New Fortress Energy Inc. Price & Performance (NFE)

Thank you, and good afternoon, everyone. Thank you for joining today's conference call, where we will discuss our fourth quarter and full year 2020 results This call is being recorded and will be available by replay on the Investors section of our website under the subheading Events and Presentations. The same location, you will find a presentation that we will walk through on today's call. Please review this as it includes important information on forward looking statements and non GAAP measures. With that, I'll turn it over to our Chairman and CEO, Wes Great, Matt, and thanks everyone for dialing in.

So let's just jump into it here and start with the presentation that we sent out. So starting on Page number three, quarterly financial results and annual financial results. So very, very good quarter, concluding a very, very good year. $13,000,000 in EBITDA for the quarter. Roughly a 50% increase over the guidance that we had previously provided. So it was a big beat for that. Very positive outlook for 2025 and beyond.

We were confirming our guidance for $1,000,000,000 for this year in total. So by the numbers, a very, very good report. The profile of the business that we run is tremendous. We're an integrated gas and power company. We have five countries, seven terminals, manage or own nearly 10 gigawatts of power. So a very, very significant portfolio. It's a capital intensive business to build, which is the bad news. But once it's created as it largely is now, it has massive competitive barriers to entry So sustainable competitive advantage is the the terms that we use And basically where we are right now is that we think by just focusing on our current markets, we feel that we have an opportunity in the next two years to grow EBITDA 50% or more. So huge numbers, I know, but that's something these markets are and how big the opportunities are if we execute on them. Growth with very little in the way of CapEx and reduce then the debt of the amount of our debt outstanding and the cost of it dramatically. Those are the goals that we have. There's tremendous work by our people this last year and over the first couple of months of this year, tremendous work actually, And I want to give a big thank you to all of them.

We're very excited for what we have accomplished thus far this year and we think that there's great things ahead. So that, let's turn to Page number four. Little bit more detail on the financial updates. Basically, here's the $314,000,000 and the $950,000,000 What is crystal clear is that the FLNG asset coming online was the star of the show for us. The star of the quarter and contributing significantly to earnings now and also in the future. The volumes that are created there allowed us to optimize the portfolio and make significant returns. And the positions continue to do so in the quarters ahead. So two areas of focus for us is long term growth in the core markets number one and number two are asset sales and deleveraging. So a little bit of the detail in terms of the business. Page number five, capital markets update. In the last six months or so, we have done a ton of different capital markets activities to all to strengthen balance sheet, increase liquidity. And set ourselves up well for future growth.

October, we raised $4.00 $9 in new equity including $50,000,000 of my own equity. November, we extended the $900,000,000 revolver to October of twenty twenty seven. We issued the $2,700,000,000 bond that basically consolidated debt and extended its maturity out to 2029. And then in March, as recently as today, it's been a very busy period, at the start of the year, we closed the $425,000,000 Term Loan B upsize and we refinanced our corporate facility in Brazil, which was $2,000,000 increase that to $350,000,000 total of $4,775,000,000 in corporate transactions, and it's put us up in a terrific place in terms of our balance sheet and liquidity to now execute what our plans are.

The goal is very simple. We want to deleverage We want to simplify the capital structure and we want to reduce debt cost. All of which are well in hand. Let's turn now to Page six. Gas supply update, as I said, FOG entering service was a big catalyst for us. And as a result, we have excess supply versus our current base demand. The significant incremental demand that we see in our core markets will definitely come over the next couple of years. But this now this surplus then leads to the next question. Do we wait and sell excess cargoes over time until demand comes online? Do we hedge and sell today to capture excess spread? You look at the chart on the right hand side, the blue line represents the price of TTF as it goes forward. So you can see that it goes down fairly substantially over the last the next couple of years. Then flattens out as people expect more and more gas to come onto the market. The yellow box represents the amount of gas or profitability that we have above our base return. So the base return to the bottom, that's if we sell to our customers down line with the returns that we generate.

The yellow is the amount above that. And so the question is, do we hedge or sell some of this do we just let it all ride? I think in particular with the geopolitical time that we live in, In particular, the prospects for some kind of a resolution in the Ukraine Russian war. We think that that alone would have a profound impact on the market. And if we did nothing and simply waited for the events to transpire, the yellow box could get bigger, it could get actually quite a bit smaller. And so the answer what we did in our judgment was to derisk, sell a portion of it, keep significant upside if the market stays elevated or goes higher. But if the market falls, we're insulated puts cash on balance sheet, conservative approach by us that we felt was struck the right balance. It's good for our earnings. It's good for our cash flow. It was the right decision to make We still retain a lot of optionality. So a very, very good result. With our FLNG volumes. Page number seven, I'm just going to breeze on these because we're going to talk about them in some detail.

Chris is going to talk about our fast LNG assets. I'll spend some time talking about Puerto Rico. Have our senior management, Deandro Cunha and Jeremy Dawson on the phone to talk about Brazil.

Loss of tremendous commercial activity, greatest opportunities for us exist in our biggest markets. So there's a lot that we have to talk about that we're looking forward to. Chris?

New. Hey, thanks, Wes.

Really appreciate it. So as Wes mentioned, we're pleased to report that our FLNG-one asset is performing above nameplate capacity, demonstrating the exceptional dedication expertise of our operators. Since achieving first gas in late July, we successfully navigated several planned outages, taking advantage of these windows to implement key process optimizations. These proactive measures have allowed us to maximize uptime enhance production efficiency and ensure the asset is operating at optimal conditions. Notably, our highest production milestone was achieved in January, we reached approximately 120% of nameplate capacity, a testament to the team's commitment to operational excellence. To date, we've shipped 12 cargoes totaling approximately 24 TBtu. In parallel, we've taken significant steps to lower other operating costs and renegotiating service contracts and consolidating third party vendor support. Additionally, we've made tremendous progress in our commitment to the local community by increasing We anticipate this figure will rise to 80% Mexican workforce over the course of twenty twenty twenty twenty five reinforcing our long term investment in the region.

