Q1 2025 New Fortress Energy Inc Earnings Call
Speaker Change: Good day and welcome to the NFE First Quarter 2025 earnings call. Today's conference is being recorded. At this time, I will be handing the call over to Matt Reinhard, managing director for introductory remarks.
Thank you. Bye.
Matt Reinhard: Good afternoon, everyone. Thank you for joining today's conference call, where we will be discussing our first quarter 2025 results.
Speaker Change: The call is being recorded and will be available by replay on the Investors section of our website under the subheading events and presentations.
Speaker Change: At the same location, you'll find a presentation that we will walk through on today's call. Please review this as it includes important information on forward-looking statements and non-GAAP measures .
Speaker Change: With that, let me hand the call over to our chairman and CEO , Wes Edens. Wes? Great, thanks Matt. Welcome everyone.
Speaker Change: So lots to go through here this afternoon and I'll try and make my own statements brief.
Speaker Change: with the core earnings for the quarter. We are very much in line with expectation.
Speaker Change: If you look at the yellow boxes on a piece of paper, you can see that post the first quarter of 24, which is the last quarter that we had
Speaker Change: The team of plants online in Puerto Rico, we've had basically extremely consistent core earnings, 110, 177, but then 109, 116, so very much in line with that.
Speaker Change: Our forecast for the core earnings for the remainder of the year are basically very much in line with what this is for the first half and then accelerating in the second half as we start to bring assets online in particular those assets in Brazil.
Speaker Change: The EBITDA that we had forecast for the quarter, we're less than that simply because we did not have any one off results to add to it.
Speaker Change: Again if you look at our numbers historically, we've had a combination of core results. [inaudible]
Speaker Change: We already had meaningful games with our Jamaica Sale, we'll talk about in a second, and there's a handful of other things that are going to be significant events for us to add to our core events. But our goal is the quality versus quantity of the earnings. In particular, what we are looking to generate for shareholders and for our constituents. Let's see what we can do.
Speaker Change: is repeatable, easy to understand and very long duration cash flows, and I'll explain kind of what the portfolio looks like because we have a lot of those to offer. So let's put the page number four.
Speaker Change: Material events that are in front of us, first and foremost in the Jamaica sale, $1.055 billion closed today, just a few hours ago, that translates into about $800 million in net proceeds of $430 million gain. So again, a good start at whacking at the one-off gains that we expect to generate for the course of the year.
Speaker Change: as we know what we are owed, so that in the 659 million reflects that.
on the-
Speaker Change: On the FSRU subchargers, we basically had a handful of FSRUs that were surplus to our needs in our portfolio, that we basically took back and then re-let them at a higher rate to third parties.
All of them in Generator One Time Game, something we're evaluating. We're waiting.
Speaker Change: Lastly, the excess cargo sale that we conducted at the end of the last year and reported the result in the fourth quarter which, if you look at the previous page, the excess cargo was $296 million. These were excess cargo as we had, we were concerned that actually the market might decline for value that turned out to be prophetic as that's exactly what happened. We sold them so the really that the gain from them was the one time game from last year. There's not the $125 million to be collected.
Speaker Change: Primarily in the periods of 26 and 27 and stuff in 28. So those are the big events for if there's others as well but hopefully this gives you some useful context in evaluating the $1.25 or $1.5 billion EBITDA or gain estimate that we're providing for the year.
Page Number Five David
Speaker Change: So our new term focus has been on asset sales, on debt reduction. Thank you very much.
Work with Accelerate.
Speaker Change: exclusively in March, and we conclude the sale now. Basically, both the timing and the amount that we had forecast that we've exceeded. So, we did it in a shorter period of time, and in a higher price than what we had originally forecasted. So, we feel great about that. A little bit on Jamaica, but this is the first market that we had started to conduct business in, and it is a great market. We ended up generating a hundred and twenty five million dollars in EBITDA. Thank you very much. Thank you very much.
Speaker Change: Stable, mature and market with long-term contracts for the 20-year durations, so the significant portion of them were supply and Jamaica's gas and power need, so roughly 60% of the odds, gas or power we supply. They still think there is significant remaining growth opportunities in Jamaica for bunkering expansion, so we feel great about the asset that we sold on to, but from our standpoint, this is a meaningful de-leveraging event for us. So, sale price of $1,055, $227 million in debt repayment from the Director Melco, [inaudible]
at my power plant. I estimated $50,000 in fees, net proceeds of $778,000. Chris will talk about that later.
Speaker Change: to make them those viable, expose those in a financing context and generate the right result for that.
