Slide 1: Investor Presentation: Proposed Merger NextDecade and Harmony Merger Corp.
STRICTLY CONFIDENTIAL STRICTLY CONFIDENTIAL I NVESTOR P RESENTATION M AY 10 2017 I NVESTOR P RESENTATION P ROPOSED M ERGER N EXT D ECADE , LLC H ARMONY M ERGER C ORP . Developing Low - Cost LNG Export Solutions from the Permian Basin and Eagle Ford Shale in South Texas
Slide 2: Disclaimer and Forward Looking Statements
PAGE 1 Disclaimer and Forward Looking Statements The information provided in this Presentation with respect to NextDecade, LLC (the “Company”) has been provided for informational purposes only . This Presentation shall neither constitute an offer to sell or the solicitation of an offer to buy any se
Slide 3: Contents
Contents 01 Summary 3 02 Transaction Overview 7 03 Management Team and Partners 13 04 LNG Market Overview 18 05 Project Overview 27 06 Permian Basin and Eagle Ford Shale 34 07 Appendix A: Additional Project Information 41 08 Appendix B: Shoal Point Overview 44 09 Appendix C: Valuation Assessment 48
Slide 4: Summary
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Slide 5: NextDecade is an LNG development company focused on LNG export projects
PAGE 4 NextDecade is a liquefied natural gas (“LNG”) development company focused on LNG export projects and associated pipelines in the State of Texas. The management team is comprised of industry leaders with experience across the global LNG value chain. NextDecade’s first proposed LNG export facil
Slide 6: Highlights (1 of 2)
PAGE 5 Proposed Merger • NextDecade and Harmony Merger Corp. announced plans to merge on March 13, 2017 • All - stock transaction expected to yield combined entity with pro forma EV of approximately $1.0 billion at closing Highlights (1 of 2) Capital Cost, Liquefaction Technology, Engineering • Sele
Slide 7: Highlights (2 of 2)
PAGE 6 Commercial • Executed non - binding Heads of Agreement (“HOAs”) with prospective customers; substantive sale and purchase agreement (“SPA”) negotiations ongoing with array of customers in Asian, European, and other global markets • Choice of flexible offtake contracting models such as tolling
Slide 8: Transaction Overview
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Slide 9: Harmony and NextDecade definitive merger agreement
PAGE 8 Harmony Merger Corp. (NASDAQ: HRMN, HRMNU, HRMNW) (“Harmony”) and NextDecade, LLC (“NextDecade”) have executed a definitive merger agreement (“Agreement”) for a business combination transaction (“Proposed Merger”), which would result in NextDecade becoming a publicly listed company. The Propo
Slide 10: Proposed Merger creates value for both companies' stakeholders
PAGE 9 NextDecade and Harmony believe the Proposed Merger creates value for both companies’ current and future stakeholders, positioning RGLNG for positive FID in mid - 2018. *Intrinsic valuation derived from discounted cash flow analysis of NextDecade’s terminal value utilizing assumed EBITDA termi
Slide 11: Rio Grande LNG Overview
PAGE 10 NextDecade is a LNG development company focused on LNG export projects and associated pipelines in the State of Texas. NextDecade’s first proposed LNG export facility, RGLNG in Brownsville, Texas, along with the associated RBPL originating in the Agua Dulce market area, is well - positioned
Slide 12: NextDecade: Company Highlights
PAGE 11 NextDecade: Company Highlights Positioned to Become a Leader Among the Second Wave of U.S. LNG Projects • The RGLNG project is a planned LNG export facility to be located in the Port of Brownsville, Texas. The associated 137 - mile RBPL is to originate in the Agua Dulce market area. Together
Slide 13: NextDecade: Summary Projections
PAGE 12 Shown below are summary projections for NextDecade including anticipated operations at its RGLNG and RBPL facilities. For more information, prospective investors are encouraged to review the proxy statement filed with the SEC for the special meeting of Harmony stockholders to approve the Pro
Slide 14: Management Team and Partners
Management Team and Partners 3
Slide 15: NextDecade: Management