Another key initiative underway is the direct sourcing of molecules from the Agua Dulce hub. Which is expected to yield annual savings of $15,000,000 to $30,000,000 in to further optimize our supply chain.

On the accounting front, due to the asset's exceptional performance and its ability to consistently produce, we officially placed the asset into service as of 12/31/2024 This milestone marks a significant step in the lifecycle of FLNG-one and positions us for continued success in the year ahead. Flipping to Slide number 10. Investors have heard us talk about the incredible facility onshore at Altamira before.

As a quick reminder, it was built in the mid-2000s by Shell and is ideal facility to turn from an import terminal to an export terminal. The infrastructure includes deepwater berthing access including direct access to the open waters in the Gulf Of America or Gulf Of which operational in cold now access to pipeline gas and power infrastructure and an incredibly protected operational location with only one named hurricane in the last ninety years has hit the facility and it was only a category one.

A comment on the FOG project generally as this is a materially different construction project as compared with FLNG one. On FLNG one, we started construction and engineering at the same time.

We didn't initially have a chosen deployment location, so our team had to engineer for any conceivable seat condition as well as multiple gas composition scenarios. The FOG1 asset was also taken offshore too early in the development of the project and manpower constraints and weather conditions impacted the schedule materially. Contrast all of these FLNG one challenges with the FLNG two project and the differences are stark. We're now able to build something that is already designed, engineered in the case of the modules we have, as built drawings all of this making the construction much easier to know and to price is what we've done with our construction partners.

On the next slide, we've outlined the current expected time line for the completion of the FLNG2 asset. Started engineering and procurement in Q2 of twenty twenty three using FLNG one as a basis for design of the modules and the ULTOMIR terminal as the deployment location. We signed a gas supply and partnership agreement January of twenty twenty four and started module construction at the same time. We currently expect onshore construction to commence this summer and are working closely with CFE on that process and write additional updates as permits are received. Over the last eighteen months, we spent about $625,000,000 with the bulk of that being on back end loaded with about $160,000,000 expected to be spent in 2025 and the remainder to be spent in 2026 or 2027. Given that we built the modules given that the modules that we built for FLNG one are the exact same for FLNG two, we were able to shift risk to the construction contractor and get price and schedule certainty. As a result of and as of 02/01/2025, we were over 50% complete on the modules and the majority of the large pieces of kit are either already at the queue at yard or ready to be shipped when needed.

With that, I'll turn it back over to West for Puerto Rico. Great. Thanks, Chris. So let's flip to the following page, Page number 13.

Here's a map of Puerto Rico with a bunch of dots on it. The dots represent power plants different facilities. There's the NFE facilities, there are current power plants, there are power plants that are targets for fuel switch there's new builds and peakers and other inero sites. So lots of dots on the map. Just a little bit of context to where we are. So today, we have two contracts. One where we provide gas to the Yellow Dot, which is our San Juan LNG facility, where we provide gas to the San Juan 5 And 6 power plant that runs through March of twenty twenty six. Two is we have a gas contract on the two plants we built for the Army Corps that are adjacent one right there in the yard, the other five miles down the road. The two of those together total about 50 TBtu's of production, so about one ton of LNG. The conversions, which I'll talk about in just a second, represent a massive opportunity for Puerto Rico and by derivative a massive opportunity for us. To basically take fuel ready assets that currently burn diesel, switch them to natural gas, save hundreds of millions billions of dollars over the years in time for the Puerto Ricans and actually generate a significant amount of business for us.

That is between 5,100 TBT's in total demand. Lastly, the newbuild business. Is also very significant. They announced their first new build power plant in twenty five years in January. We are going to be providing the gas that when it comes online in 2028. We estimate 152 TBtu's in total volume. If you add that all up, you take the 50 that we have now, it grows to between two fifty to three fifty in total. So truly, we're a fraction today of where we believe the market on this can be. Potentially the biggest gas to power market opportunity in the world. Nobody is in a better position to access this and perform on behalf of Puerto Rico than we are. So let's just flip the page real quickly. Page 14, these are the photos you've seen many times. The left hand side is the San Juan 5.6. That orange boat is a boat that we have leased sits in front of our facility.

The right hand side, there are two other contracts or assets in the Island Wide contract. It is a 80 TBtu contract. We use about half of that little less than half of it today. And that contract expired on March 15 and we just extended it this weekend for one more year. I'll talk about that in just a second. Page 15, the opportunity to convert is the earliest and easiest short term wind for Puerto Rico and for us to help them with. So there are four plants that we show here. Are currently burning diesel. Nine twenty five megawatts, they are actually used significantly. And so the the cost savings would be $5 or today's price is roughly between what they pay for diesel and what they would pay for natural gas.

These are a high priority. The government has made it a high priority. We are very aligned with them on that. This alone would double the size of our portfolio. And say Puerto Rico $250,000,000 to $500,000,000 a year. So it's a win win on both sides and something that we are very, very focused on in the short term. [indiscernible] long term it's all about new power. So a little bit of context. Average power plant in Puerto Rico built 1981, 50% of the power plants built in 1975 and before. Desperate for more reliable, less expensive power. That's the situation. First new plant that they have announced to be built in twenty five years is the one that is shown here schematically. Was originally scheduled to be a four seventy eight megawatt power plant. They've upsized it to be five fifty megawatts. We are the gas provider to that project. So twenty years at roughly 30 TBTUs at today's margins that's roughly $120,000,000 of margin for twenty years with essentially no CapEx. This is the benefit of having spent all the capital this capital intensive business, established the beachhead and now we're able to service customers efficiently course, it generates a tremendous amount of margin for us.

Page number 17, Yesterday, we announced the one year extension of the 80 TBTU contract. This is the island wide contract that allows them to grow gas use from currently 40 TBTUs to roughly 80 is the maximum over the next year. We think that the bulk of that can be taken up by the the temp power growth. We've already saved Puerto Rico over $500,000,000 in fuel savings on the San Juan five six. So we think by converting more power plants and burning more gas in this manner is the fastest way to more savings for Puerto Rico. So let's talk about page number 18. Because we announced this late last night, and this is the change in the O and M agreement that exists between Henera, which is our wholly owned subsidiary that manages the PREPA plants in exchange for $110,000,000 payment.