Speaker Change: So you look at page number seven. This is a good example of what I mean [inaudible]
Speaker Change: Basically what we have done is matched our long-term supply in our portfolio with our FL&G unit, which is performing terrifically and then two long-term contracts with venture global and matching them up side by side with those contracts that are a long-term demand.
Speaker Change: So I've listed the five that are the most notable. There are smaller ones as well, but these are the ones that are the most beautiful. And basically you can see on the supply side, we have 215 TBTUs of supply for a term of 20 years. On the demand side, this handful of the large contracts.
Speaker Change: Single B plus in the one case, but they're generally high credit quality assets, very long term duration, and these are their stated contract terms and simply subtracting the cost of supply from the value of the demand to see these assets alone generate $500 million in annual margin. These are not assets that we are aspirational about building or assets that we are talking about pursuing or whatever, this really represents the core of the portfolio.
and Peter Pasquariello.
Speaker Change: Our activities on the second half of this, at terms similar to the first half, we can generate 500 million the gross to a billion dollars annual margin with very, very long duration. And with that, that presents tremendous financing opportunities. It also presents great value to shareholders. And that's what our focus is.
Speaker Change: Page number eight is that in order to close the loop and finance this efficiently you need to control every aspect of the logistics chain.
Speaker Change: Supply, Demand, Terminal, Ships, and Overall Logistics. Fortunately, we control all that.
Speaker Change: So the four terminals that are relevant in this discussion is the La Paz Terminal in Mexico, Puerto Sandino in Nicaragua, the Bacarena Terminal in Brazil, and the San Juan Terminal in San Juan Puerto Rico.
Speaker Change: We have these terminals that we own and control essentially have developed. In addition, we have a dedicated fleet of terminal ships and transport ships to both supply to the locations, but then also supply them onto the land. So basically you've connected the dots between every aspect of it. And so the combination of the long-term cash flows, credit quality duration, in particular of this, the 20-year duration is what actually gives us so much optimism that there's meaningful things to do here. There's a reason why [inaudible]
Speaker Change: William Unger used to carry around the compounding tables in his back pocket. You know, 20 years of repeatable cash flows is an incredibly powerful combination. And that's what we have already in hand, and we think the prospects for adding to our terrific. Thank you very much.
Speaker Change: So on the on the growth side, two elements that were focused on is Brazil and Puerto Rico and I'm joined here in New York by the Andrew and Jeremy from our
Speaker Change: Palace. Thanks a lot, Les. Good afternoon, everyone. I'm pleased to be discussing our progress in Outlook in Brazil for the past few years, we've made significant strategic investments in the country, laying the foundation for a high value and resilient business.
Speaker Change: After years of dedicated work and overbealance of investment, we are finally approaching the full commercial operation dates of our key assets.
One of our projects, a 624 megawatts, combined in psychopower plant.
He's on track for COD by Meet Next Year.
Speaker Change: These are key moments for us, these investments are covering, converting each to a long-term contracted assets.
Speaker Change: and we're very excited to be part of this transformation at NFE Brazil. In this is like number ten, I wanted to highlight the Bacarena complex and it's associated with long-term contracts.
Speaker Change: This contract, all of them, are inflation-linked. They are protected from gas price volatility and backed by strong credit ratings, providing stable and predictable cash flows for our business.
starting with the last hydro contract we began.
Speaker Change: which is indexed to Henry Hub, plus a $60.04 per minute B2 adder, with part of the adder suggested by US CPI on a yearly basis as showing these lights.
Speaker Change: for Selbotchew, our 624 megawatt plants. We have a 25-year PPA with 100% take-up aid during the second semester of each year.
He's starting from COD.
expected to occur in the second semester of the year. [inaudible]
Speaker Change: The gas volume here is approximately 18 TBTU's year, considering only the tator pay, with price index to 91% of JKM, plus another of $3.36 per million B2, which is also adjusted by USCTI on a yearly basis.
Finally at Porto San, our 1.6 gigawatt class
We secured this 15-year capacity contract with the National Grid.
Speaker Change: which pays approximately $280 million for the availability of the plant.
Speaker Change: Pleasant dispatch components whenever the plant produces power. Assuminate 10% dispatch rate, it would translate into an approximately 12-30-0 of additional gas demand at a premium gas prices.
Speaker Change: These projects are secured by strong counter-fighters, as mentioned by Wes, which demonstrates how reverse our commercial foundation is. I will hand it over to Jeremy to walk you through the construction update.
Jeremy: Good afternoon, everybody. It's my pleasure to give you a very positive construction update this quarter.
Speaker Change: Since we last spoke on our Selba power plant as Leandro Dismension, the 624 megawatt combined cycle plant.
