New Fortress Energy Inc. · NASDAQ:NFE
New Fortress Energy — Q4 2020 Earnings Presentation
48 slides from New Fortress Energy's earnings presentation, March 2021
Slide 1: Q4 2020 Investor Presentation
March 2021 Q4 2020 Investor Presentation
Slide 2: Delivering Positive Energy Worldwide: Vision and Mission
Delivering Positive Energy Worldwide Our Vision We want to light the world. Billions of people around the planet lack access to affordable power. Electricity should not be a luxury good. Our Mission Our mission is to provide capital, expertise and vision to address this problem while also making pos
Slide 3: Agenda
1. Executive Summary 2. Business Update 3. Operating Performance 4. Fast LNG 5. Hydrogen Update 6. Financing Update 7. Appendix 3
Slide 4: Since last quarter, we've had several major developments
Executive Summary Since last quarter, we’ve had several major developments Powerful organic growth; major acquisitions of terminals & ships portfolios; FLNG IP Significant organic terminal growth to 9 terminals 1 • Finalizing development agreement & gas supply with Southeast Asia country for 300MW g
Slide 5: We're expanding rapidly & executing on our goals
Executive Summary We’re expanding rapidly & executing on our goals March 2020 Today 1 Year+ From Now Expanding 5 Terminals 9 Terminals 11 Terminals our terminal 2 operating (Montego Bay, Old Harbour) 4 operating (Montego Bay, Old Harbour, 9 operating (Montego Bay, Old Harbour, 3 in development(7) (S
Slide 6: Agenda
1. Executive Summary 2. Business Update 3. Operating Performance 4. Fast LNG 5. Hydrogen Update 6. Financing Update 7. Appendix 6
Slide 7: We have become the premier global gas-to-power company in the world
Business Update 3 We have become the premier global gas-to-power company in the world High-quality assets in strategic, high-demand geographies lead to immense growth Shannon, Jamalco CHP, Ireland Jamaica Montego Bay, Jamaica San Juan, Puerto Rico La Paz, Mexico Southeast Asia Old Harbour, Project P
Slide 8: We have expanded to 9 committed terminals
Business Update We have expanded to 9 committed terminals Operational In construction In development Montego Bay, La Paz, Suape, Jamaica Terminal Mexico Terminal Brazil Terminal(3) 135MW power plant 288MW power plant Old Harbour, Nicaragua Terminal Barcarena, Jamaica Terminal 300MW power plant Brazi
Slide 9: Expect 2 additional terminals FID in next 90-120 days
Business Update Expect 2 additional terminals FID in next 90-120 days 2 developments increase our footprint to 11 terminals(13) Santa Catarina, Brazil Shannon, Ireland Offshore terminal in southeast Brazil with Large scale LNG import terminal proximity to TBG pipeline in Shannon, Ireland All permits
Slide 10: Brazil has a globally unique volume and margin opportunity
Business Update Brazil has a globally unique volume and margin opportunity First mover advantage in ~35 MTPA natural gas market just beginning to emerge from state-owned monopoly Why Brazil? Why now? Large country with significant & growing energy demand but Hygo and GMLP acquisitions position NFE a
Slide 11: Terminals strategically located to take advantage of market opportunities
Business Update Terminals strategically located to take advantage of market opportunities Large market opportunity Strategic terminal locations Opportunity to grow gas demand (~45mm GPD market) by replacing HFO & diesel 1 Barcarena Barcarena Terminal • Margins similar to operational NFE terminals wi
Slide 12: Agenda
1. Executive Summary 2. Business Update 3. Operating Performance 4. Fast LNG 5. Hydrogen Update 6. Financing Update 7. Appendix 12
Slide 13: Terminal growth results in significant increase in gas and power volumes
Operating Performance Terminal growth results in significant increase in gas and power volumes(15) Ireland 20mm 19mm GPD 15mm Suape, Barcarena, Santa Catarina 12mm GPD GPD 10mm +Suape power, Sergipe power, SE Asia MX & Nica run-rate 5.1mm GPD 5mm Sergipe 3.3mm GPD Current run-rate 2.4mm GPD 2.1mm GP
Slide 14: We also recently agreed to acquire Golar MLP
Operating Performance In addition to Hygo, we also recently agreed to acquire Golar MLP Generates $300mm operating margin & solves long-term ship and logistics needs(16) Over time, acquired vessels In interim, ships add stable contracted cash flows: to be largely deployed across Golar LNG Partners A
Slide 15: Current terminals + near-term FID generate significant illustrative op. margin
