your incremental Puerto Rico growth beyond the 80, <unk> PREPA contract also be linked to liquid fuel pricing to afford acceptable spreads during sustained elevated LNG market pricing and can you update us on current spot LNG.

Craig Shere: Perhaps 73% of blended Puerto Rican diesel and finally any thoughts on hedging out LNG liquid LNG to liquid spread risk.

Wesley Robert Edens: You know, I'll let Brannen talk about that specifically, but the nature of the conversation with Puerto Rico about this contract was basically, during this interim period where they want to switch fuels and benefit from that, while looking to enter into longer-term contracts, they want to make sure that they had a contract that ensured them savings. And so linking it directly to diesel was the simplest and most direct way of doing so.

Ken: I'll, let Brian talk about it specifically, but.

Ken: Nature of the conversation with Puerto Rico about this contract was to basically during this interim period, where they want to switch feels and benefit from that while looking day to enter into longer term contracts. They want to make sure that they had a contract that ensure them savings and so lagging or directly to diesel was the simplest and most direct way of doing so.

Ken: So 73% of diesel today diesel is roughly $20, 73% is roughly 15, so $15 represents a significant savings versus what they are spending on diesel today and it also represents significant margins for us relative to our business. Our view is that this is something that will actually is the correct algorithm.

Wesley Robert Edens: So 73% of diesel today, diesel is roughly $20; 73% is roughly $15. So $15 represents a significant savings versus what they're spending on diesel today and also represents significant margins for us relative to our business. Our view is that this is something that will actually be the correct algorithm and the right way to price this in the short term over this next, you know, four-year transition period. But I would expect long-term contracts for new developments to be directly Enrihub-based. And so that's what I think we should expect, and that's what you all should expect, too.

Ken: I'm in the right way to prices in the short term over this next four year transition period, but I would expect long term contracts for new developments would be direct Henry hub base and so that's what I think we expect and Thats what <unk> expect.

Wesley Robert Edens: And it's the same basic pattern of transition as how we go from a short-term contract to provide gas and power. There was a very, very good deal for us with FEMA. We now provide twice as much fuel as we did to them at a lower price, but, you know, the P times Q, the quantity is greater, so there's more volumes to run through that. And as they expand their needs around the island and actually look to longer-term generation, we would expect that to expand even more.

Ken: And it's the same basic pattern of.

Ken: Transition of how we go from a short term contract to provide gas and power. There was a very very good contract for us Athena. We now provide twice as much steel as we did to them at a lower price, but the P times Q. The quantity is greater so theres more volume to run through that and then as they expand their needs around the Isle.

Ken: And actually look to longer term generation, we would expect that to expand even more as Brian said, it's 300 TVD using total demand right now which is roughly three actually have so without knowing exactly how much of that will get converted and when are we going to convert and what it is all you can say is that it's 300% of what the current capacity is today as it represents.

Wesley Robert Edens: As Brannen said, it's 300 TBTUs in total demand right now, which is roughly 3x what we have. So without knowing exactly how much of that will get converted and when it will get converted and what it is, all you can say is that it's 300% of what the current capacity is today, so it represents a meaningful increase to it. Brannen, do you have any thoughts about that?

Ken: A meaningful increase Bryan talked about.

Brannen McElmurray: Yep, I think that captured it perfectly. Maybe just the two quick ones, and then I think I'll hit one of your points.

Speaker Change: Yes, I think that captures it perfectly maybe just two quick ones and then I think one of your points.

Brannen McElmurray: First of all, a more macro point, which I think is kind of highly relevant here, particularly when you think about the 300 TBTU. For the first time in probably 10 years, the official estimates for GDP growth and population growth in Puerto Rico are being revised up, basically from flat to maybe even slightly negative to now positive, not indifferent, you know, not that much different than what other people are seeing, but a tremendous, you know, really a tremendous opportunity for them.

Speaker Change: First of all more and more macro point, where do you think is kind of highly relevant here, particularly when you think about the 300 <unk> for the first time actually in probably 10 years.

Speaker Change: The official estimates for GDP growth.

Speaker Change: And population growth in Puerto Rico are being revised up.

Speaker Change: Basically from flat to maybe even slightly negative to now positive not indifferent not that much different than what other people are seeing but are tremendous.

