Q2 2025 Excelerate Energy Inc Earnings Call
Speaker #1: Good morning, Allen. Thank you for joining us. On today's Excelerate Energy second quarter 2025 earnings conference call. My name is Drew, and I'll be the operator on today's call.
Speaker #1: After today's prepared remarks, there will be a Q&A session. If you would like to register for a question, please press star followed by one on your telephone keypad. To withdraw your question, it's star followed by two.
Speaker #1: It's now my pleasure to hand over to Craig Hicks, Vice President of Investor Relations and Strategy. He will now open. Please go ahead.
Speaker #2: Good morning, and thank you for joining Excelerate Energy's second quarter 2025 earnings call. Joining me today are Steven Kobos, CEO; Dana Armstrong, Chief Financial Officer; Oliver Simpson, Chief Commercial Officer; and David Leiner, Chief Operating Officer.
Speaker #2: Our second quarter earnings press release and presentation were published this morning and are available on our website at ii.excelerateenergy.com. Before we begin, please note that today's discussion will include forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially.
Speaker #2: We undertake no obligation to update these statements. We'll also reference certain non-GAAP financial measures, reconciliations, to the most directly comparable GAAP measures can be found at the back of the presentation.
Speaker #2: With that, it is my pleasure to pass the call over to Steven Kobos.
Speaker #3: Thanks, Craig. Good morning, everyone. We appreciate you joining us today to discuss our second quarter 2025 results. At Excelerate, we are committed to operational excellence, disciplined growth, and delivering long-term value for our shareholders.
Speaker #3: This quarter was no exception. We delivered strong financial and operational results; we advanced the strategic priorities that will define the next phase of our growth.
Speaker #3: On today's call, I'll speak to the Excelerate Energy value proposition and provide an update on our recent Jamaica acquisition. Then I will share recent highlights from terminal services before turning call over to Dana, who will walk through our financial results.
Speaker #3: Let's turn to our value proposition. I want to spend a few minutes on the key elements that define how Excelerate delivers long-term value to shareholders.
Speaker #3: And how we are positioning the company for continued success. First, we are a leading provider of critical energy infrastructure in the downstream part of the global LNG value chain.
Speaker #3: The recent Jamaica acquisition represents a pivotal step in our evolution. Our growth strategy has long included owning and operating downstream infrastructure assets, and today our business model reflects that ambition.
Speaker #3: Second, our business is predominantly supported by long-term take-or-pay contracts; these allow us to generate predictable earnings, and they are insulated from economic cycles.
Speaker #3: We told investors last quarter that our business model is essentially tariff-proof. We aren't exposed to tariffs. That hasn't changed. It's one of the reasons Excelerate continues to stand out as a resilient investment, especially in today's geoeconomic environment.
Speaker #3: We are a safe haven. Third, as a result of the groundwork we have laid, we have a long runway for growth through both strategic opportunities and scalable assets.
Speaker #3: Fourth, and importantly, this growth strategy is bolstered by strong macro tailwinds. These include the growing demand for LNG tied to enhancing energy security and advancing the energy transition.
Speaker #3: Energy security will remain a paramount need for all nations. We are also seeing supportive policy momentum; for example, the recent US-EU trade agreement focused on expanding LNG exports.
Speaker #3: Look, any deal that's good for U.S. LNG is good for Excelerate, and this one reinforces the relevance of our business in connecting supply to demand.
Speaker #3: Fifth and finally, all of this results in an attractive financial profile that gives us the flexibility to pursue new growth opportunities while returning capital to shareholders.
Speaker #3: Our foundational strategy remains unchanged. It continues to guide our commercial efforts and underpins the bold moves we're making as a company. We are focused on protecting and enhancing long-term contracted revenue and margins, and we are doing this while pursuing growth catalysts for near-term value creation.
Speaker #3: So with that context in mind, let's turn to Jamaica. The Jamaica transaction which closed in May brought into our portfolio the Montego Bay and Old Harbor LNG terminals, the Clarendon combined heat and power plant, and numerous small-scale regasification facilities throughout the island.
Speaker #3: Since we closed the acquisition, we have been laser-focused on ensuring a smooth integration of people, systems, and processes. We are also working to optimize the existing business, enhance customer service, and strengthen our continuity plans.
Speaker #3: I'm pleased to report that integration is proceeding as planned, and the Jamaica assets are exceeding our operational expectations. Thanks to the excellent condition of the assets and the deep expertise of our new Accelerate colleagues, we are well positioned to deliver sustained reliability and high operational performance.