PAGE 14 NextDecade: Management Kathleen Eisbrenner oversees development and execution of NextDecade’s liquefaction and pipeline strategies. She was formerly ex ecutive vice president at Royal Dutch Shell, where she was responsible for the company’s global LNG portfolio management and LNG trading. Pr
Slide 16: NextDecade: Management LNG Experience
PAGE 15 The management team at NextDecade possesses extensive LNG experience and, at prior projects, has successfully executed numerous long - term LNG contracts. Projects and companies associated with the management team’s industry experience are detailed below. NextDecade: Management LNG Experienc
Slide 17: World-Class Partners
PAGE 16 World - Class Partners EPC Contractor • CB&I, one of the world’s premier LNG EPC firms, has been involved in the development of LNG projects for over 50 years • NextDecade is in the process of finalizing detailed negotiations for a LSTK EPC contract with CB&I, including performance, ti me, a
Slide 18: Financial partners: York, Valinor, Halcyon, GE Oil & Gas
PAGE 17 NextDecade has strong financial partners in York Capital Management, Valinor Management, Halcyon Capital Management, and GE Oil & Gas. » York Capital Management ∙ ND Board: Matthew Bonanno, David Magid, William Vrattos - AUM: $17 billion* - Founder: James Dinan (1991) - York Capital Manageme
Slide 19: LNG Market Overview
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Slide 20: LNG demand projected to rise
PAGE 19 LNG demand is projected to rise for the foreseeable future, driven by a number of factors. While currently oversupplied, the LNG market is expected to enter a prolonged period of shortage in the early 2020s, according to an array of industry consultants. • Strengthening Global Demand . We be
Slide 21: Environmental considerations and new applications increase LNG demand
PAGE 20 Global environmental considerations in addition to burgeoning technologies and market applications are further anticipated to increase LNG demand. » Environmental and Political Drivers . Many countries have implemented clean energy policies, aimed at lowering the level of greenhouse gas (GHG
Slide 22: Commercial progress and cheap feedstock gas
PAGE 21 NextDecade’s commercial progress to date indicates strong market interest and, more specifically, interest in feed gas sourced from West and South Texas, which benefits from low - cost associated gas as production in key basins (Permian Basin and Eagle Ford Shale) is expected to create more
Slide 23: LNG market headed towards a shortage
PAGE 22 NextDecade believes the LNG market is headed towards a shortage, likely to occur between 2022 - 2024, driven by growing demand and certain supply challenges. In 2015, the global LNG trade topped 244 million tons, and is poised to grow at a 5.5 - 7.5% CAGR throu gh 2024. 1 NextDecade believes
Slide 24: Legacy contract expirations free up demand
PAGE 23 Through 2023, 80 mtpa of demand (and 190 mtpa through 2030) is expected to free up as legacy contracts expire and customers look to switch to U.S. LNG providers; we believe NextDecade is well positioned to capitalize on these anticipated roll - off volumes. Source: GIIGNL Annual Report 2017
Slide 25: FSRUs present opportunity to access new LNG markets
PAGE 24 FSRUs present a valuable opportunity for NextDecade to access currently underserved or nonexistent LNG markets. Members of NextDecade’s management team have experience with FSRUs, which represents a source of competitive advantage vis - à - vis competing LNG project sponsors. Source: Wood Ma
Slide 26: LNG supply and demand outlook
PAGE 25 0 100 200 300 400 500 600 2010 2015 2020 2025 2030 2035 Post-FID Effective Capacity 100% Utilization Demand While the quantum of proposed projects around the world indicates a much larger surplus than projected, many proposed project s a re unlikely to take FID for a number of reasons, inclu
Slide 27: U.S. LNG emerges as low-cost supply