Brannen McElmurray: Because even if you kind of think about our plans, in terms of generation that exists today and transformation, etc., most of that, you know, has historically been based on flat kind of projections going forward. But you can certainly imagine now what will happen, you know, as the place grows, you need more power, and in particular, you need more gas firepower. So specifically, I think, what you're asking about and actually what Wes indicated, the current contract for 80 TBTUs, which is really a four-year contract, one year with, you know, a few extension periods, which will, you know, certainly get exercised, in my view, what that really supports is the current fleet as it's being transitioned.

Speaker Change: So really a tremendous opportunity for them because even if you kind of think about our plans in terms of generation that exists today in transformation et cetera. Most of that has historically been based on flat kind of projections going forward, but you can certainly imagine now what will happen as the place grows you need more power in particular you need more.

Speaker Change: Gas firepower, so specifically I think what you're asking about next year, what Wes indicated the current contract for ADT be to use which is really a four year contract one year with a few extension periods, which will.

Speaker Change: Certainly get exercised in my view.

Speaker Change: What that really supports us the current fleet as its being transition, but as <unk> also mentioned the idea and they're taking action on it. They are building now long term power. So you could certainly imagine this diesel index over time migrating to a Henry hub index and potentially even migrating to something that reserve.

Brannen McElmurray: But as Wes also mentioned, you know, the idea and they're taking action on it; they are building now for long-term power. So you can certainly imagine this diesel index, over time, migrating to a Henry Hub index and potentially even migrating to something that resembles more of a fixed-price concept. In particular, because you raised it on the hedging, we have started conversations with them about that. They are deeply interested in it.

Speaker Change: <unk> is more of a fixed price concept in.

Speaker Change: In particular, because you raised it on the hedging we have started conversations with them about that they are deeply interested in it and I think the idea here is.

Brannen McElmurray: And I think the idea here is, you know, if you're buying 25 years of solar on fixed PPAs, you might start to think about, you know, buying 25 years of gas on a fixed price basis. So that's, conceptually, certainly something that, you know, will likely be discussed. But I think in particular, you know, we expect there to be growth beyond the 80 TBTU. As Wes said, it'll likely be the Henry Hub index.

Speaker Change: You are buying 25 years of solar on fixed Ppas, you might start to think about buying 25 year gas on a fixed price basis. So that's conceptually certainly.

Speaker Change: Something that.

Speaker Change: We'll likely be discussed, but I think in particular, we expect there to be growth beyond the ADT Btu as Wes said, it will be likely Henry hub index, but is that.

Brannen McElmurray: But as the whole energy, you know, complex moves to gas plus renewables, what they're also trying to do, you know, is get long-term price certainty, you know, because that really, for them, supercharges the growth proposition on the island.

Speaker Change: The whole energy.

Speaker Change: Complex moves to really gas plus renewables, what they're also trying to do.

Speaker Change: Long term price certainty.

Speaker Change: Because that really for them supercharging the growth.

Speaker Change: Proposition on the island.

Speaker Change: Okay.

Operator: Thanks. If I could just fit in one more quickly,

Speaker Change: Thanks, if I could just fit in one more quickly.

Speaker Change: From an adjusted EBITDA standpoint thoughts on how the tree proceeds from settlement of the early FEMA contract end and excluding that is it fair to envision a U shaped EBITDA performance.

Wesley Robert Edens: From an adjusted EBITDA standpoint, thoughts on how to treat proceeds from settlement of the early FEMA contract end, and excluding that, is it fair to anticipate a U-shaped EBITDA performance as the lost FEMA contract is filled in over an extended period of time with the ADT-TBTU-FEMA contract, growing HENERA contribution, and then the 630-megawatt Arc Arena Brazilian plant, and finally Nicaragua?

Speaker Change: As the last FEMA contract is filled in over an extended period of time with the <unk>.

Speaker Change: IDT CBT, you FEMA contract growing and ore contribution and then the 630 megawatts bark arena Brazilian plant and finally in Nicaragua.

Wesley Robert Edens: The bulk of the money in a settlement would be earnings, right, simply. There is some that could be a return of capital for certain things that we have paid for and whatnot, but the bulk of the settlement would be expected to be earnings.

Speaker Change: The bulk of the money in a settlement would be earnings right simply there is some there could be a return of capital for certain things that we have a paid for and whatnot, but the bulk of that.