Speaker #3: The Jamaica transaction is a compelling strategic win for Accelerate and for our shareholders. The assets we acquired are contracted cash-generating and already contributing meaningfully to earnings.
Speaker #3: Beyond immediate earnings contribution, the transaction also strengthens the foundation of our U.S. LNG supply portfolio. Jamaica's 21-year contract profile dovetails nicely with our 20-year offtake of U.S. LNG from Venture Global's Blackman Phase II.
Speaker #3: With this alignment, we have secured long-term downstream destination for our volumes. As we optimize the Jamaica platform, we expect to unlock near-term EBITDA growth by improving asset performance and expanding commercial activity.
Speaker #3: At the same time, we see a clear path to scale this model across the Caribbean that will require targeted investment to support new infrastructure development, to expand our customer reach, and to deliver on broader commercial objectives.
Speaker #3: This approach is designed to enhance the value of the assets over time and strengthen the return profile of the broader transaction. By 2030, we expect to generate $80 million to $110 million in incremental EBITDA from optimizing the Jamaica platform and investing $200 million to $400 million in growth capex to expand our operational presence in Jamaica and across the Caribbean.
Speaker #3: Now let's talk about how this is going to happen. First, we are focused on optimizing and expanding the Jamaica platform to meet natural gas demand driven not only by fuel switching across the island, but also by the need for additional power generation as the Jamaican economy continues to grow.
Speaker #3: Our team is off to a great start identifying ways to increase throughput across existing infrastructure and extract greater value from current commercial agreements. We have already begun to sell incremental volumes of LNG and natural gas to customers on the island, and we expect this early momentum to continue.
Speaker #3: In the medium to longer term, we will make investments in larger-scale infrastructure projects that support our growth. These opportunities span a diverse range of initiatives, including new power generation, terminal expansions, LNG bunkering, and additional pipelines.
Speaker #3: The second part of our approach is to position Jamaica as a regional hub for LNG distribution across the Caribbean. Jamaica's geographic location gives us a structural cost advantage.
Speaker #3: Its proximity to the U.S. and to key regional markets allows us to respond quickly to regional demand, making it an ideal launch point for LNG distribution and power development.
Speaker #3: We are advancing a hub-and-spoke model that leverages our floating LNG terminal in Old Harbor as a central storage and distribution point. From there, we can efficiently deliver LNG throughout the Caribbean using smaller vessels to reduce transportation times and lower fuel costs.
Speaker #3: We see this as a natural expansion of our downstream operations and an important part of our long-term Caribbean growth strategy. While we are still early in our ownership, we have hit the ground running, and we see clear opportunities to scale the platform efficiently.
Speaker #3: Now let's turn to terminal services. Before we get to the second quarter highlights, I want to underscore the progress we are making in expanding the asset portfolio that supports terminal services.
Speaker #3: We are strengthening our long-term infrastructure footprint and positioning ourselves to capitalize on new developing opportunities in the LNG import terminal space. These efforts will enable us to capture a greater share of our total addressable market, particularly in regions where demand for reliable energy infrastructure continues to rise.
Speaker #3: Now to the highlights. This quarter marked several important milestones. In April, the FSRU Excelsior arrived in Germany at the port of Wilhelmshaven. In late May, the Excelsior officially commenced regasification operations and is regularly delivering gas ashore at maximum capacity.
Speaker #3: I am really pleased with our operations team. In July, we acquired an LNG carrier, which we renamed the Excelerate Shenandoah. While the vessel will support our previously announced mid-term Atlantic Basin supply agreement, its utility extends well beyond that.
Speaker #3: Shenandoah enhances our ability to serve Jamaica and support regional LNG storage and logistics. The LNG carrier also represents Excelerate's first owned asset to be selected as an FSRU conversion candidate.
Speaker #3: We have already begun engineering for the conversion to accelerate the construction timeline. Next, we signed a deal with Petrobras to install a re-liquefaction unit on the FSRU Experience, our floating LNG terminal located in Guanabara Bay, Brazil.
Speaker #3: The re-liquefaction unit is expected to be installed in 2027 during the next planned dry dock for the Experience. Once installed, this technology will eliminate all excess LNG losses due to boil-off and lower our Scope 1 emissions.
Speaker #3: At the same time, it will upgrade the performance and life expectancy of the asset. Finally, we continue to make strong progress on the construction of Hole 34A7, our new build FSRU under construction at Hyundai Heavy Industries.
Speaker #3: The vessel remains on track for delivery on June 26. Hole 34A7 will be a best-in-class asset, capable of delivering up to a billion cubic feet a day of natural gas and also having the lowest rates of boil-off in the industry.
