NextDecade Corporation (NextDecade or the Company) (NASDAQ:
NEXT) today provided an update on developmental and strategic
activities for the fourth quarter 2023 and early 2024.
CEO Commentary
"We are committed to maximizing long-term value for NextDecade's
shareholders by executing our business strategy efficiently and
effectively," said Matt Schatzman, NextDecade's Chairman and Chief
Executive Officer. "We are focused on constructing Phase 1 at the
Rio Grande LNG Facility safely, on time, and on budget, and
delivering a positive FID of our fully permitted expansion capacity
to meet growing global demand for cleaner energy sources including
LNG."
"We have a steadfast commitment to upholding the highest
standards of safety and excellence in project management and are
working alongside our EPC partner, Bechtel, and other
counterparties to ensure that construction activities proceed
smoothly and in line with contractual schedules. Through rigorous
planning, diligent execution, and proactive risk management,
together we are seeking to maximize the efficiency of construction
efforts."
"We are also actively working to capitalize on market
opportunities and position the Company for sustained growth through
expansion of our operational footprint. With regulatory approvals
in place, our Train 4 and 5 expansion capacity is well-positioned
to meet growing global demand for LNG. Supportive market conditions
provide tailwinds to continue progressing toward FID of Train 4,
which is well underway. Commercial discussions with various
potential counterparties and the FEED and EPC contracting processes
are proceeding well. Our progress remains aligned with our goal of
reaching a positive final investment decision for Train 4 in the
second half of this year."
"Through disciplined execution on Phase 1 and our expansion
capacity at the Rio Grande LNG Facility, we are poised to achieve
our long-term objective of becoming a leading provider of LNG to
customers around the globe while also delivering sustainable growth
and value creation for our shareholders."
Significant Recent Developments
Development and Construction
Under the EPC contracts with Bechtel Energy Inc. (Bechtel),
Phase 1 progress is tracked for Train 1, Train 2, and the common
facilities on a combined basis and Train 3 on a separate basis. As
of January 2024:
- The overall project completion percentage for Trains 1 and 2
and the common facilities of the Rio Grande LNG Facility was 14.3%,
which is in line with the schedule under the EPC contract. Within
this project completion percentage, engineering was 47.9% complete,
procurement was 26.8% complete, and construction was 1.0%
complete.
- The overall project completion percentage for Train 3 of the
Rio Grande LNG Facility was 4.4%, based on preliminary schedules,
which is also in line with the schedule under the EPC contract.
Within this project completion percentage, engineering was 3.4%
complete, procurement was 10.6% complete, and construction was 0.0%
complete.
Strategic and Commercial
- The Company has started the front-end engineering and design
(FEED) and EPC contract processes with Bechtel for Train 4 and are
progressing numerous discussions with potential buyers of LNG to
provide commercial support for Train 4. The EPC contracting process
and commercial discussions are progressing at a pace consistent
with the Company's target of reaching a positive final investment
decision (FID) of Train 4 in the second half of 2024.
Financial
- As of December 2023, Rio Grande’s outstanding fixed-rate debt
and executed interest rate swaps have reduced its exposure to
movements in interest rates for approximately 84% of the debt
currently projected to be incurred in support of Phase 1
construction.
- In December 2023, Rio Grande LNG, LLC (Rio Grande) entered into
a credit agreement with a group of lenders for $251 million of
senior secured loans to finance a portion of Phase 1. The senior
secured loans were disbursed in one advance of $251 million on
December 28, 2023, which resulted in a reduction in the commitments
outstanding under Rio Grande's existing bank credit facilities for
Phase 1. These senior secured loans will be amortized over a period
of approximately 18 years beginning in mid-2029, with a final
maturity in September 2047. These senior secured loans bear
interest at a fixed rate of 7.11% and rank pari passu to Rio
Grande's existing senior secured financings.
- In January 2024, the Company's wholly-owned subsidiary
NextDecade LNG, LLC entered into a credit agreement that provides
for a $50 million senior secured revolving credit facility with
additional capacity of $12.5 million to cover interest. Borrowings
under the revolving credit facility may be used for general
corporate purposes, including development costs related to Train 4
at the Rio Grande LNG Facility. Borrowings will bear interest at
SOFR or the base rate plus an applicable margin as defined in the
credit agreement. The revolving credit facility and interest term
loan mature at the earlier of two years from the closing date or 10
business days after a positive FID on Train 4.
- In February 2024, Rio Grande issued and sold $190 million of
senior secured notes in a private placement transaction to finance
a portion of Phase 1. The senior secured notes were issued on
February 9, 2024 and resulted in a reduction in the commitments
outstanding under Rio Grande's existing bank credit facilities for
Phase 1. These senior secured notes will be amortized over a period
of approximately 18 years beginning in mid-2029, with a final
maturity in June 2047. The senior secured notes bear interest at a
fixed rate of 6.85% and rank pari passu to Rio Grande's existing
senior secured financings.