The Henera contract itself is actually quite simple. We get paid a base fee of $22,500,000 had $100,000,000 incentive that basically we got paid 50% of the cost savings that were generated either by operations or from fuel savings. We earned $110,000,000 over the course of that first year of the contract. We billed them as initially in July and have built them a number of times ever since then. They wanted to convert and grow gas. And utilize more of our business down there, but they became as government, very fixated on the incentive structure. And we said, after a lot of consultation with them, Fine. The government basically at the heart of it, the government basically didn't feel comfortable with the structure of having us sell them gas and also charging them incentive fee. This is clearly the contract and New incentives from day one, so we after again a lot of consultation with them, we said, you know what, try and understand what it is you're focused on try and come up with what we're focused on and find a compromise that works for both of us. We have two goals.

One, we're owed $110,000,000 and New want to get paid.

As we're just the owed. Two, we wanted to grow our supply of gas and by doing so, A, make more money because we're trying to generate more revenues and B, a more productive business. And be save them billions of dollars in fuel saving.

So we decided on this compromise. Pay us $100,000,000 on $10,000,000 We agreed to eliminate the incentives Together, we then try to take the island off of diesel and fuel oil save them potentially billions and generate far more for us than the incentive structure would have in a manner that they feel that they are aligned with us. So it's very much of a win win.

With that, let me turn it over to Leandro Acuna and Jeremy Dawson to talk briefly about our Brazil operation. Fellows? Thank you very much, Waz. Good afternoon, everyone. My name is Leandro Coena.

And I'm pleased to be presenting the NFE Brazil SaaS alongside my partner in Brazil, Jeremy Dawson. Starting on Slide 20, I want to take this opportunity to highlight the incredible achievements NFE has made in Brazil.

Over the past almost four years now since the acquisition of HIGU. During this time, we have made significant investments laying the groundwork for a successful business prepared to deliver This slide showcase the impressive assets that we built in Brazil. We now operate two LNG terminals with a supply capacity of approximately 200 terabits used per year each terminal or about in the North Of Brazil in a region with no access to pipelines is already operating to serve one key customer the big Marsh hydro aluminum refinery. Soon the terminal will also serve two of our own power plants on the construction in that region, totally an impressive 2.2 gigawatts of installed capacity. Furthermore, our Santa Catarina Terminal, South Brazil terminal that is connected to the same pipeline used by Brazil to import gas from Bolivia is fully commissioned and ready to play a major role in the upcoming 2025 capacity auction in Brazil. Which is scheduled by the way to happen in June 2025. The auction is an amazing opportunity for New and with our terminal, we could not only secure long term power purchase agreements, own projects, but also provide gas and terminal services to existing power plants in the region.

We believe most of the South Terminal capacity will be contracted after the auction, reinforcing our position as a key player Brazil's energy landscape. I will provide more details on the auction opportunity in the following slides. Now let's move to Slide number 21 please. And continuing with an overview of our business, I want to emphasize the strong foundation we've built in Brazil through our existing contract. In addition to the Alunorte long term gas supply agreement that I mentioned it before, we have secured over 2.2 gigawatts with long term power purchase agreements on contracted for more than fifteen years with inflation adjusted PPAs. This ensure a stable and predictable New stream for NFE in the long run. It's also important to highlight that NFE has no commodity index risk in any of those existing contracts. Both Alunortis GSA and the power plant PPAs, they do have a pass through for the commodity price. With those contracts, as far as I'm concerned, the Baccaratnam Terminal is the only terminal in Brazil with almost 100% of its capacity long term contracted. It's still on existing contracts on the funding side, we have already secured all necessary equity funding was already injected into the project.

And on the debt front, the long term financing was already secured and disbursed. This demonstrates our diligence and commitment to to these projects, which are fully funded until their completion. And looking ahead, we are focused on near term growth opportunities and we believe that that the upcoming Brazilian capacity auction could represent a great second wave of growth for NFE in Brazil. The market is expecting a big auction that will contract to over 10 gigawatts of capacity. This auction represents the potential for higher margins for NFE in the South Terminal and requires minimal additional capital investment. As we have already built the necessary foundation for the of our portfolio. I would also like to highlight that NFE registered over two gigawatts of its own capacity to participate in the next auction and has many players requesting gas supply to our terminal, which again elevates our confidence that after the auction in June, a material part of the TGS terminal will have long term contracts. Meaning NFU could potentially double its size in Brazil. Moving to Slide 22, I'm going to give you guys an overview about the auction. So first of all, this slide highlights the strategic advantage of our TGS terminal's location It's ideally positioned to serve parts of the anticipated demand from the upcoming auction supplying not only greenfield projects, but also existing assets in a region that currently lack access to flexible and reliable gas.

If you move to Slide 23, please. As I mentioned, we see a significant growth potential in the power auction scheduled for June. As also said, this auction is expected to award between $10,000,000 to 15 gigawatts of new and existing power projects The PPAs awarded in this auction will commence its operation between '25 and 02/1930 and the PPA term will be from ten years for our existing power plants to fifteen years for new plants. Those contracts, they will be very similar to the one that we own in Barcariano, the 1.6 gigawatts power plant. Where the system will pay a capacity fee for the power project and an energy fee whenever the project is called to produce power. The energy fee of those contracts can be linked to international indexes including spot indices like JKM and the TTS. As I mentioned it before, NFE already registered two gigawatts of our own projects for this auction. And have received requests from third parties to supply gas to an additional part of the terminal capacity to supply existing projects, supplying gas and terminal services aiming for revenues stream already starting as early as of September 2025 and utilizing parts of the terminal to supply new projects, including NFVs.