Speaker #3: We remain confident in our ability to place Hole 34A7. The vessel's scale, performance, and flexibility position it as a cornerstone asset in our global LNG infrastructure portfolio.
Speaker #3: We expect to provide further updates on its commercial deployment in the coming quarters. Let's sum it up: Excelerate is executing on a clear growth roadmap that aligns with our long-term strategic priorities.
Speaker #3: We remain committed to transparency and delivering on the promises we've made. We know this approach will support long-term value creation and position Excelerate as a compelling investment opportunity.
Speaker #3: I want to thank each of you for your continued support and confidence in Excelerate Energy. With that, I'll turn the call over to Dana.
Speaker #1: Good morning, and thank ou for joining us. Before we dive into the numbers, I want highlight a few important updates to our financial statements that better reflect the structure of our business following the Jamaica acquisition.
Speaker #1: On our income statement, we've renamed the FSRU and terminal services revenue line to "Terminal Services," and the gas sales revenue line is now presented as "LNG Gas and Power."
Speaker #1: The associated cost line items have been updated accordingly. Now let's turn to the results for the quarter. Q2 was a great quarter for Excelerate, with adjusted EBITDA of $107 million. Adjusted EBITDA increased roughly $7 million quarter over quarter, driven primarily by the addition of Jamaica EBITDA for a partial quarter, starting on May 14th when we closed the acquisition.
Speaker #1: This increase from Jamaica was partially offset by the seasonal impact of the Atlantic Basin winter cargo margin, which occurred in the first quarter of this year but not in the second quarter, and the timing of various vessel operating expenses, which were higher in the second quarter as compared to the first quarter.
Speaker #1: Year over year, adjusted EBITDA grew by $18 million, driven both by the addition of the Jamaica EBITDA and the strength of our legacy business.
Speaker #1: Now let's turn to our balance sheet. Our balance sheet remained strong and continues to provide the stability and flexibility needed to execute on our long-term strategy and navigate dynamic market conditions.
Speaker #1: As of June 30th, our total debt, including finance leases, was 1.3 billion, and we had 426 million of cash and cash equivalents on hand.
Speaker #1: Additionally, all of the $500 million of undrawn capacity under our revolver was available for additional borrowings. Net debt was $867 million, and our trailing 12-month net leverage as of June 30 stood at 2.2 times.
Speaker #1: Our financial strength is rooted in the durability and predictability of our business model, with over 90% of our adjusted EBITDA supported by take-or-pay contracts.
Speaker #1: This structure gives us a high degree of visibility into future cash flows, supports disciplined capital allocation, and enables us to invest confidently in growth while returning capital to our shareholders.
Speaker #1: Now let's turn to capital allocation. Our capital allocation strategy remains unchanged. Investing in accretive growth opportunities remains our top priority. We're actively deploying capital into growth projects like our new build FSRU Hole 34A7, which remains on track and on budget.
Speaker #1: We're also targeting additional infrastructure investments across our asset footprint that support long-term value creation. At the same time, we recognize the importance of returning capital to areholders.
Speaker #1: That's why on July 31st, we announced an increase to our quarterly dividend. Raising dividend is a direct reflection of our enhanced cash flow profile from the Jamaica acquisition.
Speaker #1: It's a signal of confidence in the cash flows of both the newly acquired Jamaica assets as well as our legacy business. Looking ahead with even greater confidence in our forward cash flow outlook, we are now targeting an annual dividend growth rate in the low double digits commencing in 2026 and continuing through 2028.
Speaker #1: Of course, all dividend decisions remain subject to board discretion and the pace of future growth investments. We believe this balanced approach of investing in growth while returning capital will create long-term value for our shareholders.
Speaker #1: As previously communicated on July 29th, following the closing of the Jamaica acquisition and based on our second quarter results, we have raised our adjusted EBITDA guidance range for 2025.
Speaker #1: For the full year, adjusted EBITDA is expected to range between $420 million and $440 million. As a reminder, our adjusted EBITDA guidance continues to include the financial impacts of the two dry docks planned for the third and fourth quarters of this year.
Speaker #1: Maintenance capital expenditures have increased slightly and are now expected to range between $65 million and $75 million. Committed growth capital, which is defined as capital that has been contractually committed or internally approved for specific growth projects, is now expected to range between $95 million and $105 million.
Speaker #1: This represents an increase of $30 million from our prior guidance, the majority of which is related to the purchase of our new LNG carrier.
Speaker #1: In closing, Excelerate is exceptionally well positioned to create long-term value for our shareholders. We've integrated the Jamaica platform, and it's already contributing meaningfully to our financial performance.