Operating Performance Current terminals + near-term FID generate significant Illustrative Op. Margin Committed + Pipeline Run-Rate $3,000 $2,632 $2,000 $1,200 Committed $832 Run-Rate $1,000 $125 - FY ’19 FY ’20 YE ‘21 ’22+ Operational + + SE Asia, Barcarena, Suape, Actuals Actuals Development FLNG +
Slide 16: Financial performance
Operating Performance Financial performance Operating Results Financial Metrics • Stabilized volumes in operating terminals Q4 Q3 Q4 QoQ 2019 2020 2020 Change • Normalized for maintenance outages, we were in line with expectations from Q3 Volumes Sold, Average (k GPD) 1,535 1,410 • Increased revenue
Slide 17: Agenda
1. Executive Summary 2. Business Update 3. Operating Performance 4. Fast LNG 5. Hydrogen Update 6. Financing Update 7. Appendix 17
Slide 18: Gas supply is our biggest risk & our biggest opportunity
Fast LNG Gas supply is our biggest risk & our biggest opportunity Our committed system requires 5.1mm GPD or 3.0 MTPA of natural gas in the near-term 5.1 • Committed run-rate gas GPD (mm) 3.3 demand is 5.1mm GPD (3 MTPA) 2.1 • We have contracted 2.2mm GPD (1.3 MTPA) (23) • Still need supply for ~55%
Slide 19: Index-priced gas supply is also one of our customers' biggest risks
Fast LNG Index-priced gas supply is also one of our customers’ biggest risks LNG available in the market is typically indexed to Henry Hub natural gas, Brent crude oil or JKM Brent crude oil prices have nearly doubled in last year $80 • LNG indexed to Brent, JKM or Henry Hub is volatile in price $70
Slide 20: Fast LNG at-a-glance
Fast LNG Fast LNG at-a-glance We’re ready to declare FID on our own Fast LNG that’s cheaper and faster to build (24) (25) Our Fast LNG solution is cheaper and faster to build Floating LNG (FLNG) cryogenic flexible ship to ship transfer (5 years ago) hose system liquefier storage vessel LNGC jackup r
Slide 21: Fast LNG: best-in-class counterparties
Fast LNG Fast LNG: best-in-class counterparties Liquefaction & Turbine & Installation & Jack Up Rigs & Gas Treatment Module Compressor Supply Owner’s Engineering Flexible Hoses Engineering, Procurement & Fabrication 21
Slide 22: Fast LNG target locations
Fast LNG Fast LNG target locations NFE is targeting locations with existing infrastructure and significant access to underutilized natural gas North Sea ~7 Bcf/d of gas production throughout the region Pacific Basin 17 Bcf/d from the Permian & significant pipeline infrastructure Mediterranean ~75 Tc
Slide 23: Fast LNG changes everything
Fast LNG Fast LNG changes everything Each Fast LNG installation aims to increase our annual operating margin by ~$150mm Market cost of LNG ($/MMBtu)(1) $5.50 ~$150mm = Fast LNG Cost of LNG ($/MMBtu) (-) $3.50 potential Savings ($/MMBtu) $2.00 incremental margin per Fast LNG Capacity (TBtu) (x) 70.8
Slide 24: Agenda
1. Executive Summary 2. Business Update 3. Operating Performance 4. Fast LNG 5. Hydrogen Update 6. Financing Update 7. Appendix 24
Slide 25: Zero Blue is our near-term solution for emissions-free hydrogen
Hydrogen Update Zero Blue is our near-term solution for emissions-free hydrogen We will address current large-scale demand for hydrogen in downstream applications like ammonia and methanol Steps we are taking to Blue commercialize Zero Blue We are securing an exclusive license – Harnessing clean ene
Slide 26: Zero Green is our longer-term solution for carbon-free hydrogen
Hydrogen Update Zero Green is our longer-term solution for carbon-free hydrogen Green hydrogen is a growing market with huge potential that we see as major step towards a carbon-free future Steps we are taking to Green commercialize Zero Green – Harnessing cheap renewable energy for 100% 1 We have i
Slide 27: Agenda
1. Executive Summary 2. Business Update 3. Operating Performance 4. Fast LNG 5. Hydrogen Update 6. Financing Update 7. Appendix 27
Slide 28: Material improvements in operating metrics since financing
Financing Update Material improvements in operating metrics since financing Volume Op. Margin Goal Geographic & Cash Logistics Gas Growth Flow Diversity Capabilities Supply 5.1mm GPD committed $1.2bn committed, 9 terminals 9 FSRUs Long-term, fixed 58 customers 4 FSUs price LNG at 19mm GPD including
Slide 29: Capital structure evolution
Financing Update Capital structure evolution Pre-Close Post-Close Capital Structure Capital Structure $10.1bn Total Capitalization $13.3bn Total Capitalization Corporate Debt $2.75bn 20% $1.25bn 12% Corporate Debt +New $200mm Revolver(27) Corporate Debt 175mm 206mm Shares outstanding Shares outstand
Slide 30: Agenda
1. Executive Summary 2. Business Update 3. Operating Performance 4. Fast LNG 5. Hydrogen Update 6. Financing Update 7. Appendix 30
Slide 31: We have 2 key additions to our portfolio