PAGE 26 U.S. LNG has emerged as a new source of low - cost supply by bringing new technologies to market, lowering capital requirements, breaking industry orthodoxy of oil - linked contracts, and utilizing its well - established regulatory process. Shown below, U.S. Gulf Coast LNG is among the most
Slide 28: Project Overview
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Slide 29: Progress with prospective customers
PAGE 28 NextDecade has made substantial progress with prospective customers to date. NextDecade is in the midst of advanced negotiations with an array of prospective customers in key Asian, European, and other global markets that comprise portfolio buyers, traders, and utilities in these jurisdictio
Slide 30: RGLNG located close to key reserve basins
PAGE 29 RGLNG is optimally located close to key reserve basins (especially the Permian Basin and Eagle Ford Shale) and has access to entirely different pipeline networks than other competitive projects in Eastern Texas and Western Louisiana. Graph Source: EIA, NGI’s Daily Gas Price Index calculation
Slide 31: Next wave of LNG: Texas stranded gas
PAGE 30 Historically, most international LNG projects were constructed on the premise of necessity to move “stranded gas” (supply push) to large demand markets such as Asia and Europe. Recently, US LNG capacity expansions have been driven by a “demand pull” and a price arbitrage opportunity. Conditi
Slide 32: RGLNG EPC liquefaction costs among most competitive
PAGE 31 RGLNG’s EPC liquefaction costs are expected to be among the most competitive in the world due to NextDecade’s close collaboration with its EPC contractor (Chicago Bridge & Iron) and equipment providers (GE Oil & Gas), as well as its use of proven technology (AP - C3MR™). » NextDecade engaged
Slide 33: FERC application and regulatory process
PAGE 32 NextDecade filed its formal FERC application in May 2016 and has allocated significant time and resources to advance the regulatory processes with FERC and other agencies. • NextDecade commenced pre - filing with FERC in March 2015 and filed its formal application under Section 3 of the Natu
Slide 34: Rio Bravo Pipeline
PAGE 33 • At full build - out, the RBPL will comprise two, parallel 137 - mile long, 42 - inch natural gas pipelines • Each of the two pipelines is expected to have a capacity of up to 2.25 Bcf/d (up to 4.5 Bcf/d total) and is designed to interconnect with eight existing pipelines with a combined th
Slide 35: Permian Basin and Eagle Ford Shale
Permian Basin and Eagle Ford Shale 6
Slide 36: U.S. Reserves: Vast Quantities of Inexpensive Gas
PAGE 35 -30 -20 -10 0 10 20 30 40 Proved Reserves Sources: Energy Information Administration, U.S. Geological Survey, Apache Corp. • Vast quantities of natural gas have been proven as reserves in the United States • U.S. independent shale manufacturers have created extraordinary value improvements a
Slide 37: South Texas gas market poised to benefit from trends
PAGE 36 The South Texas gas market is poised to benefit from several distinct trends. Many reserve basins proximate to NextDecade have drilled economically even in a low oil price environment, and the emergence of the Marcellus and Utica plays increasingly pushes gas flows southward. 1: Railroad Com
Slide 38: Production: Permian Basin and Eagle Ford Shale
PAGE 37 Sources: DrillingInfo / Ponderosa Energy, Apache Corporation Eagle Ford Gas Production (Bcf/d) • Apache recently confirmed the discovery of a significant new resource play, the “Alpine High,” in the southern portion of the Delaware Basin (Reeves County, Texas) with 75 Tcf of rich gas in plac
Slide 39: Associated Gas: South Texas Benefits
PAGE 38 Source: DrillingInfo / Ponderosa Energy | * Railroad Commission of Texas, Statewide Rule 32 Henry Hub Breakevens @ $50 WTI, 20% IRR ($ / MMBtu) Associated Gas: South Texas Benefits -$5.0 $0.0 $5.0 $10.0 Other Gas Play Eagle Ford & Permian Associated Gas Will Reach Market, Flaring in Texas Li
Slide 40: Comparison: U.S. Reserve Basins
PAGE 39 Permian production costs are among the lowest across U.S. basins, providing ample scope to absorb transport costs from Waha to Agua Dulce. Source: DrillingInfo / Ponderosa Energy , Company Filings, Petroleum Listing Service, Inc. Notes 1. Everything <$0.00/mmbtu is in the money due to presen