Speaker #1: We're executing with discipline, and we will continue investing in growth opportunities that will enhance our long-term earnings power while returning capital to shareholders. We believe this combination of operational strength, financial discipline, and a clear focus on shareholder returns positions Excelerate to thrive and lead in the evolving global energy landscape.
Speaker #1: Thank you, and with that, we will now open up the call for Q&A. Thank you. We will now start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you wish to withdraw your question, then it is star followed by two.
Speaker #1: Our first question today comes from Wade Suki from Capital One. Your line's now open. Please go head.
Speaker #2: Great. Thank you, operator, and thank ou all for taking my question. Just wondering if you might be able to maybe give us a better sense of your priorities for Jamaica projects timing-wise and the nature of the projects, if you could sort of help us kind of mirror segregating them for near to intermediate-term projects versus some.
Speaker #2: Long-term projects, and then I think you were talking about $80 million to $110 million in EBITDA by 2030. I mean, I've got to go ahead and expand on that question and see what you think might be the contribution next year, and if you're going to go out further to 2027, I'm sure everyone would love to hear it.
Speaker #2: Thank you.
Speaker #3: Thanks, Wade. This is this is Oliver I'll take I'll e this question. So you know I think we we put out there the the guidance through through 2030 on on our expectations for the Jamaica and Caribbean platform.
Speaker #3: Obviously, that that encompasses a wide range of of opportunities that we see out there, but I ink what I what I can probably say here today, just to give you a sense of of how we're oking at it, is you know with with the assets that we that we purchased in Jamaica, you know we've we've ked about the platform.
Speaker #3: It gives us a platform on which to grow. Those assets some of them there is opportunities to directly use those assets, optimize those assets, and and get near-term EBITDA and growth, which doesn't necessarily require significant additional capex.
Speaker #3: So that's you all getting new LNG or gas customers on the island or using those assets to reach other customers in the region.
Speaker #3: So some of those are probably a little bit more near-term in nature, and we we would we would like to think. And then there is you know the opportunities that will require that will require more more capex, and those you know there's sort of growth opportunities on the island, I certainly new new power generation is likely to be on on the higher end of the capex, as well as some some other infrastructure opportunities.
Speaker #3: 're looking there as well as as well as in the in the broader region. So there's kind of there's there's that split there. I ink we're you know we don't want to get into specific details exactly on the different opportunities.
Speaker #3: We've had these assets now for a few months, but we're extremely confident in the platform and the ability of the platform to capture new demand and grow from there.
Speaker #3: You know as Steven mentioned, we've already had some some additional additional sales since since we've acquired the platform. There's a number of discussions, and we've had a really positive reaction both in Jamaica and in the broader region of this.
Speaker #3: So, so we're really excited about what's coming from these assets.
Speaker #2: Great. Thanks, Oliver. Appreciate that. Maybe maybe I'll push it a little bit more here. Maybe I could ask if you could maybe expand on some of these opportunities in the Caribbean, maybe speak to specific markets, etc., of interest, or where you're seeing best opportunities to the extent you feel comfortable doing that, that'd be great.
Speaker #2: Thank you.
Speaker #3: Sure. I mean, I think you obviously have seen a little bit from the Jamaica assets; you've seen what we've touched in Jamaica. In many ways, as you look at some of the other islands in the Caribbean, you know there are similar fundamentals.
Speaker #3: So where Jamaica is today is perhaps where some of these markets want to be themselves. In a few years, so you know on that, as you look at the Caribbean, a lot of these islands in the Caribbean are still burning liquid fuels, you know whether it's diesel, HFO, in power generation.
Speaker #3: So the opportunity for fuel switching is there. And that's, again, that's where we believe that with our assets, you have that you have that launch pad in Jamaica to be a hub for for the broader region.
Speaker #3: So I'd say a lot of it is coming from power generation in in in the broader region, but we're also looking you know we're looking at bunkering, and I think Steven mentioned that mentioned that too, you know the growth of the growth of bunkering globally is you know I think that there's some very bullish estimates out there.
Speaker #3: About global demand for LNG, for bunkering over the next you know five plus years. And and we see Jamaica's you know in a great position both in terms of receiving supply from from the US for LNG bunkering, but also a in terms of you know proximity to some main shipping lines to which you could provide those services.
Speaker #3: So hopefully, that gives a little flavor on some of those different opportunities there.
Speaker #2: Thanks, Oliver. I appreciate it. I'll jump back into you.
Speaker #1: Our next question comes from Teresa Chen from Barclays. Your line is now open. Please proceed.