Speaker Change: The settlement would be expected to be earnings with respect to the U shape of it. It really is a function of how rapidly the transformation happens in terms of.

Wesley Robert Edens: With respect to the U shape of it, it really is a function of how rapidly the transformation happens in terms of switching fuels from distillate fuels to gas. That is a multi-month process, not a multi-year process. You know, as Brannen did a great job of kind of outlining, there is significant amounts of power on the island today that is gas ready that actually can simply be hooked up and just needs re-gas capacity and maybe some, you know, some very, very modest, like, you know, capital improvements that can burn gas today. But all of this can happen in a relatively short period of time.

Speaker Change: Switching fuels from distillate fuels to gas that is a multi month process not a multiyear process.

Speaker Change: Alan did a great job of kind of outlining there is significant amounts of power on the island today that is gas ready that actually you can simply be hooked up and just means re gas capacity and maybe some some very very modest like capital improvements that can burn gas today, but all of that's going to happen in a relatively short period of time and with respect to the U shaped with the rest of the company, it's a little harder.

Wesley Robert Edens: And with respect to the U shape with the rest of the company, it's a little harder to predict because, simply, there are some massive other issues that could happen in the short term, in particular the developments in Brazil, turning this stuff on in Nicaragua, et cetera. So I recognize that modeling the company during this period of transition is difficult. And so we try to give as much guidance as we can.

Speaker Change: To predict because simply there are some massive other issues that could happen in the short term in particular the developments in Brazil, turning this stuff on Nicaragua et cetera, So I recognize that actually modeling the company. During this period of transition is difficult.

Speaker Change: And so we've tried to give as much guidance as we can you'll probably a quarter away from being able to get to provide.

Wesley Robert Edens: You're probably a quarter away from being able to get country by country data, which will make the modeling exercise much, much simpler. The one thing I can say with great certainty is that, in any model result, it looks like the valuation proposition of what we have on the books today, not prospectively, is vastly greater than the sum of the parts in the capital structure today. So I think that, A, it will be much, much simpler to model once all this transition is completed. That's why we are so positive about the events in Puerto Rico and elsewhere.

Speaker Change: By country data, which will make the modeling exercise much much simpler the one thing I can say with great certainty as in any model results. It looks like the valuation proposition of what we have on the books today not prospectively is vastly greater than the sum of the parts.

Speaker Change: And the capital structure today, So I think I think that it'll be much much simpler to model. Once all of this transition is completed that's why we're so positive about the events in Puerto Rico and elsewhere, but all I have.

Wesley Robert Edens: But all you have to do is look at the numbers. The numbers that Andrew went through in Brazil, these are not theoretical forecasts. These are not theoretical growth numbers; these are actually cash flows on existing assets. And we forecast these over the next couple of years. We're really showing them on a direct basis. So when you add those to our current business, it doesn't look to me like there's a U to it at all.

Speaker Change: If you just look at the numbers the numbers that Andrew I went through in Brazil. These are not theoretical forecast. These are not theoretical growth numbers. These are actually in place.

Speaker Change: Cash flows on existing assets. So we forecast. These over the next couple of years, we're really showing them actually on a direct basis. So when you add those into our current business. It doesn't look to me like there's a youtube. It at all so I think timing differences over over a quarter or two is going to happen, but certainly over a.

Wesley Robert Edens: So I think timing differences over a quarter or two could happen, but certainly over a one or a two-year period, you know, we think there is nothing but upside to our numbers from this point, both in terms of size and also in terms of duration. And ladies and gentlemen, we will move to our next question. This is Mary Chen with Barclays. Please go ahead; your line is open. Good morning.

Speaker Change: One or two year period, we think there is nothing but upside to our numbers from this point both in terms of size, but also in terms of duration.

Operator: And ladies and gentlemen, we will move to our next question, which comes from Teresa Chen with Barclays. Please go ahead, your line is open.

Speaker Change: And ladies and gentlemen, we will move to our next question comes from Theresa Chen with Barclays. Please go ahead. Your line is open.

Brannen McElmurray: Yeah, sure. This is Brannen.

Theresa Chen: Good morning.

Theresa Chen: Wanted to follow up on the Puerto Rico side on.

Theresa Chen: As far as operators.

Theresa Chen: <unk> pathway near term two brand to the ADT can you can you give us an indication.

Theresa Chen: But the volumes are.

Theresa Chen: Okay.