Of course, targeting commercial operation date between 2028 and 02/1930. It's important to highlight again that we can capture substantial growth with very little CapEx and equity needs. At this stage, we have New overbooking of opportunities for our terminal and we will need to select the best projects to support our growth in Brazil until the auction date. This strong demand underscores the value of our integrated LNG and power capabilities. And NFE right now in Brazil is only one of the few players that is able to provide these capabilities. We are confident that any of you will see significant share of the awarded capacity in the auction further reinforcing our position as a leading energy provider in Brazil.

This growth will generate substantial value, I'm sure, for our shareholders and contribute to Brazil's energy security and economic development. I will now hand it over to Jeremy Dawson, who will give you an update on construction.

Thank you, Leandro, and good afternoon, everybody.

My name is Jeremy Dawson. I'm responsible for building and operating the Brazilian assets. I'd like to start, I just have a couple of slides. I'm on Slide 24.

But I would like to start just with the bottom line upfront.

The good news, we're on schedule. In one case, we're ahead of schedule with construction.

We're also on budget. So this is an excellent outcome for the company.

And we've done a good job in terms of contracting and being able to eliminate any CapEx leakage and also been able to back to back any regulatory or delay risk we have to the parties most capable of managing that risk, which is the construction consortiums themselves. If I could have you draw your attention to the map on the right side of the slide, I'd like to point out this nice geographical [indiscernible] You can see the Alunorti North Hydro Aluminum Refinery right in the middle of the photo. And then just down to the left, both of our power plant locations, I'll talk about those just a second. But this is a profitable cluster of assets that will be delivered into next summer. And we will then be able to conclude our CapEx cycle in the Barkarena This cluster of assets is going to have a demand of approximately 60 TBtu's per year.

With potential for upsizing that as the power plants dispatch increases. In years of poor hydrology in Brazil, which are becoming more frequent. I'd like to start with the North Hydro contract. This is a 30 TBtu per annum contract, which we started servicing in March of twenty twenty four.

It's got a fifteen year tenure with a very creditworthy counterparty in Norsk, That contract and our current volumes on a month on a daily basis, we're currently supplying approximately 74,000,000 cubic feet day. Of gas to that facility. Have two power projects, which you've heard about before. I'll give you an update on them. Although they're both power plants, of course, they're quite different.

The Selba Power Plant is a combined cycle power plant, which basically means it captures the waste heat generated by the turbine combustion and passes that through a water and steam cycle to increase the power plant compared to a simple cycle project.

That's a very important process for a power plant that's expected to dispatch any significant amount on an annual basis, which this plant does. The power plant is a six thirty megawatt power plant using Mitsubishi technology. It is 88% complete.

Has a twenty five year PPA. With all of the terms that Leandro mentioned before.

In terms of commodity risk pass through and also inflation adjusted. The COD or the commercial operation date of this asset will occur in the second half of this year. The Porto SAM asset is quite different. This is a simple cycle project. Which is generally used when you have any kind of sort of fast start peak support application.

Which is the nature of this asset. It's a 1.6 gigawatt power plant, which is expected to dispatch less than Selba.

But is at 39% complete, has a fifteen year PPA and the COD will be the following summer.

If I could have you go to now Slide 25, please.

I want to get into a little bit more detail on these assets.

And talk about the construction specifically of each one.

As I did mention, Selba II is the six thirty megawatt plant And being combined cycle, it's a bit more complex in terms of the engineering and the erection phase of this project. So we chose an engineering heavy consortium. Chose a consortium a Japanese consortium of Toyo Engineering with Mitsubishi as the equipment and have been able to secure lump sum turnkey contracts which place the risk of schedule and cost overruns firmly on the consortium. And also aligns our goals in terms of project completion on time and on budget. The project is 88% complete. As I said, we've already started cold commissioning. Just this week, we had a very important milestone for the project. Especially for a combined cycle project. We were able to introduce water onto the site into the water treatment plant, which allows us to start commissioning the water and steam cycle. This project, as I said, will provide firm power dispatch annually during the second semester of every year. And the cash flows for this project will commence in the second half of twenty twenty five.

You can see a few photos there on the right. Porto CEM, we have a different consortium makeup primarily because of the different nature of the projects. A simple cycle project is much more civil construction focused rather than the complex erection and construction activities that are related to combined cycle.

So we chose a local contractor that is very experienced and has a very good track record in Brazil and is very experienced with the civil construction part of the scope. They're also partnered with Mitsubishi on a joint and several basis in one in our strong lump sum turnkey contracts.

Project is 39% complete compared to a planned at this stage completion of 31%. So we're quite pleased to be significantly ahead of schedule. This is, as I said before, a standby asset. It is a capacity contract where we earn very healthy capacity payments. In exchange for being ready to be online. Immediately upon being notified by the system operator.

The capacity revenues of this contract will commence in the second half of twenty twenty six, as I said before.

Wanted to point out one interesting or two interesting photos on Porto San which highlight sort of the challenges that are inherent in constructing in a very remote and rainy area of the world, in this case, we're building in the Amazon.

You can see in the first photo on the bottom left that we have a very large tent erected over the site. That tent is almost 60 feet high and over 300 feet long. It essentially is covering an area of the site where we're going to do a lot of of civil work and installation of balance of plant equipment. During the rainy season. So essentially, we created a dome so that we could continue construction without any interference from the weather that is going on right now as we're in the rainy season. Then you see a photo of one of the gas turbines that is currently en route to the site. That is a Mitsubishi five zero one JAC advanced air cooled design gas turbine. It's state of the art. It is one of the largest turbines available in the world with a ISO output rating of about of over 400 megawatts. It is one of the five of these turbines that we own as NFE.

We're the second largest fleet owner second largest customer of Mitsubishi power in the world. When it comes to advanced class gas turbines.

This gas turbine is being loaded in this photo at the Savannah Georgia Port after departing Mitsubishi's manufacturing facilities in The United States. They're two of them are currently in route to to our project right now. They'll arrive in about four to five weeks. And the other two will arrive a few months after that. With that, I'll turn it over to Chris for the financials update.