Speaker #4: Oliver, I wanted to follow up on your comments about the opportunity for fuel switching in the Caribbean. Have you been able to quantify the addressable untapped market for gas here?
Speaker #4: What can you realistically target?
Speaker #3: I mean, I I think there is a you know again, in in the Caribbean and and the region, there is there is significant demand.
Speaker #3: I I don't think we're you know I 't think I have a number to put out to put out there today. But again, you know the majority of the islands in the Caribbean are currently burning you know liquid fuels for power generation.
Speaker #3: So you know and and we see this as this is a market with with healthy margins. And as you go down, ou know as you go down the value chain, on on the on the LNG, there's few people who can truly offer these services.
Speaker #3: And and I think our our our view is that with these assets in Jamaica, we're able to offer a service and at a cost that I think others you ow will have a competitive advantage there.
Speaker #3: So we see it as a big market, you know, from which we can grow.
Speaker #4: Thank you. Turning to a different component within your portfolio, 2025 has clearly been a banner year for U.S. LNG on multiple fronts. I realize you will likely have more details about Hole 34A7's commercialization progress.
Speaker #4: As things become more concrete, can you give us a sense of how discussions are going in general and your view of the supply and demand outlook for new builds like 34A7, especially at that caliber?
Speaker #4: You know.
Speaker #3: Teresa and Steven, I'll I'll jump in. I said just a few minutes ago that that asset's best in class, BCF. And more importantly, likely the fact that it's got the lowest boil-off in the industry.
Speaker #3: So, the asset class is incredibly tight right now. We'll remain tight, and that's largely why you're hearing the confidence. I don't want to go into the discussions and negotiations that Oliver's team are having around the world, but they are active, and there is demand. You know we've talked; all of us know that, as I said, what's good for U.S. LNG is good for Excelerate.
Speaker #3: That is in part because that means more FIDs. That means an expanding global supply of this commodity. That is already in the money for fuel switching.
Speaker #3: But which will be you know kind ever more in the money for these markets that are examining them. So you've got you have if you put it all together, you have an enormous TAM.
Speaker #3: You have a tight infrastructure market, and you have a price point that will be ever-increasing, with demand for further access. So we think we're well-positioned when you take all three of those factors together.
Speaker #4: Thank you much.
Speaker #1: Our next question today comes from Chris Robertson from Deutsche Bank. Your line's now open. Please go head.
Speaker #5: Thank you, operator, and hi, everyone. Thank you for taking my questions. Just on the FSRU conversion project, Steven, can you remind us, I guess, the timeline around that? When do you expect to initiate the conversion?
Speaker #5: And then, if you were to compare, like on an apples-to-apples basis or similarly sized new building project, what are the cost savings associated with the conversion asset versus a new build asset?
Speaker #3: Hey, Chris. I'm going to hand it over to David because his team is in the weeds on the engineering for it, and then I'll let him compare apples and oranges for you.
Speaker #6: Hey, Chris. David here.
Speaker #5: Got it. Thank ou.
Speaker #6: Yeah, so we've got actually multiple conversions.
Speaker #5: Hi, David.
Speaker #6: Hey, how are you, Chris? We've got multiple conversion projects underway right now, all you know both both the ones I'll speak to are in the engineering phase.
Speaker #6: Earlier this year, I spoke about one opportunity that we're pursuing, one specific vessel that we're working with a prospective partner on. That engineering, the original or initial engineering, has already wrapped up.
Speaker #6: And we're continuing to work with that partner to move that project forward. So we're already well on our way with that one.
Speaker #6: Now that we have Accelerate Shenandoah, in our in our in our ownership, we are starting the conversion engineering for her. So before we've said it's you know, it's roughly two years to to bring an asset like that to to market.
Speaker #6: That's about right, but we would like to think that we can compress that. We have quite a bit of equipment already in storage that we can use for that conversion, and we hope this will compress the timeline.
Speaker #6: So those who project well are on their way. In terms of cost savings that you asked about versus a new build, they're very much different animals.
Speaker #6: A new build is going to be generally a higher capacity, more flexible asset. When you get into a conversion, it's usually not as high capacity, so you aren't putting as much equipment and as much engineering into the conversion.
Speaker #6: As as as you do for a new build, so there's some savings there. Usually, it's more bespoke for a specific project, and it doesn't have that flexibility of a new build.
Speaker #6: So there's some savings there too. So I hope that gives you a sense for for some of the savings.
Speaker #5: Sure. Yeah, I appreciate that. Thank you, David. Just going back to the Jamaica assets for a minute, I wanted to ask around your expectations on incremental capex related to building the smaller receiving terminals in the kind of the hub-and-spoke model that you talked about.