Theresa Chen: Okay.

Brannen McElmurray: I think, as Wes said, and I think actually the slide, in my view, actually lays it out well, even from a modeling standpoint. You know, if you kind of just start with the basics for what we have today, which is 25 TBTU going into San Juan five and six, and then you look at the temporary power that has now really been converted to permanent power, which all in is 425 megawatts that exists today.

Theresa Chen: Yeah sure this is Brandon.

Brandon: I think as Wes said and I think actually the slide I mean in my view actually laid that out well, even given from a modeling standpoint, if you kind of just start with the basics for what we have today, which is 25 <unk> going into San Juan five and six and then you look at.

Brandon: The 10 power that is now really been converted to permanent power, which all in.

Brandon: Is 425 megawatts.

Brannen McElmurray: And then if you look at the existing assets that are in Palo Seco, and then you look at the opportunity, for example, in Mayaguez, and to add supplemental power, depending on the month you want to pick, and you know, depending on, you know, how you want to kind of model that in the way I kind of think about it is, you know, you're likely to get there certainly by the end of the year, and then, you know, on a ramp rate, you know, that starts off at, you know, 20 plus 30, so that's 50. You know, going to 80, you know, over the next, you know, quarter and a half, but depending on how you want to, you know, kind of think about that, I think the drivers of timing, you know, that you, you know, you know, on our side, we're obviously racing to settle quickly, are a little bit of infrastructure, you know, a little bit of logistics around, you know, asset movement, and then, of course, you know, finalizing, you know, permits and permissions that you might need to increase utilization at some of these sites.

Brandon: That exists today and then if you look at the existing assets that are in <unk> and then you look at the opportunity for example in microwave and to add supplemental power.

Brandon: Depending on the month, you want to pick and depending on how you want to kind of model that in the way I kind of think about it as you are likely to get there certainly by the end of the year and then.

Brandon: On a ramp rate that starts off at 20, plus 30 50 going to 80 over the next quarter and a half but.

Brandon: It depends on how you want to kind of think about that I think the drivers of timing.

Brandon: That you.

Speaker Change: On our side, we're obviously racing to settle quickly.

Speaker Change: <unk>, a little bit of infrastructure, a little bit of logistics around asset movement, and then of course finalizing permits and permissions that you might need to increase utilization at some of these sites, but all of these are things that are in progress I would say, they're just very ordinary course events from a development perspective, and if you look at our <unk>.

Brannen McElmurray: But all of these are things that are, you know, in progress. I would say they're just very ordinary course events from a development perspective, and if you look at our history in Puerto Rico, we've obviously been highly successful getting those things done in the past.

Speaker Change: In Puerto Rico, we've obviously been highly successful at getting those things done in the past we've never not done it.

Brannen McElmurray: We've never, you know, not done it, not to say there won't be bumps in the road going forward, but, you know, we're very confident that we'll be able to do that, and then. Even beyond the 80, I think, you know, as Wes indicated, there's incremental opportunity that we're working on at the same time. So, you know, I don't think, you know, our view, certainly my view is, you know, I don't view 80 as a ceiling; I view it, you know, kind of as a start.

Speaker Change: Not to say there won't be bumps in the road going in the future, but we're very confident that we'll be able to do that and then.

Operator: And then we want to see, you know, what we can do from there. It's very clear that the, you know, the mega trend there is, all the oil-fired and HFO stuff is going to be retired. On the Henera platform, you know, we're in charge of those retirements, certainly driving that schedule. And so we're highly motivated to have that happen, not only because it's the right thing to do, but the island desperately wants to get to a scenario where, you know, they are gas-fired plus solar and battery.

Speaker Change: Even beyond the 80, I think as Wes indicated I mean, there is incremental opportunity that we're working on at the same time, so I don't think.

Speaker Change: Our view is certainly my view is I don't view <unk> as a ceiling I view it kind of as a start and then we want to see what we can do from there. It's very clear that the megatrend. There is all the oil fired and <unk> stuff is going to be retired on.

Speaker Change: On the <unk> platform, we are in charge of those retirement, so thats certainly driving that schedule and so we're highly motivated to have that happen not only because it's the right thing to do but the island desperately wants to get to a scenario, where they are gas fired plus solar and battery, but I think thats, how we kind of see it towards the end of the year.