Speaker Change: Since our last update, we've increased general progress by over 7 percent. On Portocen, we've increased the progress by over 15 percent. That brings both of our plants now to a 95 percent completion for Selva and a over 54 percent completion for Portocen.
Speaker Change: and in the case of Porto Sam, which is in largely civil construction phase, that was a significant achievement for the project team to not only maintain the float and the schedule improvement that we have, but also actually increase it a little bit.
Speaker Change: Back to Selba 2 on the Combine Cycle Plants, at 95% we're nearing a very important milestone of mechanical completion.
Speaker Change: We're in a phase right now, a very critical phase of the high pressure hydro testing. We've tested the steam system up to 96 bar on our way to 300 bar, eventually.
Speaker Change: Another important milestone of the 95% is that it means a different level of effort at our site.
Speaker Change: The 95% mechanical completion milestone effectively means that we can transfer the main level of effort from our construction contractor over to our power core provider Mitsubishi and allow them to after first fire which we expect at the first fire of the gas turbine which we expect at the end of August .
Speaker Change: to take over the level of effort at sight and to start generating commissioning power.
Speaker Change: On Portalson, although we are in a civil construction phase, we did advance it significantly during this last quarter. One interesting note is, if you recall the last update, we showed you photos of gas turbines and transit to the site.
Speaker Change: As you see here, in our update on flight 11, we're showing you photos of gas turbines installed at site [inaudible]
Speaker Change: We actually have two out of the three turbines that are already manufactured. We have them installed at the site. The third gas turbine will be arriving at the end of the month. And we're also in the process of installing two of the three electric generators.
Thank you.
Speaker Change: We have the primary ability that we've leveraged in our schedule, being more than 10% ahead of the planned completion percentage at this point, is that our main equipment has arrived well ahead of the planned delivery dates.
Speaker Change: This de-risked our schedule completely and helps us to maintain a 10% float in our completion plan at this point.
Speaker Change: Importantly, in this past quarter since we last spoke, we've also commenced work on our 500KMe KV transmission line and the substation where our GIS will arrive later this year to be installed.
Speaker Change: Just before I hand back to Leandro for the power auctions, one interesting note on Porto-Sem. As you recall, this project is one that we procured from another site and transferred it to our Barker in a facility with some milestones that were delayed from the original project developer.
Speaker Change: We've actually transitioned to the schedule advancement to such a point that we're now accomplishing some of the original developer's milestones that were promised to the regulators in Brazil, although they were more than a year into development when we procured this project.
Speaker Change: So we'll look forward to another successful quarter and I'll get back to you at that time.
Thank you, Andrew.
Speaker Change: Thank you Jeremy. Turnity true is light number 12. I want you to discuss the markets all to look in the upcoming opportunities.
Speaker Change: We have a focus on the capacity auction expected later this year.
Speaker Change: has stated publicly that he expects the auction to take place in 2025 and we expect rules to provide more clarity and fairness to the competition.
Speaker Change: Just to make it clear, the fundamental haven't changed it. Brazil still needs to contract in order to estimate 10 to 15 gigawatts of capacity.
Speaker Change: The PPAs are expected to have CODs between 2026 and 2030 for both brownfields and greenfield assets.
Speaker Change: and we will offer capacity payments similar to Porto San with 16-year terms for Greenfield projects and gas indexes to JKM and TTF.
Speaker Change: While the postponement of the auction created some short-term noise in the country, we're confident in the structural needs for the auction. There is no question that Brazil needs the power and if this auction doesn't happen, the system could face real operational challenges.
Speaker Change: We're fully prepared as in a few Brazil. We're positioned to register over two gigawatts of projects in the upcoming auction. Additionally, more than three gigawatts of third parties projects have requested guest reposals from those.
showing clear market confidence.
Speaker Change: and the competitiveness of our platform in Brazil. In short, we see a path for a meaningful expansion of our business in Brazil with strong hunter-fathers, solid regulatory support and rising demands for our integrated energy to our model.
Speaker Change: Thank you very much, and the one that made it over to us. Thanks, Andrew. Let me briefly talk about Puerto Rico, because it's another big market for us with a lot of activity.
Wes Edens: just a bit of a situational overview of what the energy system in Puerto Rico looks like.
Wes Edens: He's a very under-invested, very antiquated system that is in great need for pair and great need of new investment in particular on the new generation side. There's been no power plants built that are material in the last 30 years, so the average power plant is quite old, which rotating equipment is really not to operate efficiently for 40, 50, 60 years, and so there's a lot of challenges in terms of the fleet that exists. [inaudible]
Wes Edens: Over 50% of it runs on some combination of oil and diesel. Contrast that to the mainland United States where less than 1% of our electricity is operated on diesel. You can see there's a huge difference between utilities that we find in the mainland and what we see there.