Speaker #5: So, just kind of comparing it to the Montego Bay receiving terminal, for example, what would the cost expectations be around smaller receiving terminals for the shuttle anchors?
Speaker #3: Hey, Chris. I'm Oliver here. I'll I'll take that one. I mean, I I think we, again, we we we put out we put out a range I mean, I think the range covered a number of number of assets that we saw.
Speaker #3: It had obviously some some power generation. It did have some some smaller terminals in there. You know I I don't think we'll giving an exact range on on those terminals.
Speaker #3: It's early days. We're assessing some of these projects, but I think it's also, you know, there are many different markets and many different sizes.
Speaker #3: So there there's also many different different solutions that that we can look at. So obviously, you know Montego Bay, as you look at it, is something that can be you ow scaled up or scaled down as as as you look at that asset as how it could work somewhere else.
Speaker #3: It's also something that you know we could use as also as a platform for for the further Caribbean. So I I think we'll we'll be looking to have some obviously commonality across assets, but also be flexible to to ensure that we deliver the customer what what they're looking for.
Speaker #5: Got it. Okay. And last question from my end, if if I might get a third one in here. Just looking at the balance sheet, this might be a question for Dana.
Speaker #5: Looks like as part of the transaction, we have some intangible assets here. On the balance sheet, just wondering if you could walk through some of the aspects on that from the from the transaction.
Speaker #1: Yeah. And that's Chris, that's that's detailed in our queue, which I think has been filed as of this morning, but it's it's customer contracts and that's really the bulk of what's in that intangible.
Speaker #5: Okay. Got it. Thank you very much. I'll turn it over.
Speaker #1: Our next question today comes from Jeremy Tonnett from JP Morgan. Your line's now open. Please go head.
Speaker #7: Hey, this is Eloy on for Jeremy. I appreciate there's been a lot of color shared today on the Jamaica platform and you know the work that's ongoing there, but maybe if we just think about specific milestones that we should keep an eye out for both operationally and financially, you know whether we can expect updates those this year.
Speaker #7: And if ou can just share color on you know you know again, the kind of the first key milestones you guys expect to hit and what that would do for EE both operationally and financially.
Speaker #7: Thanks.
Speaker #3: Hey, Eloy. This is Steven. Just touch on it in general. I mean, we're going to continue to be as transparent as I believe we've been today.
Speaker #3: So I assure you we will continue to give as much colors as we can just as today we told you, "Hey, we're already making incremental sales of LNG and NAP gas through the platform." Right?
Speaker #3: Right off the bat. We will continue to update you on those incremental paths you know. We've we've already you know in terms of optimizing, we've already ordered ISOs.
Speaker #3: We're buying trucks. We're buying other vaporizers. I mean, we've already hit the ground running and are doing some of these smaller investments that will allow for immediate optimization.
Speaker #3: And that will continue. Then, obviously, when we hit a suitable contractual milestone on something where we're going to deploy a little more capital than that, I assure you, you'll be the first to know.
Speaker #3: Yeah, all of you will be the first to know.
Speaker #5: Okay. Gotcha. Thanks for that color. And then you know maybe if we just touch on the LNG supply side to support some of this targeted growth across your asset portfolio, you know I know the venture global agreement you know provides key supply in the in the Caribbean, but you ow how much kind of incremental supply do you guys need to execute on this targeted growth?
Speaker #5: And you know how we should think about kind of agreements going forward to support that?
Speaker #3: Hey, Eloy, this is Oliver. I'll I'll take this one. So obviously, we've ioned that you know the the VG volume works well. You know the the 20-year VG offtake works well with our you know our profile in Jamaica.
Speaker #3: There's a little you owe the VG volume themselves; it's a little larger offtake than we have the current demand. So, obviously, there's room for some growth there.
Speaker #3: But as as the platform, you know as the platform grows in Jamaica the Caribbean, we'll be looking for you know incremental supply to to match that.
Speaker #3: But you know we feel with Jamaica and the Caribbean, obviously, the proximity to the U.S., the U.S. LNG that's coming on starting this year, going forward, you know I think that's a really odd mixture.
Speaker #3: And that sets us up really well to be able to access that incremental LNG as that demand comes from the customers.
Speaker #3: So I think it's something we can work pretty much hand in hand as that comes on.
Speaker #5: Got it. That's helpful. Thanks.
Speaker #1: Our next question comes from Michael Sialla from Stevens Inc. Your line's now open. Please go ahead.