Operator: But I think that's how we kind of see it, you know, towards the end of the year and certainly going into next year. But the trend is, in my view, kind of up and to the right. And we'll move to our next question. It is coming from the line of Sherif. Elmaghrabi.

Speaker Change: And then certainly going into next year, but the trend is sort of in my view kind of up into the right.

Operator: And we'll move to our next question. It is coming from the line of Sherif Elmaghrabi with BTIG. Please go ahead; your line is open.

Speaker Change: Okay.

Speaker Change: And we'll move to our next question is coming from the line of series Belmond Robby. Please with BTG. Please go ahead. Your line is open.

Speaker Change: Hey, Thanks for taking my question.

Belmond Robby: And I hopped on late so I apologize. If this has been asked but on the power auction in Brazil can you remind us when this power would come online.

Speaker Change: Yeah, well I'll start with that.

Andrew Dete: Hey Sheriff, it's Andrew. So the announcement is for two different products. The first product is for existing power plants, and that's a seven-year contract. And, you know, effectively, because it would come on, you know, immediately. And then there's a product for 15 years, which is for a new generation only, and you have to be online by 2028. But obviously, if you finish earlier, you can go to the agency and apply to start online earlier.

Speaker Change: Hey, Steve it's Andrew so.

Speaker Change: The announcement is for two different products.

Andrew: The first product is for existing power plants, and that's a seven year contract and effectively because it's existing would come on immediately.

Andrew: And then there is a product for 15 years, which is for new generation, only which you have to be online by 2028, but obviously if you finish earlier you can go to the agency and applied it to start I'll start earlier because this is generally simple cycle power. We think it's probably a two year build for larger power plants for them in the auctions run cuts.

Wesley Robert Edens: Because this is generally simple cycle power, we think it's probably a two-year build for larger power plants from when the auctions run. So it's kind of August 2024. So we think it will be aligned by the end of 26, maybe 27 for new power plants. And, you know, we expect to have a mix of those two products in our portfolio. Just to amplify it a little bit, I mean, as Andrew said, when you think of power auctions, I think that the knee-jerk reactions assume that they're going to happen two or three years from now.

Andrew: Kind of August 2024, so we think we'd be aligned by the end of 'twenty six 'twenty seven.

Andrew: For new power plants and.

Andrew: We expect to have a mix of those two products in our portfolio.

Wesley Robert Edens: Just to amplify a little bit, as Andrew said, when you think of power auctions, I think that the knee-jerk reactions assume that they're going to come on two or three years from now because that would be the normal course of events. Given that there is a significant amount of power in the South that does not have gas that would actually be eligible to bid into these auctions if they had gas, those are partnerships that we think are mutually beneficial for us, potentially, as a gas provider, and obviously for them, they're life-changing, because they can now bid an existing asset into the marketplace.

Speaker Change: That's helpful and just to amplify a little bit as Andrew said, the when you think power auctions I think that the knee jerk reactions to assume that's going to come on two or three years from now because that would be the normal course of events given that there is a significant amount of power in the south that does not have gas that we would actually be eligible to bid into.

Speaker Change: These auctions that they had gas those are partnerships that we think are mutually beneficial for us potentially as a gas provider and provided obviously for them their life changing because they can now bid an existing asset into the marketplace. So.

Wesley Robert Edens: So this is a unique situation where a gas auction or a power auction may well result in power being turned on at the end of this year or early next year, and so these financial results that we're showing for 2025, 2026 may be increased by these kinds of long-term auctions in the short term. That's what is so incredibly exciting about this revaluation.

Andrew: This is a unique situation where gas.

Andrew: Gas auction or power auction may well result in power turning on at the end of this year early next year and so these financial results. We're showing for 2025 2020, maybe increased by these kind of long term auctions in the short term that's what it is so incredibly exciting about this from a valuation standpoint.

Andrew: Okay.

Speaker Change: Unless you actually touched on my second question, but so far the three five gigawatts that you guys highlight on slide 16, but three five gigawatts of power plants without contract is it possible to go merchant power and entered agreements with these plans directly I'm thinking you highlighted Puerto Rico desire for Chrysler anti but it seems like there is a similar opportunity in Brazil.

Andrew Dete: Yeah, no, it certainly is possible. And Brazil is certainly on a different grid, though, right? So in many parts of the year in Brazil, you've got a lot of hydro and a lot of renewable power at very low cost. So there is a business opportunity there, but it's going to be more in times of stress where, you know, the cost of generating power at these plants is in the money. And we think, you know, that certainly is an opportunity.