Wes Edens: What that means is that the plan and the needs in the business in Puerto Rico on the energy side we think are extremely clear.
Wes Edens: Number one, there's a lack of sedition reserve, which hence means that they need temporary power, which is exactly what they've done in terms of going out for a bid for temporary power, especially with the upcoming summer and the demands on the system that happened when it gets...
Wes Edens: Harder down there and, of course, hurricane season is around around the corner. There's a concern that they lack adequate reserve from some of the plants being offline as they're trying to buttress that by holding an RFP for temporary power. [inaudible]
Wes Edens: Number two is there is a total of about 925 megawatts of power today that runs on diesel that can be readily converted to natural gas.
Wes Edens: That represents roughly a $300 million difference in fuel costs between burning the diesel and burning the natural gas for no benefit whatsoever. And so our view is that in the context of the RFP that
Wes Edens: has been talked about for gas supply. It should include a provision to also convert those other assets. We list the four that are on here. There's Michaelas, 200 megawatt plant, Campalacha 240 megawatts.
Wes Edens: The three Pratt and Whitney mega-gems that are in Palosaco and the Aguirre one and two, which is the combined cycle plant in the south. All those can be readily converted and simply doing so is relatively low cost to the system and can generate very, very meaningful decreases in fuel cost to them, upwards of $300 million a year. [inaudible]
Wes Edens: Lastly is there's been no new power generation built in the last 30 years. There was a plant that was agreed by the government in early January . There's the first new PPA that's been signed in some time. We are the gas provider for that in a long term. And so we think that, you know, basically building new generation is really what will cure what ails the system for the most part because the lack of reliability and the inefficiency of the system is really, really a function of these old power plants. And right now there are plants.
Wes Edens: that actually allows us to be more efficient in bringing in more supplies. So basically cuts our expenses but it also greatly increases the capacity of that terminal which is a good thing.
Wes Edens: So with that, let me turn it over to Chris. Great. Thanks Wes. Appreciate the opportunity to talk to everybody today.
Chris: First, let me start with giving a little bit more color regarding the two recent FHD filings that we submitted earlier this week.
Chris: On Monday, we filed an AK outlining an update to the use of proceeds of the Jamaica sale, which I'll walk through shortly. And yesterday, we filed a notification of late filing under Rule 12B25, which allows the company to file our full form, 10Q, no later than Monday the 19th.
Chris: The reason for the late filing is twofold. First, we wanted to be able to announce the consummation of the sale of the Jamaica business including describing for investors the use of proceeds. And second, with the Jamaica Acetyl proceeds in hand, we can report an improved liquidity prediction and reduction of the going concern risk that was included in the 10K. Okay.
Chris: So now turning to slide 15, we've outlined both the cash and the accounting treatment of the Jamaica transaction. On the left side of the page, we show the proceeds waterfall and on the right side, the gain we will recognize in the second quarter.
Chris: Now prior to the most recent amendment of the credit agreement, there was a requirement to use 75% of the proceeds of material asset sales to pay down super priority debt which included the revolving credit facility, the term loans A and B and the new 2029 notes.
Chris: However, we were able to negotiate an agreement with the revolving credit facility lenders to waive this asset sale proceeds waterfall in exchange for the early pay down of the September amortization payment of $270 million in the hollars.
Chris: In addition, we also amended the term loan A, where we agreed to a modest paydown of $55 million, which is in line with what they would have received under the waterfall anyway.
Chris: Further, we eliminated the debt to capitalization covenant in this facility, and we matched the financial covenants of that loan to those in the Revolving Credit Facility, none of which will be tested until September 30th of this year.
Chris: As a result of these amendments, we were able to retain almost 400 million dollars of proceeds after tax that can be used to solve, in part, nearer term maturities, including the 2026 notes and non-extended revolver tranche, thus eliminating debt maturities until the second half of 27.
Chris: On the right side of the page, we show the expected accounting gain on this transaction.
Gross Proceeds of 1.055 Billion, West the asset level debt.
Chris: then reduced by our basis, which is $177 million, and reduced by a goodwill allocation of $172 will result in a book gained.
Chris: of $430 million. A big thank you to our full team that tirelessly worked to get to the Jamaica deal closed. This includes our internal employees, our external advisors, and our partners that accelerate when we send best wishes for their success with incredible assets.
Chris: Go ahead and turn now to slide number 16 and let's talk for a minute more about the two FSRU contracts that we signed over the last couple of months. In December , we announced that we chartered the Eskimo to EGAS, and this week we announced that we chartered the freeze to enter HIA 2000.
Chris: These two projects alone equate to approximately $200 million of future earnings.