Speaker #8: Yeah. Good morning. I wanted to see, given the incremental growth you're expecting from Jamaica, the EBITDA growth, if there's been any change in thinking on how you might finance the 34A7.
Speaker #8: I think in the past, you've been leaning towards some external financing. I want to see if there's been any change in thinking there.
Speaker #1: Hey, Michael Steiner. We're still evaluating that. As you know, we raised $800 million of debt from the bond market a couple of months ago.
Speaker #1: And so we are continuing to evaluate that. But as you can see from our balance sheet, we still have a very healthy balance sheet.
Speaker #1: We have over $400 million of cash on hand, unrestricted cash. We have $500 million of borrowing capacity on our revolver. So we're in very good position to finance that roughly $200 million, which is going to be due in a little under a year.
Speaker #1: It's June 2026. So, again, it could be revolver borrowing. It could be some of our cash or a combination of cash and debt.
Speaker #1: It could be we're still working on potential ECA financing, or it could be some sort of bond upside. But we haven't decided yet. I'll just say that, you know, there's no issue there.
Speaker #1: And if we wanted to use cash, we will. And revolver capacity, we could easily do that.
Speaker #5: Okay. Good. And looking at the purchase of the LNG carrier, the Shenandoah, looks like you were kind of on the low end or maybe even a little bit below the the low end of what you had previously talked about for a purchase price, just wondering could ou speak to you know did you have to sacrifice anything in terms of the quality or size of the vessel that you were looking for there?
Speaker #3: Hey, Michael, this is David. I can take that one. Yeah, we were really happy with the Accelerate Shenandoah. We took her immediately after her dry docking.
Speaker #3: So, for folks unfamiliar, you know at a dry docking, which happens roughly every five years, you're renewing or rebuilding all the major equipment.
Speaker #3: So when we took her, when we took ownership, she's in great condition, got a great price on her. We're really happy about it. And she's already on her way over into the Atlantic.
Speaker #3: So we didn't have to compromise anything. Not at all. We're happy she's a great candidate for conversion, and she's going to serve those Atlantic-based volumes very well until we need to pull her over for whatever conversion we have.
Speaker #5: Thank you y much.
Speaker #1: Our xt question comes from Zach Vanavan from TPH. Your line's now open. Please proceed.
Speaker #9: Hi, all. Thanks for taking my question. Maybe going back to the new LNG carrier, you know I know you mentioned this is going to help with the mid-term Atlantic-based supply deal.
Speaker #9: I believe that deal was already in motion. So, will there be any cost savings using your own vessel or any upside to that contract that we can look for?
Speaker #1: Hey, Zach, it's Dana. Yeah, we, I mean, obviously, buying this vessel, there's an upside to our returns. It's cheaper to own a vessel than to charter a vessel for this contract.
Speaker #1: So, you will see enhanced returns. We don't release what those returns are, but we are delivering a new cargo: our summer cargo and the third quarter.
Speaker #1: This year, we do expect to have more creative returns on that project than in the past because of the ownership of that vessel.
Speaker #5: Got it. That makes sense. And then maybe one more on Jamaica. The $80 million to $110 million EBITDA, I know you’re still in the works of planning all that out and how that will look, but can you break out maybe at a high level what portion that is synergies on the existing assets versus, you know, new build or, you know, capex going into other Caribbean islands?
Speaker #5: Just kind of an idea of how much of that is original deal synergies versus new EBITDA from other opportunities.
Speaker #3: Yeah. Hey, Zach. This is this is Oliver. I mean, I I I ink you know all of these opportunities you know the the platform to make it gives us gives us access to all these new opportunities.
Speaker #3: I an, I think that that's part of the reason why we were comfortable giving some of this this guidance today because these these you know there are portunities that without Jamaica on these other islands, we didn't think we could you know we could be competitive or you know or or have a sort of right to win on those.
Speaker #3: So you ow some some, as I mentioned earlier, you know and it's a you know it's not a I'd say it's not an insignificant portion of things that you know optimizing the assets we have and and growing from there with with minimal capex.
Speaker #3: Others, while they will likely use the assets we have in Jamaica, will require further capex for you, for that project.
Speaker #3: So you know there's a split there. It's yeah, it I you ow I I wouldn't want to get pinned to to specific numbers on that, but but I that that's a little bit how we how we are looking at it.
Speaker #5: Got it. That makes sense. Well, I appreciate your time. Thanks, Yone.
Speaker #1: As a reminder, if you would like to ask a question today, please press star followed by one on your telephone keypad, or to withdraw your question, press star followed by two.
Speaker #1: Our next question comes from the line of Bobby Brooks from Northland Capital. Your line is now open. Please go ahead.