Super. Thanks, Jeremy. Let's turn to the next section. I'll walk through a little more on both the financial results for the quarter and fiscal year twenty twenty four as well as an update on cash flow and liquidity. So turning to Slide '27, we've included some comments on financing activities both past and present. As you're all familiar, in Q4 twenty twenty four, as the company completed a series of refinancing transactions we exchanged $875,000,000 of 25 notes dollars 1,000,000,000 of 26 notes, $500,000,000 of 29 notes into a new $2,700,000,000 2029 tranche that included about $300,000,000 of new cash proceeds to the balance sheet.

As part of that transaction, we agreed to an amendment with our revolving credit facility lenders to extend $900,000,000 of the $1,000,000,000 revolver into October of twenty twenty seven. In addition, we issued $400,000,000 of primary equity anchored by an additional personal investment from our CEO, In Friday, we priced and today we're closing the upsize of our Term Loan B facility where we raised $25,000,000 associated with this, we terminated commitments under the term loan A facility in the amount of $350,000,000 This transaction puts incremental cash on balance sheet, which will be used to fund the FLNG2 CapEx program. This refinancing was a natural progression of terming out and replacing relation capital from select members of our supportive bank group with institutional investors that are better situated to have long term funded loans in place. The 2025 asset sales processes are well underway and Wes has talked about earlier, we expect to generate $2,000,000,000 in net proceeds after fees and any asset level debt payoffs, which can be used to further pay down corporate debt. Specifically, we will be using eligible proceeds from asset sales to retire the 2020 notes or we could do a refinancing to extend them, but in any event that is a near term focus for us.

Longer term, we think the right capital structure would be to take out the Term Loan B and the remainder [indiscernible] With the long term asset level financing secured by the FLNG units as well as long term offtake agreement. We think that this combination of delevering as well as extending maturities is in the best interest of debt and equity holders alike. My final comment here is that while we have seen some downgrades to our corporate debt ratings, we would expect that these steps once completed will result in positive improvements to our corporate debt profile which we expect will lead to upgrades. Flipping to Slide 28, and the takeaway from this page is that as a result of refinancing transactions, and equity capital raise we completed in Q4 as well as the monetizing the portion of our supply that we were long, you can see the company has ample liquidity to service debt and to pay committed CapEx. On the left side of the page, we have a cash flow walk that we've included in prior presentations.

Embedded in this, we've updated the 2025 estimated adjusted EBITDA to be $1,000,000,000 as Wes has described already this afternoon. On CapEx, this now includes the costs associated with FLNG too as we have that cash on balance sheet. But it continues to exclude the Brazil power plant CapEx, which is fully funded through either restricted cash on the balance sheet or committed financing facilities. For debt service, this includes the increased cost of [indiscernible] coming from asset sale proceeds. An important note here is that the way the debt documents work, a minimum of 75% of any asset sale proceeds in excess of $50,000,000 go to pay off debt. The company does have discretion in keeping a portion of the cash on the balance sheet, but for this exercise and consistent with what we've said publicly, we are assuming we use all of the proceeds to delever. And again, to keep it simple, this assumes a pay down is pro rata to the 29 notes, the RCF, and the term loans. We've excluded the portion of adjusted EBITDA that represents earnings that are generated from charter to third parties and we've excluded the portion of ship charter hire that's running through interest expense.

This results in in cash flow use of $200,000,000 for fiscal year twenty twenty five. On the right side of the page, we show beginning of the year unrestricted cash balance $493,000,000 then add to that the proceeds from the Term Loan B and Luminess Financing that have just closed, which $490,000,000 You have the negative $200,000,000 of funds of cash flow from the left side of the page. And finally, our expectation of the FEMA claim, which which after taxes and debt repayment suite yields cash inflows of $425,000,000 All of this results in an end of year cash balance projection in excess of $1,200,000,000 Turn forward to Slide 29 and we have the financial results. Total segment operating margin was $240,000,000 for Q4, which just under $1,100,000,000 for fiscal year twenty twenty four, For Q4, this is $2.00 $6,000,000 from sales to customers through our down stream terminals and cargoes that were sold to the market, which about 85% of the revenue for the quarter. Similar percentage exists for the full year 2024, which is nine fifty five for the year or 88% of total segment operating margin.

In Q4, we had $34,000,000 of operating margin from the ships, which contributed to $137,000,000 for the full year. Core SG and A for the third quarter was $34,000,000 which is up slightly [indiscernible] For 2025, we're forecasting $30,000,000 per quarter or $120,000,000 New year. The deferred earnings line was $108,000,000 in the fourth quarter and is nil for the fiscal year 2024. This represents previously contemplated cargo sales that were included in segment revenue in Q2 and Q3, but they were not recognized in EBITDA until Q4. As a result of all of this and the punch line adjusted EBITDA for the third quarter $313,000,000 or $950,000,000 for the full year 2024. Moving on to Slide 30. For Q4, dollars $242,000,000 of a net loss for GAAP or a loss of $1.11 per share for fiscal year twenty twenty four, dollars $270,000,000 of a net loss or $1.25 a share. Importantly, the majority of the Q4 result is a $235,000,000 of charges related to the extinguishment of debt. $225,000,000 of that was non cash is largely driven by the equity issuance associated with the new 2029 notes which was issued as part of the refinancing. If you adjust that and other non recurring items out, we would result in $29,000,000 of net income for Q4 or $0.13 a share and $101,000,000 of net income for the full year $24 or $0.46 a share.

Finally, funds from operations for the fourth quarter of $68,000,000 and for the fiscal year $63,000,000 Now that we've shared the high level earnings for Q4 and fiscal year 'twenty four, I want to expand just a little more on the financing financial statement impact of the press release out this morning regarding the termination of the fuel incentives with PREPA. In prior quarters, notably Q2 and Q3 twenty twenty four, we previously recognized $58,000,000 associated with the fuel savings under our Henerica incentive contract with PREPA. However, given that we are changing this incentive contract, we are having to reverse that revenue. So we recognized $33,000,000 in fuel savings during Q2 twenty five million dollars in fuel savings during Q3 and we had been intending to recognize another $25,000,000 in Q4. So we were previously projecting an additional $83,000,000 in EBITDA for fiscal year 'twenty four that will be excluded and deferred over future periods with the cash is in hand New, given this has been changing daily over the past week, we need a couple of extra days to ensure appropriate presentation and disclosures in the 10 ks. So as a result, we will be filing a notification of late filing under Rule 12b-twenty five with the SEC.

