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NextDecade Corporation (NASDAQ:NEXT) shares are trading higher after Abu Dhabi Oil & Gas giant ADNOC announced it secured an equity position and LNG offtake agreement in NextDecade’s Rio Grande LNG project.
In particular, ADNOC acquired an 11.7% stake in Phase 1 (Trains 1-3) of Rio Grande LNG, which is a liquefied natural gas (LNG) export project located in Texas and expected to produce less carbon-intensive LNG.
This marks ADNOC’s first strategic investment in the U.S. to expand its lower-carbon LNG portfolio to meet growing gas demand.
Apart from this, ADNOC and NextDecade penned a 20-year LNG offtake agreement for 1.9 mtpa from Rio Grande LNG Train 4, on a free on board (FOB) basis at a price indexed to Henry Hub, subject to a Final Investment Decision (FID).
Notably, the Phase 1 Grande LNG’s equity stake has been acquired through an investment vehicle of Global Infrastructure Partners (GIP) and ADNOC acquired a part of GIP’s existing equity interest in Phase 1.
On the other hand, NextDecade retained its previously announced expected economic interest in Phase 1 along with its interests in the Train 4 and Train 5 expansion capacity.
ADNOC’s acquisition of an equity stake in Phase 1 (Trains 1-3) of Rio Grande LNG also secures the option from GIP for equity participation in the future Trains 4 and 5 of the project.
NextDecade is also currently targeting FID on Train 4 at the Rio Grande LNG Facility in the second half of 2024.
Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer, said, “We are excited to begin a multi-decade partnership with ADNOC, a major player in the global LNG market, and we look forward to having them as both a commercial offtaker and an equity partner in Rio Grande LNG. LNG from our facility will allow ADNOC to further increase its presence in the global LNG market, while also supplying global customers with more affordable and less carbon-intensive LNG.”
Investors can gain exposure to the stock via Listed Funds Trust Roundhill Alerian LNG ETF (NYSE:LNGG) and Exchange Traded Concepts Trust Range Global LNG Ecosystem Index ETF (NYSE:LNGZ).
Price Action: NEXT shares are up 14.8% at $8.01 at the last check Monday.
Photo via Shutterstock