Speaker #10: Hey, good ning, team. Thank you for taking the estion. The the Caribbean growth plan, very intriguing, but I just wanted to make sure I'm thinking about it right with the hub-and-spoke model.
Speaker #10: Would you be buying a vessel that would then move the LNG from the Jamaican hub to other islands, or would it be countries you make agreements with that make their own arrangements to move the LNG, or maybe a combination of both?
Speaker #10: Just curious on that.
Speaker #3: Hey, Bobby. It's iver again. Yeah. So so I I ink, I mean, it's you know today we have a small-scale vessel that we use to to shuttle from within Jamaica from from our old harbor terminal up to the Montego Bay terminal.
Speaker #3: As we as we look at other opportunities on on other islands in in the Caribbean, you know it it's early stages as discussions with the customers.
Speaker #3: So so it's understanding what at they want, what we can give to them. But you know I I'd say as a as a general statement, they want the they want the delivered LNG, the delivered gas solution.
Speaker #3: So so we are looking to you ow expand you know the the asset base that we have to to bring those solutions to the customers.
Speaker #3: So that would mean that would mean new vessels new new new onshore assets on on other islands, to deliver those solutions. So it's it could be quite a wide wide range, but yeah, we're we're pretty excited about that that growth there.
Speaker #5: Super helpful. Thank you for that. And then I just think more broadly, a lot of focus today, obviously, on the Eastern Hemisphere of the business.
Speaker #5: But I know your vision for growth goes far and obviously extends globally. So, I was just curious to hear any general updates on development within Europe or Asia, specifically Vietnam, as I know we've talked about that more in detail before.
Speaker #5: Thank ou.
Speaker #3: Hey, Bobby. It's Steven. I'll take that one because you've probably seen photos of me around the world, and that is because we are a global company.
Speaker #3: We want to spend some time today on the Caribbean and this area near to the United States, just because it was a significant investment.
Speaker #3: We're excited about that. We're excited about this platform. We think it's going to give us the ability to shop for some predictable wood in the neighborhood.
Speaker #3: A lot of thirst for US LNG in the neighborhood, and we're excited about that. But our confidence comes from the fact that we are a global energy company.
Speaker #3: And we do care about those markets. We do care about all of that TAM. I'll touch on a couple points. I am excited.
Speaker #3: I mentioned it in passing as a proof point, but I think the EU and U.S. deals—anything that’s going to have more U.S. LNG flowing into Europe is good.
Speaker #3: I'm pleased that Excelsior is regularly delivering at max send-out into Germany. You know we are an important part of the mix. So Europe, you know Europe is an important market.
Speaker #3: I think we've talked in the past about Germany and Germany adding gas-fired power and the resilience that they have and need. I think it's a cornerstone.
Speaker #3: We expect to be in Europe for a long time. Let me pivot to the other side of the world, Vietnam. Since you mentioned it, how can you not be interested in a market that people widely expect to be 20 gigawatts of gas for power generation?
Speaker #3: I mean, how can you not be excited about Vietnam? I'm excited about Vietnam. I was over and met with the Prime Minister of Vietnam.
Speaker #3: Gosh, in late May or June, we continue to engage with Vietnam. What I would say there is, I think what I told folks on this call back in May: we have two MOUs with PetroVietnam or with subsidiaries of PetroVietnam.
Speaker #3: We continue to engage with PetroVietnam. We are willing to make significant investments in Vietnam. We want to be part of the solution.
Speaker #3: For Vietnam, we want to aid with the prosperity of that country. And the best way to do that is to continue to build and prove ourselves with significant actors and national champions like PetroVietnam.
Speaker #3: And we continue to do that. So basically, I would say we're wanting to give everyone on this call some detail about the Caribbean and what our intentions are there.
Speaker #3: But we are a global company. We're bringing that global expertise to this platform just as we do everywhere else. We are a critical part of the LNG value chain.
Speaker #3: And I expect for folks to sit up and take notice that we are the important part downstream that are going to help make all of this happen.
Speaker #5: Awesome call. I really appreciated and agree with your thoughts there, Steven. I'll return it to Q.
Speaker #1: Thank you. With that, we have no further questions in the queue at this time. So that concludes the Q&A portion of today's call. I'll hand it back over to Steven Kobos, CEO, for some closing comments.
Speaker #5: Thank you all for joining us today. Look, we appreciate your continued support and engagement. As we execute on our strategy and deliver long-term value, we're looking forward to updating all of you on our progress and seeing many of you on the road in the months ahead.
Speaker #5: Thank you.