It is important to note though that the income statement and adjusted EBITDA numbers included in our earnings release are reflective of the final PREPA deal. We do not any expect any material changes these results released and furnished within the earnings eight ks filed with the SEC today. Further, it is our expectation that we will file the 10 ks before the end of the week. With that, I'll turn the call back over to Wes for some additional updates.

Great. Just a couple of brief updates and then we'll go to questions. So the three most frequently asked questions, I thought I would actually like to say to the end. So questions about the asset sales, we've said this before, this is all public New are very focused on deleveraging the company. Deleveraging can happen from one of two ways. It can happen old fashion way by making more money than you spend and using that to pay down debt which of course we intend to do and that will become a bigger and bigger factor for us as we move forward. Number two though, you can sell assets at accretive values and use those proceeds to pay down debt. The first asset that we are focused on is Jamaica. So Jamaica is a the country where we went first. So it's our oldest and most developed market. Just to buy review, it's about a 30 TBtu downstream market, which generate about $125,000,000 in EBITDA. Virtually, all of that is flow because that's what happens in these businesses over time is that once they're up and running, there's very little CapEx to run them. It's an extremely attractive profile of assets.

It's got twenty plus years of downstream demand contractually got twenty plus years of gas supply. 100% of the assets are U. S. Dollar based. It's never suffered a dollar of credit loss in its entire history. So it is a phenomenal asset. It's in a very, very good market. And we have phenomenal people that actually we're lucky to work with down there. So New surprisingly, it's been a very soft after asset. We started this process back in the fourth quarter. We're now in a kind of a final process with a handful of different folks. And although it's always hard to predict the exact timing for this, you like, the outcome thus far has been very positive and then we'll kind of go on from there. So it's the asset sale update. FEMA, my favorite four letter word, has been a very, very productive period of time for us FEMA way that it works just administratively is that you have we contracted with a prime contractor who then in turn contracts with the Army Corps that then in turn that money is paid by FEMA. FEMA obviously is the is the disaster relief providers. They play a massive role in all seriousness both in a place like Puerto Rico, but also in the wildfires out west and every place else.

So it's a critical role that we value and deeply respect. We have had the most kind of comprehensive person interactions with the Army Corps folks. I think that there's a great amount of understanding that we have accomplished in terms of them explaining us explaining to them what the nature is of our business and exactly how we provide a gas to this and all the different aspects of the contract. And we've learned a lot about from them in terms of how they think the process and whatnot. It's an interactive process that does not have a definitive date right now, but I can say that the level of respect and interaction across the board between us and between them and between FEMA is at an all time high for sure and we feel very good about the constructiveness of it. Lastly, Klondike is our our effort to provide power to data center developments. That asset, the first asset that we have that is in our portfolio is in Pennsylvania. We filed in early January to get building permits and air permits for the power plant that we would build there.

We expect to get those sometime in the middle of this year. And we are hopeful that later this year we'll have good news with respect to the consummation of construction and marketing with it. So those are the three updates. It's been obviously a heck of a period. Q4, dollars $313,000,000 in EBITDA.

The year $950,000,000 in EBITDA. Our guidance for next year is $1,000,000,000 which is what we're just reaffirming what we said before. Our two biggest markets are the ones that have the biggest opportunities. Brazil, that first power plant, we expect to turn on in the second half of the year and produce [indiscernible] are upcoming. They could be significant assets for us. Incredibly well positioned in that market in both the North and most importantly in the South. Puerto Rico, perhaps the biggest gas to power opportunity in the world, We are the sole provider of gas in San Juan where over 80% of the people live. In that geographic area. So we feel like we're incredibly well positioned. Capital structure wise, $4,775,000,000 later, it's been a very, very busy and productive year for us.

The balance sheet is in much better shape than it was at the beginning of it. We have excellent liquidity as Chris went through. We are poised to deleverage, simplify and grow the business. And those are the perspectives that we have. So with that, I will take a pause and we'll open it up to questions. Thank you very much.

And we'll take our first question from Ben Nolan with Stifel.

Yes, thanks. I appreciate you taking my questions.

So the first I wanted to start if we could on Slide number six, where you talked about your effective open position Can you maybe help me quantify that a little bit? You've just between what you're buying and producing 170 TBTUs of annual supply. How much of that is available? And then you talk about a portion It has been fixed. Can you maybe put a little little context on the spread that you have locked in for?

Yes.

Yes. The majority of our position, the vast majority of it is either sold or destined for a downstream customer or hedged. So our actual long position would show up as something slightly more than that then. Basically the decision that we made, as I said, was to derisk the portfolio with really the caveat being that we think that there is a lot of volatility potentially ahead And to the extent that there was, we didn't want to let the yellow box evaporate.

And so our goal was not to be exposed to at this point either increases in TTF that actually then somehow hurt us because we were short. Or decrease in the TTF that somehow eroded the profits that we already had in the balance sheet. And so thought that actually the conservative approach was the right one and that's why we hedged it up. Obviously, when the FLNG2 comes into the portfolio here in the first part of twenty twenty seven, those will be incremental volumes. Those are volumes that we are already talking to people that are interested in buying them. So it's a good position to be in. So that would be technically a long position, but it's not yet something that is deliverable about it. But the on the balance sheet deliverable positions, we are essentially neutral.

So we have either sold committed discreetly or we have hedged them so that we are actually insulated from price moves.

Okay.

And then for my next question, I know in conversation that we've had in the past, there were a number of cost saving initiatives that you guys were looking to undertake to do that. And in Puerto Rico or in New in Jamaica? Could you maybe give any update on first of all what those look like?

How meaningful they would be and where you are in the Yes. I'd say the majority of the cost savings are from the shifts FSRU side of the balance sheet. So we've got FSRUs that have come back to us that are under market we've talked about initiatives to try to realize the gap between market and where they're priced. Those are those are more opportunities on the profit side.