Chris: Additionally, we are in advanced discussions with counter parties on two additional FSRI opportunities which contribute an incremental $100 million to the total value of the portfolio.
Chris: On an annual basis, these relets can increase their cash flow up to about $50 million in added even up per year.
Chris: Further, with a high demand for these contracts, we have the opportunity to innovate or sell them to other companies which would provide us with upfront payments that we think are around $200 million dollars. And when that occurs, it would be included in EBITDA and of course earnings.
Thank you.
Chris: Turn, please now to slide 17, we have financial results. Total segment operating margin was $106 million for Q1 compared to 240 for Q4 of 2024.
Wes Edens: Corps SGNA for the first quarter was 34 million, which is equal to what we had for Q4 of 24, and for their balance of 2025, we're forecasting $30 million of quarter. As West stated earlier, adjusted even to F for the first quarter was $82 million. In the house.
Wes Edens: Moving to slide 18 for Q1, we had $200 million net loss for Gap or a loss of 73 cents a share. We had no material one-time items leading to the adjusted EPS to be the same as Gap.
Wes Edens: As West said already, the quality of our earnings this quarter was high but the quantity was lower than we were initially forecasting.
Wes Edens: Two differences that we were initially expecting in the first quarter versus what we are reporting is one, the recognition of the PR incentive payment, which is about $110 million. This is still something we expect to receive in 2025, who has not agreed to before the closing of the first quarter. [inaudible]
Wes Edens: and two, a sale of the Eskimo Vessel Charter. Again, this is still something that we expect to complete in 2025, but we think that combining this with the other charters that have been signed as well as ones in process makes this a more attractive as a package of contracts than one off.
Wes Edens: In spite of lower than expected earnings, we still have a strong liquidity position. We ended Q1 with $448 million cash on hand and $275 million available under a revolving credit facility.
Wes Edens: Add to that the $393 million of cash proceeds after debt paydown and you have over 1.1 billion of pro-former liquidity at the end of Q1.
Wes Edens: With that, thanks everybody for your time. We'll turn the call back over to the operator for Q&A.
Thank you. Bye.
Wes Edens: Thank you for watching. Please like and subscribe. See you next time.
Thank you. If you would like to ask a question,
Speaker Change: Police Signal by pressing star 1 on your telephone keypad. If you're using a speaker phone, 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 our first question is going to come from Gregory Lewis from BTIG. [inaudible]
Gregory Lewis: Yeah, I thank you and good afternoon, and thanks for taking my questions, everybody. Chris, I was hoping, thanks for laying out the liquidity in the cash and the injection, post the Jamaica sale. I was hoping you could walk us through. I mean, clearly, you have-
Gregory Lewis: You know, a lot of restricted cash on the balance sheet. Could you maybe kind of point to, you know, is that restricted against specific projects and what kind of hurdles are there that could free up that cash to make it unrestricted? [inaudible]
Thank you. Thank you.
Gregory Lewis: Hey, Greg, short answer is it's almost all related to the CAPEX in Brazil. So that is restricted cash, meaning it can only be spent on the two projects that are still under construction, the Selva Power Plant and the Porto Sim Power Plant.
Gregory Lewis: The remainder, which is probably in the magnitude of 40 to 50 million dollars, is restricted around kind of other credit instruments that we have inside the business.
Gregory Lewis: Some of which will be freed up as a result of this Jamaica transaction, about 30 million of it, and the remainder would stay restricted just because again it's collateral for other kind of credit support enhancement, a credit enhancement on other instruments that are on the business
Speaker Change: Okay, super helpful. And then just as we look at, as we kind of look across the cab structure of some of the dead, it's trading at a discount, you know, he kind of alluded to maybe looking to kind of refinance that post to make a transaction, you know, but just given some of the cash on the balance sheet and kind of running the numbers. Is the company looking at potentially doing open market, repurchases of some of that that just to try to maybe be a little bit of opportunity.
Unespect,
Speaker Change: We certainly look at the capital structure. We think that there are some significant opportunities as a result of it. I talked about the asset level debt and maybe I should amplify that just in the first second as it will help.
Speaker Change: The capital structure is used for liquefaction, generally, as people build the liquefire. They enter into a series of S.P.A.s.
Speaker Change: It's for the most part kind of a wholesaling strategy selling gas onto others. The margin in that business is relatively low, but then the credit quality and the duration is very, very long and very, very high. It's very able to generate significant amounts of financial ability when they do so.
Speaker Change: In our case, we also have a portfolio of gas, both from our own little fire as well as from other sources.
Speaker Change: and our overall cost of that gas is roughly $100.00 plus $250.00.