Speaker Change: Yes, it certainly is possible.

Speaker Change: <unk>.

Speaker Change: Brazil, Brazil is certainly a different grid right. So in many parts of the year in Brazil, you've got a lot of hydro in a lot of renewable power at very low cost. So there is a merchant opportunity there, but it's going to be more in times of stress, where the cost of generating power at these at these plants is in the money.

Speaker Change: And we think that certainly is an opportunity, but the real big opportunity here is the auctions.

Andrew Dete: But the real big opportunity here is the auctions, because they basically allow for a, you know, fixed capacity contract. And then also the merchant opportunity as well, right? So when you have these capacity contracts, not only are you getting a fixed fee, but then you're also in the sort of regulated and organized market to generate when the system needs you on a JPM basis, and we'll move to our next. Martin Malloy with Johnson Rice, please go ahead, sir. Your line is open. Good morning. Thank you for taking my question.

Speaker Change: Because they basically allow for a fixed capacity.

Speaker Change: City contract.

Speaker Change: Then also the merchant opportunity as well right. So.

Speaker Change: When you have these capacity contracts not only are you getting a fixed fee, but then you're also in the in the sort of regulated organized market to generate when the system needs you on a <unk> basis.

Speaker Change: And we'll move to our next question comes from Martin Malloy with Johnson Rice. Please go ahead, Sir your line is open.

Operator: And we'll move to our next question that comes from Martin Malloy with Johnson Rice. Please go ahead, sir. Your line is open. Good morning. Thank you for taking my question. My first question is about Brazil.

Martin Malloy: Good morning, Thank you for taking my question.

Martin Malloy: First question is on Brazil, and outside of the power options could you maybe talk about the outlook for adding additional volumes.

Martin Malloy: You mentioned the additional potential volumes for the Norske grow facility.

Speaker Change: Could you maybe talk about that.

Martin Malloy: How should we be thinking about other opportunities there.

Operator: Yeah, so on the gas supply side, we're announcing today our first contract at Santa Catarina, which is with the Trans-Bolivia Pipeline. It's about a 14 TBTU contract.

Martin Malloy: Yes, so on the gas supply side.

Martin Malloy: We're announcing today, our first contract at Santa Catarina, which is with the trends Bolivia pipeline, it's about a 14 television to your contract.

Andrew Dete: We're also working with a number of other large industrial consumers in the region. We've got about 300 TBTUs of consumption today on this pipeline system. And our terminal has a few benefits that are kind of outside of just molecule pricing. So first, the transport benefit we have. So customers that are buying from us will have a lower pipeline fee to pay than if they're buying from other sources, which would be either Bolivian gas or offshore gas that comes from the north of Brazil.

Speaker Change: We're also working with a number of the other large industrial consumers in the region. We've got about 300 TV to use of consumption today on this pipeline system and our terminal has a few benefits that are kind of outside of just molecule pricing. So first is basically the transport benefit we have so customers that are.

Speaker Change: <unk> from Us will have a lower basically pipeline fee to pay than if they are buying from.

Speaker Change: The other sources, which would be the Bolivian gas or offshore gas that comes from the north of Brazil.

Andrew Dete: The second is that we can help some of these consumers transition from buying from their regulated distribution companies to buying as what they call a free consumer in Brazil. So they can save some money on that by paying less in regulatory fees. And then they can also get a contract from us, which is much more flexible, and it's usually designed really around their consumption patterns rather than the kind of inflexible contracts they have today.

Speaker Change: Second is we can help some of these consumers transition from buying from the regulated distribution companies to buying is what they call a free consumer in Brazil. So they can save some money on that by paying less in regulatory fees and then also they can get a contract from us which is much more flexible and it's usually designed really around their consumption patterns rather than.

Speaker Change: <unk> kind of in flexible contracts. They have today and then of course, we can compete on actual price, but there's a few other benefits as well by kind of going with the more flexible lower transport cost solution from us so.

