New Fortress Energy Inc. (NASDAQ:NFE) Q4 2022 Earnings Call Transcript

Chris Guinta: Yes. So, non-FLNG CapEx is pretty minimal. So, there are terminals, as I mentioned and any maintenance CapEx is less than $50 million. You have got a little bit of FSRU conversion, $20-ish million or so. The Barcarena power plant, if Andrew can talk to specifics about it, but we also have the Barcarena alone that we have and it’s disclosed in the financial statements. So, we expect that to fully fund the development and construction of that power plant over the course of the next 24 months or so, maybe 18 months.

Andrew Dete: Yes. The power plant is being built under a fixed price lump sum turnkey EPC agreement with Mitsubishi between now and July 2025. So, actually on a kind of a per quarter basis, it’s a pretty modest amount of CapEx, obviously, mostly done through the loan we have.

Chris Guinta: Yes. So then, I think $2 billion is probably a little high from kind of what we were expecting when we announced last quarter. That included probably moving forward at a quicker pace with additional FLNG units that we will now be very thoughtful on how we move forward there to match the online of supply with our demand.

Operator: We will take our next question from Sean Morgan with Evercore. Your line is open. Please go ahead.

Sean Morgan: Hey guys. I think Slide 11 is pretty helpful. We get a lot of questions sort of regarding open exposure. And I am wondering a little bit, the FLNG, it looks like the fully contracted, some of that would have to be contacted by the math for the 120 loan of kind of third-party gas. So, have you €“ firstly, is there any difficulty of procuring gas kind of upstream? You have to sign contracts on midstream pipelines and then contracts with E&Ps to basically procure that 63% that you have on Slide 11? And then also on the other side, you don’t have any firm offtake contracts yet, right? Just now, you are just sort of maybe saying that instead of being 100% merchant, you would probably look to sign some of that either shortly before you start producing gas or kind of in the near-term after it starts operating.

Wes Edens: Yes. The first question, the gas that we are going to take on FLNG 1 is Texas gas, right. It comes from Aguadulce, comes in a pipeline, a TC pipeline, which 100% of the capacity is contracted with CFE. And they, in turn, are subcontracting to us. So, the sticky bit there would be the capacity on that pipeline, but that’s the agreement that we have with CFE. The gas out of Texas is obviously very plentiful. There is an oversupply. Prices have come down, obviously. So, there is massive flexibility in terms of buying Henry Hub-indexed gas at that location for us. So, that’s not a challenge whatsoever. Andrew?

Andrew Dete: Hey Sean. Yes, I think the way to think about it is, yes, we are not looking to necessarily sign like fixed offtake at the unit like you might think about some other business models, right. We have a bunch of fixed offtake through our terminals. I think it’s 66 contracts now with an average life of 15 years. And on Page 12, showing kind of some of that, right. So, if you think about the Barcarena or the Nicaragua contracts, like that’s how we think about our charter demand through FLNG.

Wes Edens: To Andrew’s point, the numbers that are shown on Page 11 are aggregates of the entire portfolio. So, it’s not that we are taking an individual supply contract, be it FLNG or Cheniere or Shell or anybody else and allocating to a specific location typically. It’s really just done in the context of the overall balance of the supply that we have and €“ balance of demand that we have and the net numbers at the bottom, so.