- Rio Grande has syndicated a portion of its bank credit facility
commitments, resulting in a supporting lender group of
approximately 40 international banks.
Rio Grande LNG Facility
NextDecade is constructing and developing the Rio Grande LNG
Facility on the north shore of the Brownsville Ship Channel in
south Texas through its partially-owned subsidiary Rio Grande. The
site is located on 984 acres of land which has been leased
long-term and includes 15,000 feet of frontage on the Brownsville
Ship Channel. The Rio Grande LNG Facility has received necessary
approvals and authorizations required for construction, including
those from the Federal Energy Regulatory Commission (FERC) and the
Department of Energy (DOE), which allow for development,
construction, and operation of up to five trains and 27 million
tonnes per annum (MTPA) of LNG exports.
Phase 1 (Trains 1-3)
Phase 1 at the Rio Grande LNG Facility is under construction.
Phase 1 includes three liquefaction trains with a total nameplate
capacity of 17.61 MTPA of LNG production, two 180,000 cubic meter
full containment LNG storage tanks, and two jetty berthing
structures designed to load LNG carriers up to 216,000 cubic meters
in capacity. Phase 1 also includes associated site infrastructure
and common facilities including feed gas pretreatment facilities,
electric and water utilities, two totally enclosed ground flares
for the LNG tanks and marine facilities, two ground flares for the
liquefaction trains, roads, levees surrounding the entire site, and
warehouses, administrative, operations control room, and
maintenance buildings.
As of January 2024, progress on Trains 1 through 3 is in line
with the schedule under the EPC Contracts. Recent construction
activities have included the start of Train 1 foundation concrete
pours, piling activity for the LNG tanks, and construction of the
levee and marine offloading facility. Additionally, the civil works
program has progressed via the deep soil mixing program, and
meaningful progress has been made on the shoreline restoration
program, with the majority of shoreline reclamation nearing
completion, and shoreline protection work has commenced. Bechtel
has also made meaningful progress on purchase orders for Train
3.
NextDecade holds equity interests in the Phase 1 joint venture
that entitle it to receive up to 20.8% of the distributions of
available cash during operations.
Final Investment Decision on Train 4 and Train 5
NextDecade is targeting a positive FID and commencement of
construction of Train 4 and related infrastructure at the Rio
Grande LNG Facility in the second half of 2024, and subsequently
Train 5 and related infrastructure. Achieving a positive FID of
this fully permitted expansion capacity at the Rio Grande LNG
Facility will be subject to, among other things, finalizing and
entering into EPC contracts, entering into appropriate commercial
arrangements, and obtaining adequate financing to construct each
train and related infrastructure.
The Company has commenced certain pre-FID activities for Train
4, including the FEED and EPC contract processes with Bechtel. The
Company expects to finalize the Train 4 EPC contract in the first
half of 2024.
TotalEnergies SE (TotalEnergies) has LNG purchase options of 1.5
MTPA for each of Train 4 and Train 5. If TotalEnergies exercises
its LNG purchase options, the Company currently estimates that an
additional approximately 3 MTPA of LNG must be contracted on a
long-term basis for each of Train 4 and Train 5 prior to making a
positive FID for the respective train. The Company continues to
advance commercial discussions with various potential
counterparties and expects to finalize commercial arrangements for
Train 4 in the coming months to support an FID of Train 4 in the
second half of 2024.
The Company expects to finance construction of Train 4 utilizing
a combination of debt and equity funding. The Company expects to
enter into bank facilities for the debt portion of the funding. In
connection with consummating the Rio Grande Phase 1 equity joint
venture, the Company's equity partners each have options to invest
in Train 4 and Train 5 equity, which, if exercised, would provide
approximately 60% of the equity funding required for each of Train
4 and Train 5. Inclusive of these options, NextDecade currently
expects to fund 40% of the equity commitments for each of Train 4
and Train 5, and to have an initial economic interest of 40% in
each of Train 4 and Train 5, increasing to 60% after its equity
partners achieve certain returns on their investments in each of
the respective trains. The Company expects to undertake the
financing process for Train 4 after the EPC contract and commercial
arrangements are finalized.
Investor Presentation
NextDecade has posted an updated investor presentation to its
website concurrently with this release. A copy of this release and
the investor presentation can be found on its website at
www.next-decade.com.
