NFE 'at an inflection point'

Wes Edens, CEO of New Fortress Energy (NFE), shrugged off a US$1.7mn Q2 loss and stressed that nearly US$7bn in investments made starting in 2016 were finally paying off in booming sales with new operations now up and running.

The New York-based LNG-focused company, which has operations in Jamaica, Puerto Rico, Mexico and Nicaragua and the Sergipe power plant in Brazil, reported an operational margin of US$130mn in the quarter, up from US$15mn in the same quarter 2020.

“We really are at an inflection point with the company from an earnings perspective,” Edens told NFE’s second quarter earnings call. “And we’re making material strides now in actually transforming from a development company to an operating company.

“We’ve already paid for the operations. We’ve already paid for the infrastructure,” he added, “We have a massive competitive advantage that is both the money and time, and I believe we’re going to show tremendous organic growth across the portfolio in the months to come.” 

Edens added that with what the company has seen of Q3, he is confident the projection of operating margin of US$130mn this quarter will be achieved, and hitting US$550mn for full-year 2021.

The metric, defined by the company as total revenue minus operating costs at the company’s terminals and ships segments, is expected to surpass US$1bn in 2022, adding five new terminals and facilities to the six operating in 2021, and NFE sees the figure crossing US$1.25bn in 2023.

Edens said his goal for the company was to become the “world’s leading company in the energy transition space,” and suggested NFE is perfectly placed for the trends expected in the coming years.

“What you’d expect to see: one, more power plants switching to gas in places like Puerto Rico and Mexico; two, new power plants being built in places like Brazil; and three, soon, you’ll see bunkering using LNG as a marine fuel using places like Jamaica as a hub,” said Edens, all three of which are central to NFE’s current and onboarding operations.

The CEO also hailed the company’s decision to purchase gas cargoes in advance for committed supply in contracts due through 2027, saying NFE is currently making major savings in avoiding the recent spike in spot LNG prices, protecting the portfolio from volatility for years to come.

Other financials

The company posted record quarterly revenue of US$224mn, up from U$$146mn Q1 and US$94.6mn in the second quarter of 2020.

Meanwhile, average daily volumes of LNG sold reached 1.51Mg/d (million gallons per day), up from 1.44Mg/d in Q1 and 978,000g/d in 2Q20.

Total debt, however, surged to US$3.53bn from US$1.24bn the previous quarter, and US$950mn in the same quarter of 2020.

Source: NFE

Project developments

In the second quarter, NFE began commercial operations at Pichilingue port in Baja California Sur, Mexico, and expects it to be fully operational within 60 days.

Edens said the company was planning an investor site visit to Pichilingue in September. 

The company’s terminal in Puerto Sandino, Nicaragua is nearing completion and is expected to be operational sometime this quarter. 

Capex and expansion

Edens said capex to complete construction at the Mexico and Nicaragua sites totaled US$250mn, part of the US$1.63bn currently needed by the company to carry out its plans. 

These include US$475mn to complete the first ‘fast LNG’ operation, which entails the conversion of an offshore rig into a sort of drive-through LNG refilling station.

The company also has US$350mn earmarked for the Barcarena and Santa Catarina terminals in Brazil as well as the Suape terminal and power plant in the country’s northeast.

NFE is also assigning US$300mn for a terminal in Colombo, Sri Lanka and US$150mn in Ireland.

Edens said NFE expects to have developments announced in 2-3 new nations, with expansion plans in the pipeline involving Asia, Africa and more in South America, Central America and Mexico.

Source: NFE

However, he added, “[The company] is at a pivot point, but that doesn’t mean we aren’t going to develop others [territories].

All US$1.6bn in planned capex, Edens said, would be self-financed though cash from operations, ship financing and asset sales.