The other side, we've got abundance of ships. When we started the we increased the portfolio of gas we provided in Puerto Rico, we increased the number of supply ships from two to five. We're kind of we're trying to reduce that from five to two. So and that is well underway. We spent a tremendous amount of time and effort, basically refurbishing and upgrading the berth in Puerto Rico to be able to take in a bigger ship. That will then simplify that supply chain. That's what we're focused on right New. We have a handful of other initiatives that we think are also meaningful. One of the things that has been really interesting is that as we have basically built some version of just about every terminal, you can imagine, We've learned a lot of things. As part of that, we think that there are significant opportunities. And pretty much in the shipping business, everything you touch is worth millions of dollars. So if you can reduce or ship or two, or just use it more efficiently, you can save meaningful amounts of money and that really is [indiscernible] On the people side, obviously, we think there's always opportunities to continue to grow the business and whatnot, but we've got a great core of people that have worked extremely hard and really effectively so we think there's less on the labor side, but on the ship side of it, we think there's definitely meaningful opportunities to do do some good work All right.

I appreciate Thanks, Wes. New. Thanks, Ben.

And we'll take our next question from Chris Robertson with Deutsche Bank.

Hi, good afternoon. Thank you for taking my questions.

I was going to ask a bit About the Brazil power auction, but Leander did a pretty good job of laying an overview there. So I wanted to ask him a bit more of a specific question about the two gigawatts that you registered of your own power Just in terms of where would you source the turbines? How are you thinking about the number of different projects that makes up that two gigawatts and what estimated CapEx might look like for something like that?

Hi, Chris. Thanks for your question. So we as I said, we brushed two gigawatts in projects. And you went straight to the point, I mean, the most difficult thing for this auction will be to secure turbines availability. And we did it So we have a secured turbines from one of the O and M's that are our partners. So we're confident that we have terminals available New only for the twenty twenty eight COD date, but also for 2029 and 2020. The CapEx for those plants I'm mirroring here what we just did at Perto San, which we hired the full EPC Lumpsan turnkey last year. Is around BRL600 billion dollars I'm sorry, per kilowatts installed. And those projects, they are going to be spread over two different sites. Initially. Nevertheless, we have many other projects that qualified for the auction connected to the same pipeline that we do provide gas that would also be interested to somehow partner with us So that number until the auction in June could increase a bit. Okay.

I guess as a follow-up, when you guys are talking to potential partners here, that have existing assets and you're coming in as a potential gas supply partner. How are those conversations going with the potential for sharing in some part of fixed capacity payment in addition to the variable dispatch and the spread on that? That part of the conversation or where does that Yes, absolutely, Chris. I mean, we are the about potentially supplying gas to brownfield assets. And in the end of the day, what those projects need is a kind of a gas call option, right? Because there are power plants available to produce power whenever the system needs.

So they need to buy gas whenever there required to produce power. So it's a gas call option. And yes, I mean, in order to buy that gas call option for us, they will need to premium for the call option, which is our terminal fee plus a strike price that it's going to be a premium over the JK M. So yes, I would say that all the players in the country they are already expecting that because we have done contracts before charging capacity fees or terminal fees. In a high strike price whenever they buy the gas. So all the discussions that we are having there having right now, they are boarding on that direction.

Great. Yes, that was really helpful, Leonard. Thank you. I'll turn it over. Thank you. And we'll take our next question from Sharif Almagrovi BTIG.

Hey, thanks for taking my questions. A couple on Puerto Rico.

First, as we think about building to that $1,000,000,000 of EBITDA guidance, it seems like there's a lot of upside to volumes under the island wide contract. How quickly can some of these older plants switch over to gas?

Really as quickly as they can get regas and And so, if you have the regas in stock, which we do, you can actually convert them fairly quickly. Mega gens are actually connected to a regas system New, so they could actually convert at the drop of a hat. The Maguaz plant is entirely gas ready. They just simply needs regas that is put in place. It's basically a regas unit and a buffer tank as what kind of sits between it. The Campilacci plant, same thing. It's actually a gas ready plant and 160 of the two forty megawatts. The other asset needs some technical work. And the Aguirre plant is actually ready today.

So the short term opportunity on the conversions is significant. And it really became one of the factors in the discussions we had them. As I said, they were just uncomfortable, notwithstanding the contract, they were uncomfortable with the notion that we would selling gas and generating revenues and still earning an incentive. Even though that's what the contract called for. And it was an easy decision to sit down with them and say, look, we share objectives and our objectives are we want us to provide more gas and power to the island, we want to save you a lot of money and they want to save money on that go forward basis and they want to save on the incentives. And so it's a very, very simple and easy transaction. There are New things in life that are truly win wins. This is one of them. So happy to to do our part on that and we think that benefits will become manifest quickly because we think that there's going to be significant amount of activity on these initiatives on the conversion side.

That's helpful color.

And then kind of longer term, how does contract renewal work for the Islandwide contract?

Is it there a fixed number of extension options or like does it just roll every March?

There's a couple of different extension options, but for the first time, the government really came to us, came to me a couple of months ago and said, we would like to run an RFP for a new contract that would have a significantly more duration. [indiscernible] the year by year tenor of it [indiscernible] instability in terms of their energy security They recognize what a critical part of the energy sector of the gas is today.

Only to get more critical as they add more volume into it. And so this is something we talked about having a duration of ten years or fifteen years or even longer. So we know what the tenure looks like on the new contract that we signed. On the new power plant, that's a twenty year. So but I would expect that there will be something that happens in the not too distant future with no specific time associated with it right New. I would expect it would end up being a significantly longer duration, at least on a portion of it than what they have right now.

Wes, thanks very much for taking my questions.

Great. Thank you very much. [indiscernible] take our next question from Craig Sheer with Tuohy Brothers.

Hi. Thanks for taking the question. Just continuing on the question about renewing New extending longer term the ADT Btu contract with Islandwide with PREPA?