Speaker Change: Our margin across the assets that I'd list is about $4.50. So it's $500 million of financeable cash flow that's buried in our capital structure right now that we expose that into a 20-year duration.
Speaker Change: Transaction and just run the numbers on it. It has got the ability to refinance, you know, a significant portion of the balance sheet if not all of it.
Speaker Change: and so, from a standing start on where we are right now, we think it's now...
Speaker Change: The appropriate time to really focus on this, obviously there was a lot of focus.
Speaker Change: on the company's part in this Jamaica sale, but that's over with, and this will be the next step of it. And I think in the context of that, the goal would be to refinance the corporate balance sheet in its entirety, you know, over the course of the next 12 months or so. And as part of doing so for successful in that, we'll obviously repay all the debt. And as we start to repay it, you'll look at opportunities perhaps to retire at a discount if there still are bonds that are available at discount. Thank you.
Speaker Change: So, that's the process for it. We think that, you know, de-leveraging through the asset sale we just had, adding meaningful liquidity and addressing liquidity issues, which now, with a billion dollars plus in liquidity, we feel great about what the transaction has realized for us. We're near completion on the power plant in Brazil, since we have assets in hand that are extremely financial with very, very high quality and very long-term cash flows. Now is the time to refinance lower cost dramatically.
Speaker Change: Extend the term so they're consistent with the duration of the underlying cash flows, and then we think we can actually with the improvement in our capital structure, that the loan-washing via substantial benefit to us.
Speaker Change: and we still have a lot of dry powder. So we've only utilized about half of the volumes that we own in our portfolio. And so if we're successful and recapitalized in the balance sheet and lowering costs and extending, and then we also then grow as we expect to in Brazil and Puerto Rico and other places, all that growth would then accrue to the benefit of the shareholders. So that's the next two steps that we really see. So first was an essence sale, now it's a recapitalization, refinance, and then it'll be growth. And those are the primary components.
Speaker Change: and the components of what we think it takes to be really successful. So, sort of give you a long answer to a short question but that's the context that hopefully will make sense a little bit better.
No, that was super helpful, thank you very much. Thank you very much.
Thank you. Thank you. Thank you.
Our next question comes from Chris Robertson from Deutsche Bank.
Thank you.
Chris Robertson: Hey, good afternoon. Thank you for taking my questions. Wes, I was wondering if you could talk a little bit about the short-term power opportunities in Puerto Rico here, when people are bidding into the process. Thank you very much.
Chris Robertson: Is it for equipment or equipment plus fuel and what strategy is NFE taking here in terms of are you bidding into provide equipment or just fuel supply or how does that process work?
Speaker Change: You know I can only relate to what I read through the portal because it's a government run process so they're actually quite disciplined about how they respond to information and provide information.
Speaker Change: and kind of period it. So you're not actually able to just simply bid in…
Speaker Change: Tervens. We actually asked that question specifically in the RFP questionnaire in the portal. The two questions we asked were you allowed to bid in equipment versus an aggregate price, number one, and number two, was there any minimum dispatch that we could assume that we'd be guaranteeing to know how much power would be generated and therefore can run the numbers on as little easier? And the answer to that was, no, there was no minimum. So...
Speaker Change: The requirements in the RFP were quite stringent. From our standpoint, we're blessed to have a big operation on the island, and so can take advantage of the infrastructure that we have in place, but that's basically what it is.
Speaker Change: You know, I'd say of the three opportunities that I outlined.
Speaker Change: The emergency power and the gas contract and the long-term generation, they all could be interesting under the right circumstances.
Speaker Change: But that's an emergency power, it's probably the least interesting, just economically given the relatively short duration and the lack of any kind of commitment in terms of the utility of.
Speaker Change: Okay, gotcha. That's my follow-up question. Maybe one for Leandro here. As it relates to Selba...
Speaker Change: on the 18th TVT per year. Should we think about that as being more seasonally weighted?
Speaker Change: in the back half of the year or the kind of split across all four quarters and then just to confirm on slide ten years, there's no fixed capacity payment related to that it's just a hundred percent take your pay on the volumes.
Chris Robertson: Yeah, so Chris, the poor plan is to have a capacity payment. It's around a 25 million dollars per year.
Chris Robertson: But the biggest payment that we get is the second semester of the year, which is linkage to the production of power and linkage to the 18 TB to use.
Chris Robertson: of gas mentioned in the slide. So we get some payments throughout the year but most of the payments of the plans there do on the second semester, where we need to produce power.
Speaker Change: Okay, that's a lot more clear. Thank you for clarifying that. I'll turn it over.
Welcome.
Speaker Change: and our next question is going to come from Wade Suki from Capital One.