Slide 41: Permian Basin: A World-Class Reserve Base
PAGE 40 The Permian Basin saw nearly $30 billion of M&A activity in 2016 , approximately half of all U.S. upstream M&A activity showcasing elevated interest among producers. Drilling and Completion (D&C) spending in the Basin is expected to more than double (YoY) by 2018 , and comprise approximately
Slide 42: Appendix A: Additional Project Information
Appendix A: Additional Project Information 7
Slide 43: CB&I is a preeminent LNG EPC contractor
PAGE 42 CB&I is a preeminent LNG EPC contractor with over 50 years of experience on some of the largest projects in the world, an exceptional training and safety record, and a deep relationship with the Rio Grande Valley workforce. • CB&I has deep experience with the LNG industry, having been involv
Slide 44: Apache: Alpine High & Drill-Out Program
PAGE 43 Source: Apache Slide Presentation, September 7, 2016 • Apache has secured more than 300,000 contiguous acres, mainly in Reeves County, Texas • Apache’s September 2016 announcement states its view that $2.50 gas and $40 WTI supports 30%+ IRR (including infrastructure to provide access to the
Slide 45: Appendix B: Shoal Point Overview
Appendix B: Shoal Point Overview 8
Slide 46: Shoal Point: Overview
PAGE 45 Shoal Point: Overview Houston Shoal Point Site Key Points • NextDecade leased a total of 994 acres in Texas City for the development of its Shoal Point project ‒ Lease period 3+1 years; ending Dec. 31, 2020 ‒ Option to enter into long - term lease for 30+20 years • Located within the Port of
Slide 47: Shoal Point: Aerial View
PAGE 46 Shoal Point: Aerial View Site Area 994 Acres
Slide 48: Shoal Point site among most attractive on Gulf Coast
PAGE 47 Management believes that the Shoal Point site is one of the most attractive locations along the U.S. Gulf Coast • Project is sited in a highly industrial area with very close access to the Gulf of Mexico • Project to have access to two major gas pipeline market hubs: Katy & Houston Ship Chan
Slide 49: Appendix C: Valuation Assessment
Appendix C: Valuation Assessment 9
Slide 50: NextDecade: Valuation
PAGE 49 The valuation of NextDecade and its proposed RGLNG and RBPL projects – in advance of the Proposed Merger – can be assessed using the below methodologies. NextDecade: Valuation *At the time of the valuation assessment, NextDecade was a limited - liability company and as such, is considered to
Slide 51: NextDecade: FCF Yield Analysis
PAGE 50 Shown below is an analysis of the implied valuation of NextDecade utilizing a FCF terminal value yields range of 8 - 10 percent to assess an appropriate equity value for the assets and NextDecade as a whole. NextDecade: FCF Yield Analysis • FCF Yield Analysis. The top left diagram showcases
Slide 52: NextDecade: EBITDA Multiples Analysis
PAGE 51 Shown below is an analysis of the implied valuation of NextDecade utilizing various EV / EBITDA multiples (x - axis) and discount rates (y - axis) to assess an attributable valuation for the Company. NextDecade: EBITDA Multiples Analysis ^Terminal value multiples assessed on annual run - rat
Slide 53: Contact Information
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Slide 54: Contact details
PAGE 53 Contact Harmony Merger Corp. 777 Third Avenue, 37th Floor New York, New York 10017 David Sgro, Chief Operating Officer T: + 1 (212) 319 7676 | E: ds@harmonymergercorp.com H ARMONY Ward CC (for NextDecade) 5959 West Loop South, Suite 510 Bellaire, Texas 77401 Molly LeCronier, Vice President T
Slide 55: x Experienced team x Extensive commercial relationships x Strategic partners x Expertise along the
PAGE 54 x Experienced team x Extensive commercial relationships x Strategic partners x Expertise along the value chain x Proven technology x Substantial de - risking accomplished x Favorable sites x Key development milestones completed PAGE 54 x Experienced team x Extensive commercial relationships