Andrew Dete: And then, of course, we can compete on the actual price. But there are a few other benefits as well by kind of going with the more flexible, lower transport cost solution from us. So that's applicable to a number of the larger kind of industrial consumers who are typically good credit as well in Brazil. And we're working on that. We expect our portfolio in Santa Catarina to look a lot like Bacarena. So if we do this right, we'll have kind of one MTPA of baseload supply, which will make money on and will also give us the ability to then go and contract the more intermittent capacity contracts on the power side, so we might end up with kind of four MTPA of sort of total contracted supply, one MTPA of which is baseload, and three is probably contingent on the power dispatch and linked to international energy spot prices.

Speaker Change: Thats applicable to a number of the larger kind of industrial consumers, who are typically good credits as well in Brazil and.

Speaker Change: We're working on that.

Speaker Change: We expect our portfolio in Santa Catarina to look a lot like Buck arena. So.

Speaker Change: If we if we do this right we will have kind of one M Tpa a base load supply.

Speaker Change: We will make money on and will also give us the ability to then go and contract the more intermittent.

Speaker Change: Capacity contracts on the power side, so we might end up with kind of four MTA of sort of total contracted supply one one MTBE, which is base load and three it's probably contingent on the power dispatch and linked to international LNG spot prices.

Speaker Change: Great very helpful and my second question I, just wanted to ask about Capex I think it was up.

Speaker Change: Around $680 million during the first quarter could you maybe talk about how that.

Speaker Change: Yes.

Andrew Dete: Yeah, I mean, so there's a lot of sorry, microphone open here, guys. There's a lot of in and outs because there have been financing actions. And we can go through it further as you see the notes in the queue. And if you have follow-ups, we can go through it.

Speaker Change: Yes, so there is a lot of sorry.

Speaker Change: But here you guys there.

Speaker Change: There's a lot of it and announce it because theres been financing actions and we can it will be further detailed as you see the notes in the queue and if you have follow ups. We can go through it but fundamentally when I look at the balance of the rest of the year, there's very little equity capex required to build out what we are executing in Nicaragua, and then the conversions in Puerto Rico, specifically Marty it's about.

Speaker Change: $100 million in total across the terminals in vessels and about $100 million associated with the Puerto Rico expansion. The rest of the Capex is LNG two in Brazil, both of which are fully financed on a debt basis.

Christopher Guinta: But fundamentally, when I look at the balance of the rest of the year, there's very little equity capex required to build out what we are executing in Nicaragua. And then the conversions in Puerto Rico, specifically, Marty, it's about $100 million in total across the terminals and vessels, and about $100 million associated with the Puerto Rico expansion. The rest of the capex is FLNG2 in Brazil, both of which are fully financed on a debt basis.

Operator: And our next question comes from Chris Robertson with Deutsche Bank. Please go ahead; your line is open.

Speaker Change: Okay.

Speaker Change: And our next question comes from Chris Robertson with Deutsche Bank. Please go ahead. Your line is open.

Christopher Guinta: Hey guys, thanks for taking my questions. Chris, I just wanted to follow up on that last question with regard to the CapEx guidance from the previous presentation. I think it was around $1.5 billion. I'm just trying to see how much of the first quarter of CapEx is related to FL&G 1 spending. And then how should we think about the cadence and overall total spend for the remaining part of the year as it relates to gross CapEx?

Speaker Change: Yes.

Christopher Robertson: Hey, guys. Thanks for taking my questions.

Christopher Robertson: Chris I just wanted to follow up on that on that last question.

Christopher Robertson: The capex guidance from the previous presentation I think it was around $1 5 billion.

Christopher Robertson: Okay.

Christopher Robertson: I'm just trying to see how much of the first quarter Capex is related to LNG, one spending and then how should we think about the cadence.

Christopher Robertson: And overall total spend for the remaining part of the year as it relates to gross capex.

Christopher Guinta: Yeah, so I stand by the 1.5, with 1.25 billion being financed. That still kind of works for what we're expecting in the Brazil assets in FLNG2. For FLNG1, we spent in the first quarter of 2024 around $140 million. And then for the balance of the year, that'll really taper off; you'll still have some spend through April and May, of course, on that asset, and then very little spend we expect in June, July, August, as we kind of complete a few make-ready activities post-first LNG. As I mentioned, you spent a little bit of money on the Mexican asset and modest maintenance capex in the first quarter on Jamaica and Puerto Rico. And that'll obviously be outlined in the Q.

Speaker Change: Yeah. So.