Wade Suki: Afternoon, number one. Appreciate, Elba, taking my questions. Just a follow-up, I think it was on Greg's question, make sure I heard her y'all correctly on asset sales. I think you all originally had a goal of like two billion of memory service oftentimes fails me. But clearly, Jamaica be risks substantially, substantial portion of that. Anything left out here you could discuss.
David
Thank you.
Speaker Change: Yeah, actually about other asset sales. I mean, I think like the business, we have an amazing business in Brazil. These guys have talked about which poses a lot of opportunities for us. You have those Pacific theater, which is another kind of business in and of itself in Nicaragua and in.
Wade Suki: in Mexico. But I think like absent-asset sales, Wes's point of being able to do large kind of of securitization type transactions would allow us to refinance our debt at a seemingly cheaper rate. That's our real goal, to be honest with you, Wade.
Thank you.
Wade Suki: I appreciate that. I just switching gears here a little bit. I didn't notice F1G2 not on the, not in the prestige to be able to status update there.
and the other husband must have been a boss. [inaudible]
Speaker Change: Sure, yeah, there hasn't been much development over the last kind of 60 days on FL and G number two. I mean, still...
Dunderconstruction in the Kuwait Yard. [inaudible]
Speaker Change: We have been focused obviously on the closing of the Jamaica transaction and on the refinancing of the business in order to ensure that we have ample.
and Nicaragua.
Speaker Change: I'm sorry. I think we're on. Just hoping to get an update there.
Speaker Change: Yeah, Nicaragua, we are in the final stages of restructuring our PPA with the government. We had a lot of productive thoughts about that and basically what we're trying to do is
of the Selba and in Puerto Rico. So, uh...
Speaker Change: Long-Term Gas Contracts, so there's basically a capacity payment that is designed to cover expenses, and then a marginal gas cost that we think would reflect kind of the value of the credit. So, if you think about it, Norse Hydro, which is an investment grade credit, is Henry Hubplus6.
Speaker Change: C.F.E., which is a triple B minus credit, his Henry Hub plus 745, and so you want to be a modest
Speaker Change: Agreement on the contract and we'll finish up what remaining work we've got. The PowerPoint itself is virtually 100% built. The terminal needs a little bit more time and effort, but we're very, very close to the end, so we just need to finalize our agreement to move ahead on that.
Thank you.
Thank you so much, I'll go back in the queue. Thank you.
Thank you. Thank you. Thank you.
Speaker Change: and our next question is going to come from Craig Shere from 2A Brothers.
Speaker Change: Hi, thanks for taking the questions. On slide seven, I mean obviously we're not getting the key placaments and especially CP2 volumes anytime soon.
Speaker Change: What are your thoughts about bridging LNG supply needs between now and commencement of the Central Global SBAs?
Speaker Change: We're actually in a very well positioned right now because we've got the vines from F1J. Right now, the <expletive> is producing basically right at nameplate capacity at the cold box.
Speaker Change: We are planning an outage here in a couple of weeks so we think is going to significantly improve from that level. So it's already performing very consistently and reliably and at a good level. But we think there's a significant amount upside with the planned outage and de-bottle lacking activity of it. So that's 90 TBT uses our estimate of where that will end up with. [inaudible]
Speaker Change: The volumes that we have in place that are needed in Brazil is really just the North Chydro at this year and the second half of next year then it becomes the Selva plant.
Speaker Change: Puerto Rico, the large gas contract we signed earlier this year, is slated to come on in 2028. So as we look across the portfolio, it's actually quite balanced overall in terms of the needs.
Speaker Change: and kind of step by step. And, you know, if we add to those, those, those volumes because we're successful in, in, in either Brazil or Puerto Rico or elsewhere, we can always then, you know, add any volumes to, to address that. But, we've got a net position that is 215 versus the long term of 109. Obviously there's some short term volumes in there that could be displaced if we, if we were successful in some of these long term things, but we're, we're in a very good position in terms of our gas needs. [inaudible]
Speaker Change: and our gas use at the time, so it's actually works well for the timing of these future developments.
Speaker Change: Gotcha. And you've been talking for a number of months or quarters about the significant opportunities with both the Puerto Rico RFP and the Brazil Capacity Auction into June and second half this year. You know, obviously you have some...
Speaker Change: Competitive Infrastructure Banages. Do you believe some of the noise around liquidity and balance sheet?
Speaker Change: Could impact any of the decision making there by regulators, or do you think that given your entrenched position and the obvious virtual cycle of favorable awards on the whole business just kind of makes that a mood point? Thank you very much.
Thank you.
Speaker Change: very, very expensive to build, but are also very, you know, very time consuming to build. So we feel like we've...
