NextDecade Corporation (NextDecade or the Company) (NASDAQ:
NEXT) today provided an update on developmental and strategic
activities for the third quarter 2023.
CEO Commentary
“The third quarter was transformational for NextDecade, as we
achieved a positive final investment decision and issued notice to
proceed to Bechtel for Phase 1 at the Rio Grande LNG Facility,
marking a new era in the Company’s history, the transition from
development to construction and ultimately production of LNG that
will enable us to provide a cleaner source of energy to customers
around the world,” said Matt Schatzman, NextDecade’s Chairman and
Chief Executive Officer. “Making a positive FID and issuing the
notice to proceed on Phase 1 was a landmark achievement for us, and
I’d like to thank everyone who helped make this a reality. I
especially want to thank the incredible employees at NextDecade,
our shareholders, equity partners, customers, construction
partners, equipment suppliers, the Rio Grande Valley community, the
Port of Brownsville and the countless leaders and officials at the
local, state, and federal levels. We are now focused on working
with our EPC partner, Bechtel, to complete Trains 1, 2, and 3
safely, on time, and on budget.”
“We are also focused on commercializing and achieving a positive
FID for Train 4 in the second half of 2024, and subsequently
progressing Train 5. We expect these FERC approved expansions to
benefit from our Phase 1 equity partners’ options to participate in
Train 4 and Train 5, and TotalEnergies’ LNG offtake options for 1.5
MTPA per train. Construction of Train 4 and Train 5 should be
advantaged due to the common facilities and full site preparation
included in the Phase 1 EPC contracts, as well as potential labor
optimization with a timely Train 4 FID. We continue to experience a
strong LNG market and contracting dynamics, and we are confident in
our ability to progress toward FID of our expansion capacity.”
“NextDecade is committed to providing economically competitive
LNG to customers around the world and promoting emissions
reduction, energy security, and energy affordability. We have taken
significant steps toward our goals this quarter and look forward to
continuing our momentum in the coming quarters.”
Significant Recent Developments
Development and Construction
- On July 12, 2023, NextDecade announced a positive final
investment decision (FID) to construct the first three liquefaction
trains and related infrastructure (Phase 1) of the Rio Grande LNG
Facility, and its subsidiary Rio Grande LNG, LLC (Rio Grande)
issued full notice to proceed (NTP) to Bechtel Energy Inc.
(Bechtel) under the Phase 1 engineering, procurement, and
construction (EPC) contracts.
- At FID, the final EPC cost of Phase 1 was approximately $12.0
billion.
- Other costs included in Phase 1, as estimated at the time of
FID, totaled approximately $6.0 billion, including owner’s costs
and contingencies of approximately $2.3 billion, dredging for the
Brazos Island Harbor Channel Improvement Project, conservation of
more than 4,000 acres of wetland, and installation of utilities of
approximately $600 million, and interest during construction and
other financing costs of approximately $3.1 billion.
- As of September 2023, the project completion percentage for
Trains 1 and 2 of the Rio Grande LNG Facility was approximately
8.1%, which is in line with the schedule under the EPC contract.
Within this project completion percentage, engineering was 35.7%
complete, procurement was 14.1% complete, and construction was 0.2%
complete.
- As of September 2023, Bechtel has made meaningful progress on
purchase orders for Train 3 and is focused on mobilizing labor and
equipment and preparing temporary facilities at the site.
Strategic and Commercial
- NextDecade has started the front-end engineering and design
(FEED) and EPC contract processes with Bechtel for Train 4 and
expects to finalize the EPC contract in the first half of 2024. The
Company is progressing numerous discussions with potential buyers
of LNG to provide commercial support for Train 4 and is targeting a
positive FID of Train 4 in the second half of 2024.
Financial
- In July and September 2023, NextDecade closed the second and
third tranches of common stock sales pursuant to its three-tranche
common stock purchase agreement with Global LNG North America
Corp., an affiliate of TotalEnergies SE (TotalEnergies). In
aggregate for all three tranches, the Company sold 44.9 million
shares of its common stock for a total purchase price of $219.4
million.
- On July 12, 2023, in conjunction with the positive FID of Phase
1 of the Rio Grande LNG Facility, NextDecade and certain of its
subsidiaries closed an approximately $18.4 billion project
financing for Phase 1, the largest greenfield energy project
financing in U.S. history. This financing underscores the critical
role that LNG and natural gas are expected to play in the global
energy transition, and included the closing of:
- A joint venture agreement which included approximately $5.9
billion of financial commitments from Global Infrastructure
Partners (GIP), GIC, Mubadala Investment Company, and
TotalEnergies;
- A commitment by NextDecade to invest approximately $283 million
in Phase 1, which was completed in September 2023 and included $125
million of pre-FID capital investments and additional funds
contributed from the proceeds of sales of the Company’s common
stock to an affiliate of TotalEnergies;
- Senior secured non-recourse bank credit facilities of $11.6
billion with a 7-year maturity, consisting of $11.1 billion in
construction term loans and a $500 million working capital
facility; and
- An offering of $700 million senior secured non-recourse private
placement notes, which will mature in July 2033 and will accrue
interest at a fixed rate of 6.67%.
- NextDecade holds equity interests in the Phase 1 joint venture
that entitle NextDecade to receive up to 20.8% of the distributions
of available cash during operations.
- In September 2023, Rio Grande entered into a credit agreement
with a group of lenders for $356 million of senior secured loans.
The senior secured loans were disbursed in one advance of $356
million on September 15, 2023, which resulted in a reduction in
commitments outstanding under Rio Grande’s existing bank credit
facilities for Phase 1.
- These senior secured loans will mature in July 2033, will
accrue interest at a fixed rate of 6.72%, and rank pari passu to
Rio Grande’s existing senior secured financings; and
- This financing illustrates NextDecade’s commitment to extending
and spreading out debt maturities, diversifying sources of capital,
reducing bank commitments to provide potential capacity for
financing future LNG expansions, and mitigating interest rate
exposure.
- As of September 30, 2023, Rio Grande’s outstanding fixed-rate
debt and executed interest rate swaps have reduced its exposure to
movements in interest rates for over 80% of the debt currently
projected to be incurred in support of Phase 1 construction.
- Rio Grande has completed a syndication of a portion of its bank
credit facility commitments, resulting in a supporting lender group
of over 30 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), which
allow for development, construction, and operation of up to five
trains and 27 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, two 180,000 cubic meter full containment
LNG storage tanks, two jetty berthing structures designed to load
LNG carriers up to 216,000 cubic meters in capacity, and 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 September 2023, progress on Trains 1 through 3 is in line
with the schedule under the EPC contracts.
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 FERC approved 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.
In connection with consummating the Phase 1 equity joint
venture, the Company’s equity partners each have options to invest
in Train 4 and Train 5 equity, which would provide approximately
60% of the estimated 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.
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 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 has commenced certain pre-FID activities for Train
4, including the FEED and EPC contract processes with Bechtel.
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 wholly
owned 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,” and “forecast” 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 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, 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/20231113355677/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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