About NextDecade Corporation
NextDecade Corporation is an energy company accelerating the
path to a net-zero future. Leading innovation in more sustainable
LNG and carbon capture solutions, NextDecade is committed to
providing the world access to cleaner energy. Through our
subsidiaries Rio Grande LNG and NEXT Carbon Solutions, we are
developing a 27 MTPA LNG export facility in South Texas along with
one of the largest carbon capture and storage projects in North
America. We are also working with third-party customers around the
world to deploy our proprietary processes to lower the cost of
carbon capture and storage and reduce CO2 emissions at their
industrial-scale facilities. NextDecade’s common stock is listed on
the Nasdaq Stock Market under the symbol “NEXT.” NextDecade is
headquartered in Houston, Texas. For more information, please visit
www.next-decade.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of U.S. federal securities laws. The words
“anticipate,” “contemplate,” “estimate,” “expect,” “project,”
“plan,” “intend,” “believe,” “may,” “might,” “will,” “would,”
“could,” “should,” “can have,” “likely,” “continue,” “design,”
“assume,” “budget,” “guidance,” “forecast,” and "target," and other
words and terms of similar expressions are intended to identify
forward-looking statements, and these statements may relate to the
business of NextDecade and its subsidiaries. These statements have
been based on assumptions and analysis made by NextDecade in light
of current expectations, perceptions of historical trends, current
conditions and projections about future events and trends and
involve a number of known and unknown risks, which may cause actual
results to differ materially from expectations expressed or implied
in the forward-looking statements. These risks include NextDecade’s
progress in the development of its LNG liquefaction and export
projects and CCS projects and the timing of that progress; the
timing of achieving a final investment decision on future trains at
the Rio Grande LNG Facility and the project costs thereof; the
availability and frequency of cash distributions available to
NextDecade from its joint venture which owns Phase 1 of the Rio
Grande LNG Facility; the ability to generate sufficient cash flow
to satisfy Rio Grande’s significant debt service obligations or to
refinance such obligations ahead of their maturity; restrictions
imposed by Rio Grande’s and NextDecade's debt agreements that limit
flexibility in operating its business; increases in interest rates
increasing the cost of servicing Rio Grande’s indebtedness;
reliance on third-party contractors to successfully complete the
Rio Grande LNG Facility, the pipeline to supply gas to the Rio
Grande LNG Facility and any CCS projects; ability to develop NEXT
Carbon Solutions’ business though implementation of CCS projects;
ability to secure additional debt and equity financing in the
future to complete the Rio Grande LNG Facility and CCS projects on
commercially acceptable terms; accuracy of estimated costs for the
Rio Grande LNG Facility and CCS projects; ability to achieve
operational characteristics of the Rio Grande LNG Facility and CCS
projects, when completed, including liquefaction capacities and
amount of CO2 captured and stored, and any differences in such
operational characteristics from expectations; development risks,
operational hazards and regulatory approvals applicable to
NextDecade’s development, construction and operation activities and
those of its third-party contractors and counterparties;
technological innovation which may lessen NextDecade’s anticipated
competitive advantage or demand for its offerings; global demand
for and price of LNG; availability of LNG vessels worldwide;
changes in legislation and regulations relating to the LNG and CCS
industries, including environmental laws and regulations that
impose significant compliance costs and liabilities; scope of
implementation of carbon pricing regimes aimed at reducing
greenhouse gas emissions; global development and maturation of
emissions reduction credit markets; adverse changes to existing or
proposed carbon tax incentive regimes; global pandemics, including
the 2019 novel coronavirus pandemic, the Russia-Ukraine conflict
and hostilities in the Middle East, other sources of volatility in
the energy markets and their impact on NextDecade’s business and
operating results, including any disruptions in its operations or
development of the Rio Grande LNG Facility and the health and
safety of its employees, and on its customers, the global economy
and the demand for LNG; risks related to doing business in and
having counterparties in foreign countries; NextDecade’s ability to
maintain the listing of our securities on the Nasdaq Capital Market
or another securities exchange or quotation medium; changes
adversely affecting the businesses in which NextDecade is engaged;
management of growth; general economic conditions; ability to
generate cash; the result of future financing efforts and
applications for customary tax incentives; and other matters
discussed in the “Risk Factors” section of NextDecade’s most recent
Annual Report on Form 10-K and subsequent reports filed with the
Securities and Exchange Commission. Additionally, any development
of subsequent trains at the Rio Grande LNG Facility or CCS projects
remains contingent upon execution of definitive commercial and
financing agreements, securing all financing commitments and
potential tax incentives, achieving other customary conditions and
making a final investment decision to proceed. The forward-looking
statements in this press release speak as of the date of this
release. Although NextDecade believes that the expectations
reflected in these forward-looking statements are reasonable, it
can give no assurance that the expectations will prove to be
correct. NextDecade may from time to time voluntarily update its
prior forward-looking statements, however, it disclaims any
commitment to do so except as required by securities laws.
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version on businesswire.com: https://www.businesswire.com/news/home/20240311902166/en/
Investors Megan Light mlight@next-decade.com
832-981-6583
Media Susan Richardson srichardson@next-decade.com
832-413-6400
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