New Fortress Energy Inc. · NASDAQ:NFE
New Fortress Energy — Merger or Acquisition (January 2021)
34 slides from New Fortress Energy's merger presentation, Jan 21, 2021
Slide 1: Investor Update
January 21, 2021 Investor Update
Slide 2: Agenda
1. Executive Summary 2. FAQ: How will we pay for this? 3. FAQ: How does this fit with capital-light business model? 4. FAQ: Why Brazil? 5. FAQ: Why buy ships vs. leasing? 6. FAQ: How does FLNG fit into business model? 7. Appendix 2
Slide 3: Executive Summary: Announced 3 separate transactions for $5.1bn equivalent enterprise value
Executive Summary Announced 3 separate transactions for $5.1bn equivalent enterprise value(1) 1 Acquiring Hygo Energy Transition Ltd. • Private LNG-to-power business Consideration • 3 terminals & power plants in Brazil(2) • Includes country’s largest thermal power plant Adds 4 $2.18bn for 100% of Hy
Slide 4: Our business is simple
Executive Summary Our business is simple We sell power & natural gas in developing countries around the world by providing capital, infrastructure, assets & expertise Objective #1: Democratize access to power Objective #2: Provide cleaner, cheaper energy Objective #3: Reach zero emissions Natural ga
Slide 5: Growing from 5 to 9 terminals
Executive Summary Growing from 5 to 9 terminals(7) We reach new markets via terminals Our goal: 15-20 terminals globally by YE 2021, focused on largest & fastest-growing markets Montego Bay, Jamaica La Paz, Mexico San Juan, Puerto Rico Facility Old Harbour, Jamaica Puerto Sandino, Nicaragua Barcaren
Slide 6: Not all terminals are created equal
Executive Summary Not all terminals are created equal High-volume Brazil terminals are expected to dramatically increase our addressable market(10) Terminals Pre-Acquisition Acquisition Terminals (GPD) Current Max. (GPD) Current Max. Jamaica 1.2mm 2.5mm Barcarena 0mm 12mm Puerto Rico 800k 3mm Suape
Slide 7: NFE has become the premier global gas-to-power company in the world
Executive Summary NFE has become the premier global gas-to-power company in the world(12) High-quality assets strategically located in target geographies(11) Terminal Power plant FSRU FLNG + 4 x LNGC Key target markets terminals FLNG 9 operational & in development 3.5 GW 9 FSRUs 4 LNGCs 1 (50% inter
Slide 8: Brazil terminals offer significant op. margin upside with limited project costs
Executive Summary Brazil terminals offer significant op. margin upside with limited project costs(13) Capex per Terminal Potential Op. Margin ($mm/year) Terminal Project Power Project Terminal Costs Costs Total potential market is 45mm GPD Sergipe - - Illustrative Operating 10% 25% 50% Barcarena $35
Slide 9: New portfolio + pipeline targeted to generate $1.6bn+ Illustrative Op. Margin
Executive Summary New portfolio + pipeline targeted to generate $1.6bn+ Illustrative Op. Margin(14) Combined company targets Illustrative Op. Margin of $895mm at closing, almost doubling once pipeline projects come online Hygo + Suape NFE GMLP Total $3.1bn $10bn $1.9bn enterprise value enterprise va
Slide 10: Expanded footprint positions us to lead global carbon-free power transition
Executive Summary Expanded footprint positions us to lead global carbon-free power transition We aim to replace natural gas with emission-free hydrogen across our global portfolio We already to Opportunity serve the sectors most lead emission-free …and now we will have footholds in in need hydrogen
Slide 11: Today we are addressing some FAQs about these transactions
Executive Summary Today we are addressing some FAQs about these transactions 1 2 3 4 5 How will How does Why Why buy How does we pay for this fit into Brazil? ships vs. the FLNG this? our capital- lease ships? fit into our light business business model? model? 11
Slide 12: Agenda
1. Executive Summary 2. FAQ: How will we pay for this? 3. FAQ: How does this fit with capital-light business model? 4. FAQ: Why Brazil? 5. FAQ: Why buy ships vs. leasing? 6. FAQ: How does FLNG fit into business model? 7. Appendix 12
Slide 13: Multiple sources of funds in excess of needs
How will we pay for this? Multiple sources of funds in excess of needs(17) Committed expenditures… …can be funded by a combination of: $580mm cash for Hygo $600mm cash + $300-400mm committed project costs $200mm revolver $880-980mm $300-400mm 2021 illustrative op. margin + $1bn+ potential asset sale
Slide 14: Agenda
1. Executive Summary 2. FAQ: How will we pay for this? 3. FAQ: How does this fit with capital-light business model? 4. FAQ: Why Brazil? 5. FAQ: Why buy ships vs. leasing? 6. FAQ: How does FLNG fit into business model? 7. Appendix 14
Slide 15: Capital-light growth model: recycle assets & redeploy capital to high-growth terminals
How does this fit with capital-light business model? Capital-light growth model: recycle assets & redeploy capital to high-growth terminals Future growth expected to be funded by cash flow from operations and recycling of stable assets Our business model Significant equity in stable assets that are
Slide 16: Agenda
1. Executive Summary 2. FAQ: How will we pay for this? 3. FAQ: How does this fit with capital-light business model? 4. FAQ: Why Brazil? 5. FAQ: Why buy ships vs. leasing? 6. FAQ: How does FLNG fit into business model? 7. Appendix 16
Slide 17: Brazil's emerging gas market presents huge opportunity
Why Brazil? Brazil’s emerging gas market presents huge opportunity Brazil is a unique opportunity: ~35 MTPA natural gas market just beginning to emerge from Petrobras monopoly Why Brazil? Why now? Large country with significant & growing energy demand but We’re a first mover in a market on the thres
