Matt Schatzman, NextDecade's Chairman And Chief Executive Officer Provides Q4 2023 Business Update

Author: Happy Mohamed | March 11, 2024 04:36pm

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.

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