Speaker Change: and significant gas abilities. We've got a very, very good position in San Juan, that's by design and we spent hundreds of millions of dollars developing our product there like anybody else could do or could have done to give ourselves that position. But in no respect are we monopolistic about this, we think we're well positioned. And what we have predicted to happen in these countries, we think is largely coming true. I mean, they're like.
and we're certainly disappointed that the auctions in Brazil.
Speaker Change: We're delayed, but there was reasons for that, that are out of our control. And as we Andrew said, the needs of the country having gotten less, they've gotten greater during that period, so we feel great about those auctions. And we've got great, great acid in the south that we think is going to play a central role in those auctions when they do come. And in Puerto Rico, with both the short term and long term generation needed, we think that having gas in San Juan is going to prove to be very, very helpful. And so we'll...
Speaker Change: We'll obviously need to find if we can do that economically attractive levels and go from there but we feel like the competitive situation is actually really good. I mean like most importantly, when you disaggregate and you look behind the numbers and you look at the assets that we've got, you're generating half a billion dollars in cash flow on a 20 year duration assets that are largely right around investment grade. So that is a lot of bull. [inaudible]
Speaker Change: that our valuation in no way reflects that. And so we'll go finance ourselves on a long-term basis and we'll fix the capital structure and align it with the same duration of what we're doing.
Speaker Change: We've got on the asses side and kind of go from there and if we're fortunate and through our work of us and our people in the field we can add to art with more long-term off-take and use up some of the excess capacity we've got on the splice side we did.
Speaker Change: and there's a tremendous amount of upside in both the debt and the equity side, so that's the plan. The one thing I'd say is that on the last thing I'll say is that on the securization front.
Speaker Change: You know, we've secured ties or have created instruction financing for many many different products over our careers.
Speaker Change: and I think in the scale of degree of difficulty, if you just take the Brazilian assets you've got...
Speaker Change: Two assets that have got direct obligations by the Brazilian government, in one case, Norse Kider and the other. So a double B plus and triple B rated counter parties, discrete cash flows with no variability that run out for 15 and 25 years.
Speaker Change: That doesn't sound like the hardest thing in the world to kind of realize, or US dollar-based contracts. That's what we're going to be very focused on. And I think if we're successful there, it gives us a real opportunity then to attack our capital structure and do some good work there. So that's the plan for the summer and we'll see how it plays out.
Great, thank you.
Speaker Change: The last question will come from Tarek Hamid from JP Morton.
Thank you for joining us. Thank you.
Speaker Change: Could you guys maybe help us bridge through the liquidity picture a little bit, you know particularly sort of higher thinking about gross cap ex-needs for the remainder of the year. Obviously you have a bunch of restricted cash as well as liquidity outlined but this would love to understand sort of how much is yet to go out the door.
Thank you.
Speaker Change: Yeah, so let's say, let's start in Brazil. So the remainder of the capex for Selvent Porto-Sem is fully funded with cash on the balance sheet on that restricted cash line. So that's paid for.
Speaker Change: and that will be paced this year and through the first kind of six-ish, maybe nine months in total because you'll have some lag in the payments beyond COD in 2026 for Porto Sound.
Speaker Change: Beyond Porto-Sim, you have very little remaining CAPEX to spend. Obviously, FLNG-1 is in place in the service.
Speaker Change: You have no more spend in Mexico or in really in Puerto Rico until you get conversions and those conversions, whatever capics is needed for those conversions, we envision would be paid for by Prepa.
Speaker Change: That really then leaves you in Nicaragua and we've disclosed this before it's about remaining to spend in Nicaragua's about $50 to $60 million.
Speaker Change: Maturities. And as we have those in hand, or we do refinancing, as Wes just discussed, we would then re, we would move forward in greater pace on the FLNG2 CAPEX development.
Speaker Change: Thank you. And then you was very helpful. You guys walked through the Covenant amendments on the revolver and the Permanente. But is it fair to assume that for the astral language on the 12th and the Permanente B,
Speaker Change: I'm not sure I understood the question you're talking about, like, the reinvestment, right? Yeah, well in terms of you're having to prepay those without still proceeds.
Speaker Change: Well, we aren't using asset cell proceeds to repay those. We have cash on the balance sheet and cash loads from our operations that we can use to refinance if we want the or to pay off any of the other instruments.
Thank you. Thank you.
Fair enough. Thank you very much.
and there are no other questions in the queue.
Speaker Change: Great. Okay. Thank you very much, everyone. The port of talking next quarter. Thank you. Thank you.
Speaker Change: and this concludes today's call. Thank you for your participation. You may now disconnect.