So your initial sales on the island We're just like gas sales, gas margin sales.

But that 80 TBTU is diesel linked. But it won't be diesel linked forever, right? I mean, you may still apply this for twenty years, but go ahead.

It definitely won't be the diesel length ironically is our initiative because it was linked to our savings initiative, we wanted to make it crystal clear there was savings, so we linked it to diesel. So you'd say at 73% of diesel, you save 20% of the money. It's not that hard. And but it wasn't the pricing that they objected to at the end of the day. It was really just this notion of you're selling us gas, why are you also being charged as an incentive for it? And that became the heart of the discussion. I think the new contract we signed on the new power plant is Henry Hub based. I think this certainly will be Henry Hub based. When they go to redo it. It's not a natural fit to the diesel savings that was an artifact from. A different part of a transaction that we were trying to do. But I mean, just to put it in perspective, you have nine twenty five megawatts of gas or diesel burning plants today. Probably have 1.5 gigawatts to two gigawatts of new power needed We have the peaker plants that are being built right now that are another two eighty or 60 megawatts or whatever.

So there's a tremendous amount of of room for this. I mean, we even talked with them about converting some of their old steamer plants to those boilers to running on gas. So I think that now that we've kind of gotten past this point on the incentive part of it, think it's kind of a logjam that then opens up. That's our bet. And it's a bet based on the fact that I assume that people will want to save money and have less emissions, right? That seems like a very logical outcome. And if they do that, we'll sell more gas, it'll be more profitable for us. And so what seems like a given in the short run is actually a great opportunity for both of us. That's the That's the win win aspect of it.

And with a conversion from diesel to Henry Hub Plus, you're confident you still have sufficient LNG availability respectable margins, given selling at the Henry Hub Plus.

We do. We think that the margins are are appropriate and consistent with they are across the rest of the portfolio. So think it's a good situation. Obviously, the more that you sell, probably the may affect your margin at some level, but on a total volume basis, As I said, when you add it all up, the gas need quite likely could be $2.50 or 300 or $3.50 TBtu. So many, many times size of the 50 TBtu's you currently have. So there's just there's a lot of efficiencies in gas. And we think there's a lot of savings for them, billions and billions of dollars of savings frankly. And for us, it's obviously could be a huge market.

Got you. And I just want to confirm real quick, the $110,000,000 Henera payment is a part of the $1,000,000,000 guided 2025 EBITDA?

It is.

Great. Thank you. You bet.

We'll take our next question from Lee Zukhi with Capital One.

Afternoon, everyone. Thank you for taking my question. Just one on guidance, if I could.

I might have missed an interim step somewhere, but wonder if you could kind of speak to the moving parts from prior guidance. I thought it was around 1.3 to the New.

And if there's anything embedded in guidance or things like that. Sales or sort of non recorrections, [indiscernible] Hey, Wade, it's Chris. No, it's simple as changes that we're not including FEMA claim in the guidance for 2025.

The $1,000,000,000 would be exclusive of the claim. That's a simple answer.

Got you. That's what I thought. Thank you. And just to switch gears a little bit dovetail on that I think O'Span's question earlier, talking about the supply book open. Cargoes and whatnot. I'm New so thinking about longer term, [indiscernible] So just wondering if you might be able to give us color on the third party supply book kind of what the supply situation is and the out years excluding FLNG one and two, maybe '26, '27 timeframe, maybe color you could give us on the third party supply book would be great. Thank you.

Yes. I mean, obviously, the further out that you go, the more. So supply is available. The tightness in the market is really a function of the shortness of gas, in particular in Europe with the the restrictions on the Russian gas. That's why Russian gas coming back into the European markets, if that was to pass, would have a profound impact I think on certainly prices in Europe and thus worldwide. As you go further out, there's obviously a tremendous amount of activity on the construction side and the prices go out. And so if you especially if you're looking for longer term tenure, there's a lot of gas that is available. So with respect to our portfolio, we do have a couple of million tons. In long term contracts. We have our own FLNG. So we have very long dated I think that as you extend duration in some of these portfolios, you're also then likely to then look to to maybe layer in other amounts of supply.

So it's a large portfolio. As I said, it is on a current basis, we feel like it's as well matched as we can make it. So it's like you're you're predicting the usage levels with all the different customers and there's always different factors into it. But to the best of our abilities, that's what we try to do to de risk the portfolio, take advantage of the elevation in price, generate some earnings, but still maintain some significant amounts of upside on these. And so that's the That's the That's the goal.

But longer term, there's lots of gas. I think is readily available for longer term projects, especially with creditworthy downstream Perfect. Thank you so much. Appreciate Could I squeeze one more in?

Sure.

I think you're the last question.

Okay. Thank you. I'm just wondering if there's anything sort of maybe more creative that you can do in Brazil with the auction coming up and I'm thinking about the existing Porter Sam and Selva plants. Is there anything whether it's adding capacity or expanding the plants, anything like that Again, because they can creatively participate more so in that option.

I gave you the answer for the Andrew on that. The Port Of San and the sub plants committed, right? So unfortunately, we can only commit them once. They are tied to very long term contracts. That said, We think that there is incremental capacity at the terminal. So obviously, that's something that Leandro and Jeremy and the other guys down there are in the thick of. And power auctions are an unbelievable opportunity in our judgment in terms of the the array of options that they have both on the brownfield and the greenfield sites both in the gas terminal cash flows etcetera. The one point that I would just reinforce is that where in the past we either bought or acquired these PPAs and then built the plants, We think now that there's lots of different opportunities to partner in different ways, We're very focused on our terminal cash flows but the overall emphasis of the business is to minimize CapEx, maximize free cash flow, grow without actually building a tremendous amount of stuff on balance sheet. So you can put capital into it, we think that that's actually something that we're very, very focused on. And we think there's going to be lots of opportunity to do so in this house.

So Great.

Thank you so much. Appreciate it.

And at this time, I'll turn the conference back for any additional or closing remarks.

Great. Well, thank you everyone for your time on a a Monday night. We appreciate it and look forward to talking to you again soon.

Thank you.