Appendix We have 2 key additions to our portfolio These additions increase our system’s gas demand by 1 MTPA CFE (Mexico) Southeast Asia Supply contract with CFE has Offshore terminal & been awarded; truck LNG 300MW gas to power with from MX terminal to 2 nearby expansion to 600MW power plant sites
Slide 32: Announced 3 separate transactions for $5.1bn equivalent enterprise value
Appendix Announced 3 separate transactions for $5.1bn equivalent enterprise value 1 Acquiring Hygo Energy Transition Ltd. • Private LNG-to-power business Consideration • 3 terminals & power plants in Brazil • Includes country’s largest thermal power plant Adds 4 $2.18bn for 100% of Hygo • Includes 3
Slide 33: Not all terminals are created equal
Appendix Not all terminals are created equal High-volume Brazil terminals are expected to dramatically increase our addressable market (29) Terminals Pre-Acquisition Acquisition Terminals (GPD) Current Max. (GPD) Current Max. Jamaica 1.2mm 2.5mm Barcarena 0mm 12mm Puerto Rico 800k 3mm Suape 0mm 14mm
Slide 34: Barcarena Terminal
Appendix Barcarena Terminal Terminal strategically-positioned at the Amazon River delta to serve stranded demand Barcarena Terminal Barcarena Terminal Market description 1 • Margin profile similar to other NFE terminals with ~4-5x greater volume potential • Sole natural gas supply source in region -
Slide 35: Suape Terminal
Appendix Suape Terminal Locationally advantaged LNG terminal in Northeast Brazil with close access to major pipeline network Suape Terminal Barcarena Terminal Market description 1 • Gas volumes potential orders of magnitude greater than in isolated geographies • Favorable margins compared to LNG ter
Slide 36: Sergipe Terminal
Appendix Sergipe Terminal Existing 1.5 GW combined cycle power plant with option to expand Sergipe Terminal Barcarena Terminal Market description 1 • Fully operational LNG terminal servicing a 1.5 GW power plant • Close proximity to industrial users and the TAG Pipeline • 50% ownership by NFE (pro f
Slide 37: Santa Catarina Terminal
Appendix Santa Catarina Terminal Only LNG terminal the South—positioned to capture robust southern market Santa Catarina Terminal Barcarena Terminal Market description 1 • High volume terminal with best-in-class margin potential • Terminal provides critical infrastructure to meet constrained and gro
Slide 38: Acquisitions significantly de-risk our global shipping needs
Appendix Acquisitions significantly de-risk our global shipping needs Our total portfolio needs(21),(22) Large scale vessels acquired 8 FSRU 44 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 FSRU 2 Freeze FSR
Slide 39: Transactions dramatically diversify our earnings profile
Appendix Transactions dramatically diversify our earnings profile No one asset accounts for more than ~15% of cash flow Last Meeting +MX, Nicaragua, + Hygo, Suape & SE Asia, & FLNG GMLP 2 5 10 geographies geographies geographies (Jamaica, Puerto Rico) (Jamaica, Puerto Rico, MX, (Jamaica, Puerto Rico
Slide 40: 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 41: 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 42: 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 43: Operating margin reconciliation
Appendix Operating margin reconciliation (in thousands) 2019 2020 Net income/(loss) $ (204,319) $ (263,965) Add: Contract termination charges and loss on mitigation sale 5,280 124,114 Selling, general and administrative 152,922 124,170 Depreciation and amortization 7,940 32,376 Interest expense 19,4
Slide 44: 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 45: 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 46: Endnotes
Endnotes 9. “Illustrative Annualized Operating Margin Goal” means our goal for Operating Margin under certain illustrative conditions, presented on a run rate basis by multiplying the average volume we expect to sell on a gallons per day basis, multiplied by 365, or for the relevant month, multiplie
Slide 47: Endnotes
Endnotes 10. “Committed Volume”, “Committed Portfolio” or references to Commitments means our expected volumes to be sold to customers under binding contracts, awards under requests for proposals, and the agreement being finalized in for our project in Southeast Asia as of the period specified in th
Slide 48: Endnotes
Endnotes 20. “Pipeline” “opportunities” or “In Discussion” refers to potential customers (i) with whom we are in active negotiations, (ii) for whom there is a request for proposals or competitive bid process, or (iii) for whom we anticipate a request for proposals or competitive bid process will soo