NextDecade Provides Third Quarter 2023 Business Update
“The third quarter was transformational for
“We are also focused on commercializing and achieving a positive FID for Train 4 in the second half of 2024, and subsequently progressing Train 5. We expect these
“NextDecade is committed to providing economically competitive LNG to customers around the world and promoting emissions reduction, energy security, and energy affordability. We have taken significant steps toward our goals this quarter and look forward to continuing our momentum in the coming quarters.”
Significant Recent Developments
Development and Construction
July 12, 2023, NextDecadeannounced a positive final investment decision (FID) to construct the first three liquefaction trains and related infrastructure (Phase 1) of the Rio Grande LNG Facility, and its subsidiary Rio Grande LNG, LLC(Rio Grande) issued full notice to proceed (NTP) to Bechtel Energy Inc.(Bechtel) under the Phase 1 engineering, procurement, and construction (EPC) contracts.
At FID, the final EPC cost of Phase 1 was approximately
Other costs included in Phase 1, as estimated at the time of FID, totaled approximately
$6.0 billion, including owner’s costs and contingencies of approximately $2.3 billion, dredging for the Brazos Island Harbor Channel Improvement Project, conservation of more than 4,000 acres of wetland, and installation of utilities of approximately $600 million, and interest during construction and other financing costs of approximately $3.1 billion.
- At FID, the final EPC cost of Phase 1 was approximately
September 2023, the project completion percentage for Trains 1 and 2 of the Rio Grande LNG Facility was approximately 8.1%, which is in line with the schedule under the EPC contract. Within this project completion percentage, engineering was 35.7% complete, procurement was 14.1% complete, and construction was 0.2% complete.
September 2023, Bechtel has made meaningful progress on purchase orders for Train 3 and is focused on mobilizing labor and equipment and preparing temporary facilities at the site.
Strategic and Commercial
NextDecadehas started the front-end engineering and design (FEED) and EPC contract processes with Bechtel for Train 4 and expects to finalize the EPC contract in the first half of 2024. The Company is progressing numerous discussions with potential buyers of LNG to provide commercial support for Train 4 and is targeting a positive FID of Train 4 in the second half of 2024.
In July and
September 2023, NextDecadeclosed the second and third tranches of common stock sales pursuant to its three-tranche common stock purchase agreement with Global LNG North America Corp., an affiliate of TotalEnergies SE (TotalEnergies). In aggregate for all three tranches, the Company sold 44.9 million shares of its common stock for a total purchase price of $219.4 million.
July 12, 2023, in conjunction with the positive FID of Phase 1 of the Rio Grande LNG Facility, NextDecadeand certain of its subsidiaries closed an approximately $18.4 billionproject financing for Phase 1, the largest greenfield energy project financing in U.S.history. This financing underscores the critical role that LNG and natural gas are expected to play in the global energy transition, and included the closing of:
A joint venture agreement which included approximately
$5.9 billionof financial commitments from Global Infrastructure Partners(GIP), GIC, Mubadala Investment Company, and TotalEnergies;
A commitment by
NextDecadeto invest approximately $283 millionin Phase 1, which was completed in September 2023and included $125 millionof pre-FID capital investments and additional funds contributed from the proceeds of sales of the Company’s common stock to an affiliate of TotalEnergies;
Senior secured non-recourse bank credit facilities of
$11.6 billionwith a 7-year maturity, consisting of $11.1 billionin construction term loans and a $500 millionworking capital facility; and
An offering of
$700 millionsenior secured non-recourse private placement notes, which will mature in July 2033and will accrue interest at a fixed rate of 6.67%.
- A joint venture agreement which included approximately
NextDecadeholds equity interests in the Phase 1 joint venture that entitle NextDecadeto receive up to 20.8% of the distributions of available cash during operations.
September 2023, Rio Grande entered into a credit agreement with a group of lenders for $356 millionof senior secured loans. The senior secured loans were disbursed in one advance of $356 millionon September 15, 2023, which resulted in a reduction in commitments outstanding under Rio Grande’s existing bank credit facilities for Phase 1.
These senior secured loans will mature in
July 2033, will accrue interest at a fixed rate of 6.72%, and rank pari passu to Rio Grande’s existing senior secured financings; and
- This financing illustrates NextDecade’s commitment to extending and spreading out debt maturities, diversifying sources of capital, reducing bank commitments to provide potential capacity for financing future LNG expansions, and mitigating interest rate exposure.
- These senior secured loans will mature in
September 30, 2023, Rio Grande’s outstanding fixed-rate debt and executed interest rate swaps have reduced its exposure to movements in interest rates for over 80% of the debt currently projected to be incurred in support of Phase 1 construction.
- Rio Grande has completed a syndication of a portion of its bank credit facility commitments, resulting in a supporting lender group of over 30 international banks.
Rio Grande LNG Facility
Phase 1 (Trains 1-3)
Phase 1 at the Rio Grande LNG Facility is under construction. Phase 1 includes three liquefaction trains with a total nameplate capacity of 17.61 mtpa, two 180,000 cubic meter full containment LNG storage tanks, two jetty berthing structures designed to load LNG carriers up to 216,000 cubic meters in capacity, and associated site infrastructure and common facilities including feed gas pretreatment facilities, electric and water utilities, two totally enclosed ground flares for the LNG tanks and marine facilities, two ground flares for the liquefaction trains, roads, levees surrounding the entire site, and warehouses, administrative, operations control room, and maintenance buildings.
Final Investment Decision on Train 4 and Train 5
In connection with consummating the Phase 1 equity joint venture, the Company’s equity partners each have options to invest in Train 4 and Train 5 equity, which would provide approximately 60% of the estimated equity funding required for each of Train 4 and Train 5. Inclusive of these options,
TotalEnergies has LNG purchase options of 1.5 MTPA for each of Train 4 and Train 5. If TotalEnergies exercises its LNG purchase options, the Company currently estimates that an additional approximately 3 MTPA must be contracted on a long-term basis for each of Train 4 and Train 5 prior to making a positive FID for the respective train.
The Company has commenced certain pre-FID activities for Train 4, including the FEED and EPC contract processes with Bechtel.
This press release contains forward-looking statements within the meaning of