Speaker Change: Standby like the $1 five with $1 25 billion being finance that still kind of works for what we're expecting in the Brazil assets in <unk>. Two <unk>. One we spent in first quarter of 2020 for around $140 million and then for the balance of the year that'll really taper off Youll still have some spend through April.

Speaker Change: In May of course on that asset and then very little spend we expect June July August as we kind of complete a few make ready activities post first LNG as.

Speaker Change: As I mentioned, you spent a little bit of money on the.

Speaker Change: Mexican asset and modest maintenance capex in the first quarter for Jamaica, Puerto Rico.

Speaker Change: And that will obviously be.

Speaker Change: <unk> outlined in the Q.

Christopher Guinta: And then for the rest of the year, as I said, it's really not much equity capex, it's really just the terminals and the conversion in Puerto Rico. Now you will start ramping up capex spend for FLNG2 once you go first with LNG on FLNG-1. And then obviously, the Brazil business continues to spend on its build of the Bacarena power plant, but all the CapEx for the terminals should be done as of the end of the first quarter.

Speaker Change: And then for the rest of the year as I said, it's really not much equity capex, it's really just the terminals and.

Speaker Change: The conversion in Puerto Rico, now you will start ramping up capex spend for F. LNG to once you.

Speaker Change: Ill go first LNG on F. LNG, one and then obviously the Brazil business continues to spend on its build of the background of power plant, but all of the capex for the terminals should be done as of the end of the first quarter.

Christopher Guinta: Right. And just to circle back, so the evaporated power, as far as I understand, the financing against that is just drawn down in tandem with the spend, so that nets out basically, so there's no need for equity cash there. But on the second, the Portachem facility, is there financing against that one as well, and how much CapEx is going to be spent on the 1.6 gigawatt power project this year?

Speaker Change: Right.

Speaker Change: Just to circle back so the bulk rated power as far as I understand the financing against that is just drawn down in tandem with the spend so that nets out basically so there is no.

Speaker Change: Need for equity cash there, but.

Speaker Change: On the on the second and the Florida facility is there.

Speaker Change: Financing against that one as well and how much capex is going to be spent on on the one six gigawatt power project this year.

Christopher Guinta: Yeah, yeah, perfect. So you're totally right about the Bacarana Power Plant. So that's fully financed by BNDES, the Brazilian Development Bank. All of the funding is in place, and we'll just draw it down as we keep building. So zero incremental kind of capex from the NFP side today, or equity capex, as I think you're saying. On Porto Sen, so basically, same thing. So we have closed on a loan with four Brazilian banks, and we are funding capital expenditure as we go.

Speaker Change: Yes, yes, perfect. So youre totally right on the Buck Rana power plant. So that's fully financed with <unk>, the Brazilian development Bank and all of the funding is in there and we'll just draw down as we as we keep building. So so so zero incremental kind of capex from the NFS side today or equity equity Capex as I think youre, saying on <unk>.

Speaker Change: And so.

Speaker Change: Same thing basically so we.

Speaker Change: Have closed on a loan with four Brazilian banks and we are funding capex as we go.

Speaker Change: We will probably transition.

Speaker Change: That debt structure to a longer term bond structure in Brazil over the next few months, but from a net result basis for kind of what you're talking about from a capex perspective same thing what we're just draw that down over the course of construction from now to then so we don't expect.

Christopher Guinta: We will probably transition that debt structure to a longer-term bond structure in Brazil over the next few months. But from a net result basis, for kind of what you're talking about from a capex perspective, same thing; we'll just draw that down over the course of construction from now to then. So we don't really expect any incremental capex from NFP.

Speaker Change: Really any incremental Capex menifee.

Operator: And that concludes today's question and answer session. I'll turn it now back to Chance Pipitone for any additional closing remarks.

Speaker Change: And that concludes today's question and answer session I will turn it now back to chance pepitone.

Chance Pipitone: Hey, Mark.

Chance Pipitone: Well, great, everyone. Thanks for calling in for the update. Obviously, it's a clarifying and exciting update from our perspective, and I hope you found it informative. We look forward to following up on any questions you have, and we'll talk to you in a few months. Thank you very much.

Mark: Oh, great everyone. Thanks for the update obviously, its a clarifying exciting updates from our perspective, an outcome founded informative and we look forward to following up any questions you have and.

Speaker Change: We'll talk to you in a few months. Thank you very much.

Operator: Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.

Speaker Change: Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may now disconnect.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].