Slide 18: Terminals strategically located to take advantage of market opportunities
Why Brazil? Terminals strategically located to take advantage of market opportunities Large market opportunity Pipeline proximity allows Opportunity to grow gas demand (~45mm GPD market) access to most of country by replacing HFO & diesel 1 Barcarena (in development) Barcarena Terminal • Co-located
Slide 19: Agenda
1. Executive Summary 2. FAQ: How will we pay for this? 3. FAQ: How does this fit with capital-light business model? 4. FAQ: Why Brazil? 5. FAQ: Why buy ships vs. leasing? 6. FAQ: How does FLNG fit into business model? 7. Appendix 19
Slide 20: Buying ships is better than leasing for long-term use
Why buy ships vs. leasing? Buying ships is better than leasing for long-term use Example calculation: Golar Winter Own cost(25) (annual) Savings Lease cost(24) $120mm value amort. $6mm (20-yr) (annual) $7mm/yr Op. & maintenance expense $9mm vs. $26mm ($70k/day) Interest expense $5mm 26% (75% debt x
Slide 21: Acquisitions significantly de-risk our global shipping needs
Why buy ships vs. leasing? Acquisitions significantly de-risk our global shipping needs Our total portfolio needs(21),(22) Large scale vessels acquired 8 FSRU 4 FSU 12 Vessels 9 FSRU 4 FSU 13 Vessels Asset Vessel Need Vessel Size 1 Old Harbour, Jamaica FSRU 1 Spirit FSRU (125k m3) 2 Sergipe, Brazil
Slide 22: Agenda
1. Executive Summary 2. FAQ: How will we pay for this? 3. FAQ: How does this fit with capital-light business model? 4. FAQ: Why Brazil? 5. FAQ: Why buy ships vs. leasing? 6. FAQ: How does FLNG fit into business model? 7. Appendix 22
Slide 23: FLNG is the future of liquefaction
How does FLNG fit into business model? FLNG is the future of liquefaction FLNG is what FSRUs were 20 years ago…we are investing at the beginning of an industry-disruptive future (Operational) Acquisition will give us FLNG technology, which allows access to stranded offshore fields Allows owners NFE
Slide 24: FLNG could allow our entire system to be supplied with low-cost LNG
How does FLNG fit into business model? FLNG could allow our entire system to be supplied with low-cost LNG FLNG manufactures LNG for ~$3/MMBtu Step 1: Own the terminals Step 2: Build our own Step 3: Supply system with FLNG(27) $3 LNG(28) Developing portfolio of costs $1 billion high throughput to bu
Slide 25: Agenda
1. Executive Summary 2. FAQ: How will we pay for this? 3. FAQ: How does this fit with capital-light business model? 4. FAQ: Why Brazil? 5. FAQ: Why buy ships vs. leasing? 6. FAQ: How does FLNG fit into business model? 7. Appendix 25
Slide 26: Hygo: Sources & Uses
Appendix Hygo: Sources & Uses $3.1bn Enterprise Value Hygo: Total acquisition cost of $2.18bn • NFE to issue $950mm stock and pay $50mm cash to GLNG for 50% stake in Hygo • NFE to pay cash to Stonepeak for $180mm preferred equity + $350mm cash + rest in NFE stock (50% stake in Hygo ($1bn + $180mm =
Slide 27: GMLP: Sources & Uses
Appendix GMLP: Sources & Uses $1.9bn Enterprise Value GMLP: Total acquisition cost of $1.4bn • NFE to issue $1.4bn of corporate debt to pay for GMLP ($516mm ship facility + $380mm NOR bonds + $197mm Eskimo SLB + $59mm Nu. Regas Satu SLB + $251mm common) • Keep existing $389mm Hilli attributable debt
Slide 28: Post-closing asset overview
Appendix Post-closing asset overview 9 terminals 7 power plants Montego Bay, Jamaica La Paz, Mexico Jamalco, Jamaica Sergipe, Brazil Operational Under development 150MW 1.5GW Operational Operational Old Harbour, Jamaica Sergipe, Brazil Operational Operational Puerto Sandino, Nicaragua Barcarena, Bra
Slide 29: Disclaimers
Disclaimers – IN GENERAL. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the “Presentation.” – FORWARD-LOOKING STATEMENTS. Certain statements reg
Slide 30: Endnotes
Endnotes Certain of the below Endnotes include forward-looking statements. Please see our note regarding “Forward-Looking Statements” on the slide titled “Disclaimers” of this Investor Update (the “Presentation”). Please evaluate this Presentation in connection with the risk factors in our public re
Slide 31: Endnotes
Endnotes – (9) “Under Construction” means “In Construction”, “Under Construction”, Development”, “In Development” or similar statuses means that we have taken steps and invested money to develop a facility, including procuring land rights and entitlements, negotiating or signing construction contrac
Slide 32: Endnotes
Endnotes – (14) We define “Operating Margin” as the sum of (i) Net income / (loss), (ii) Depreciation and amortization, (iii) Interest expense, (iv) Other (income) expense, net (v) Contract termination charges and Loss on Mitigation Sales, (vi ) Loss on extinguishment of debt, net, (vii) Tax expense
Slide 33: Endnotes
Endnotes – (15) “Project Costs” means management’s internal estimates of the costs of development and construction of projects from current state through commercial operations. These costs do not include all costs included in generally accepted accounting principles and should not be relied upon for
Slide 34: Endnotes
Endnotes – (22) This number of FSRUs includes the conversion of the Golar Penguin and the Golar Celsius, currently owned by Hygo, from LNGCs to FSRUs. There can be no assurance that this conversion will be successful on a particular timeline or at all. – (23) These vessels are currently subject to c
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