NextDecade Corporation (NextDecade or the Company) (NASDAQ:
NEXT) today provided an update on developmental and strategic
activities for the second quarter and early third quarter 2024.
CEO Commentary
“NextDecade has recently made excellent strides toward achieving
its dual goals of constructing Phase 1 at the Rio Grande LNG
Facility safely, on schedule, and on budget, and progressing Train
4 expansion capacity toward a positive Final Investment Decision
(FID),” said Matt Schatzman, NextDecade’s Chairman and Chief
Executive Officer. “We do not agree with the D.C. Circuit Court’s
recent decision to vacate the Federal Energy Regulatory
Commission’s (FERC) remand authorization of the Rio Grande LNG
Facility. We are committed to taking any and all available legal
and regulatory actions to ensure that Phase 1 will be delivered on
time and on budget and that FID of Trains 4 and 5 will not be
unduly delayed. The decision reached by the D.C. Circuit Court has
far-reaching implications. If the ruling stands, the precedent that
would be set by the Court’s action has the potential to impact
viability of all federally permitted infrastructure projects
because it will be difficult for these projects to attract capital
investments until they receive final unappealable permits.”
“During the second quarter, we made excellent commercial
progress for Train 4. We entered into a 20-year LNG sale and
purchase agreement (SPA) with ADNOC, under which they agreed to
purchase 1.9 MTPA of LNG from Train 4. We also entered into a
non-binding heads of agreement (HoA) with Aramco for 1.2 MTPA of
LNG, which we expect to convert into a binding SPA. These
developments, alongside our expectation that TotalEnergies will
exercise its LNG purchase option for 1.5 MTPA, lead us to believe
that we will soon reach the necessary contracted capacity to
commercially support Train 4. More recently, we finalized our
negotiations with Bechtel and executed the EPC contract for Train 4
and related infrastructure with a contract price of approximately
$4.3 billion, which concludes one of the final pieces of work
required before commencing the financing process for Train 4.”
“Construction of Phase 1 at the Rio Grande LNG Facility
continues to progress very positively. We are committed to working
with Bechtel to ensure a safe and timely delivery of Phase 1. As we
work through the impacts of the recent Court decision, we are
committed to continuing construction on Phase 1 and progressing the
development of Train 4 by securing financing and ultimately
reaching a positive FID, once necessary regulatory resolution is in
place.”
Significant Recent Developments
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 June 2024:
- The overall project completion percentage for Trains 1 and 2
and the common facilities of the Rio Grande LNG Facility was 24.1%,
which is in line with the schedule under the EPC contract. Within
this project completion percentage, engineering was 66.4% complete,
procurement was 45.4% complete, and construction was 3.5%
complete.
- The overall project completion percentage for Train 3 of the
Rio Grande LNG Facility was 7.8%, which is also in line with the
schedule under the EPC contract. Within this project completion
percentage, engineering was 8.4% complete, procurement was 18.4%
complete, and construction was 0.1% complete.
Strategic and Commercial
- In May 2024, the Company entered into a 20-year LNG SPA with
ADNOC, pursuant to which ADNOC will purchase 1.9 MTPA of LNG from
Train 4 at the Rio Grande LNG Facility for 20 years, on a free on
board (FOB) basis at a price indexed to Henry Hub, subject to a
positive FID on Train 4.
- In June 2024, the Company entered into a non-binding HoA with
Aramco for a 20-year LNG SPA for offtake from Train 4 at the Rio
Grande LNG Facility. Under the terms of the HoA, Aramco expects to
purchase 1.2 MTPA of LNG for 20 years, on an FOB basis at a price
indexed to Henry Hub. Aramco and NextDecade are in the process of
negotiating a binding LNG SPA, and once executed, the SPA will be
subject to a positive FID on Train 4.
- In August 2024, the Company entered into an EPC contract with
Bechtel for Train 4 and related infrastructure with a contract
price of approximately $4.3 billion. Price validity under the EPC
contract for Train 4 and related infrastructure extends through
December 31, 2024.
- In July 2024, the Company appointed Tarik Skeik as Chief
Operating Officer. Mr. Skeik has over 20 years of experience
delivering complex global mega projects in LNG, oil, and
petrochemicals across North America, the Middle East, and Asia. He
led the completion and start-up of six greenfield assets, and his
experience includes the planning and execution through initial
operation of projects including the Huizhou Chemicals Complex in
China, Gulf Coast Growth Ventures in the U.S., Banyu Urip in
Indonesia, Kearl Expansion in Canada, and QatarGas 2 in Qatar.
Financial
- In June 2024, the Company’s subsidiary Rio Grande LNG, LLC (Rio
Grande) issued $1.115 billion of senior secured notes in a private
placement, and net proceeds were utilized to reduce outstanding
borrowings and commitments under existing Rio Grande term loan
facilities. These senior secured notes will be amortized over a
period of 18 years beginning in September 2029, with a final
maturity in September 2047. The senior secured notes bear interest
at a fixed rate of 6.58% and rank pari passu to Rio Grande’s
existing senior secured financings. Including this transaction, the
Company has now refinanced a total of over $1.85 billion of the
original $11.1 billion Rio Grande term loan facilities since a
positive FID was reached on Phase 1 at the Rio Grande LNG Facility
in July 2023.
Regulatory
- In August 2024, the U.S. Court of Appeals for the D.C. Circuit
(Court) issued an order vacating FERC’s remand authorization of the
Rio Grande LNG Facility on the grounds that the FERC should have
issued a supplemental Environmental Impact Statement (EIS) during
its remand process. The Court’s decision will not be effective
until the court has issued its mandate, which is not expected to
occur until the appeals process has been completed.
- At this time, construction continues on the first three
liquefaction trains and related infrastructure (Phase 1) at the Rio
Grande LNG Facility.
- The Company is disappointed in the Court’s unprecedented
decision and disagrees with its conclusions. The Company is
reviewing the Court’s decision and assessing all of its options,
together with the key project constituencies, including its equity
partners and lenders. The Company expects to take all available
legal and regulatory actions, including but not limited to,
appellate actions and other strategies, to ensure that construction
on Phase 1 will continue and that necessary regulatory approvals
will be maintained to enable the future construction of Trains 4
and 5 at the Rio Grande LNG Facility.
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. 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.
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 June 2024, progress on Trains 1 through 3 is in line with
the schedule under the EPC contracts. Train 1 deep soil mixing has
been completed and foundation pours are underway, including
refrigeration compressor foundations. Additionally, steel erection
for Train 1 is in process, and the first pipework has been placed
in the Train 1 cryogenic rack. Train 2 deep soil mixing is in
process, and delivery of key materials such as large bore
above-ground pipe and structural steel has continued. LNG tank
progress has been strong, with excavation, pile leveling, and rebar
installation for Tank 1 underway and Tank 2 piling completed. The
permanent water supply for the site has been fully constructed and
is operational.
Bechtel has continued to make meaningful progress on procurement
for Phase 1, with a focus on completing purchase orders for
critical and high-value items early in the construction process. As
of June 2024, Bechtel has issued approximately 92% of the total
purchase orders for Trains 1 and 2 and approximately 88% of the
total 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
Achieving a positive FID on Trains 4 and 5 at the Rio Grande LNG
Facility will be subject to, among other things, maintaining
requisite governmental approvals, 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 finalized an EPC contract with Bechtel for Train
4 and related infrastructure.
The Company continues to advance commercial discussions with
multiple potential counterparties and expects to finalize
commercial arrangements for Train 4 in the coming months to
commercially support an FID on Train 4. The Company entered into an
LNG SPA with ADNOC for the sale of 1.9 MTPA of LNG from Train 4, as
well as a non-binding HoA with Aramco for the sale of 1.2 MTPA of
LNG from Train 4. The Company is working with Aramco to finalize a
binding SPA. Additionally, the Company expects TotalEnergies to
exercise its LNG purchase option for 1.5 MTPA of LNG from Train
4.
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 equity, which, if exercised, would provide approximately
60% of the equity funding required for Train 4. Inclusive of these
options, NextDecade currently expects to fund 40% of the equity
commitments for Train 4 and to have an initial economic interest of
40% in Train 4, increasing to 60% after its equity partners achieve
certain returns on their investments in Train 4. The Company
expects to take FID on Train 4 after commercial and financing
arrangements are finalized.
The Company expects to progress the development of Train 5 after
a positive FID on Train 4. TotalEnergies also holds an LNG purchase
option for 1.5 MTPA for Train 5, and the Rio Grande Phase 1 equity
partners have options to invest in Train 5 equity which are
materially equivalent to their options to participate in Train 4
equity.
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. 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’s actual results could differ
materially from those anticipated in these forward-looking
statements as a result of a variety of factors, including those
discussed in NextDecade’s periodic reports that are filed with and
available from the Securities and Exchange Commission.
Additionally, any development of subsequent trains at the Rio
Grande LNG Facility or CCS projects remains contingent upon
maintaining requisite government approvals, 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. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240814408202/en/
Investors Megan Light mlight@next-decade.com
832-981-6583
Media Susan Richardson srichardson@next-decade.com
832-413-6400
NextDecade (NASDAQ:NEXT)
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