Baker Hughes, NextDecade Enter Framework Agreement for Rio Grande LNG Expansion Trains

Rhea-AI Summary

Baker Hughes (NASDAQ: BKR) and NextDecade have entered into a framework agreement for Rio Grande LNG Facility's expansion. Under the agreement, NextDecade will use Baker Hughes' gas turbine and refrigerant compressor technology for Trains 4 through 8, along with maintenance services.

The expansion plans aim to make Rio Grande LNG one of the largest LNG production and export facilities globally. NextDecade is progressing with the commercialization of Trains 4 and 5, pending final investment decisions, governmental approvals, EPC contracts, and financing. The company is also developing and initiating permitting for Trains 6 through 8, which are expected to increase total liquefaction capacity by approximately 18 million tonnes per annum.

Positive

• Secured framework agreement for equipment and maintenance services for 5 LNG trains
• Potential for significant long-term revenue from equipment sales and maintenance contracts
• Strategic positioning in major LNG infrastructure project

Negative

• Order timing and revenue recognition uncertain, dependent on project progress
• Contract value not disclosed

Insights

Energy Infrastructure Expert

This framework agreement with NextDecade represents a significant strategic win for Baker Hughes in the growing LNG infrastructure market. The deal positions BKR as the primary technology provider for both equipment packages and maintenance services across five LNG trains at what's projected to become one of the world's largest LNG facilities.

The agreement encompasses not just initial equipment sales of gas turbines and refrigerant compressors, but more importantly, establishes long-term recurring revenue through maintenance service contracts. For capital equipment providers like Baker Hughes, these service agreements typically generate higher margins and more stable cash flows compared to one-time equipment sales.

While NextDecade hasn't yet made final investment decisions on Trains 4-5 and is still developing Trains 6-8, the framework positions Baker Hughes favorably when these projects advance. The potential scale is substantial - the article notes these additional trains could increase NextDecade's liquefaction capacity by approximately 18 million tonnes per annum.

The timing aligns well with the broader LNG market trajectory, as global demand for natural gas continues to grow amid energy transition efforts. For Baker Hughes, securing key positions in major infrastructure projects buffers against cyclicality in other energy sectors and demonstrates the company's ability to win significant contracts in competitive bidding processes.

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Baker Hughes has secured a strategic framework agreement with NextDecade to provide critical technology and services for the Rio Grande LNG Facility expansion. Under this agreement, Baker Hughes will supply its gas turbine and refrigerant compressor technology for Trains 4 through 8, along with maintenance services through contractual service agreements. This partnership represents a significant long-term opportunity for Baker Hughes in the LNG infrastructure sector. While the exact financial terms weren't disclosed, the scale of the project is substantial - NextDecade indicates these additional trains could increase their liquefaction capacity by approximately 18 million tonnes per annum once completed. The agreement includes both equipment packages and maintenance services, providing Baker Hughes with potential recurring revenue streams beyond the initial equipment installation. This aligns with Baker Hughes' strategy of expanding its service-oriented business model in the energy technology sector. It's worth noting that NextDecade has not yet made final investment decisions on Trains 4 and 5, while Trains 6-8 are still in the development and permitting process. Baker Hughes expects to receive orders as NextDecade's project progresses, indicating this framework agreement will materialize into firm orders in stages as NextDecade advances through its decision-making and construction timeline.

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Initial analysis covers key agreement aspects but lacks depth on strategic significance. First reflection: Framework agreement represents potential future revenue rather than immediate firm orders - NextDecade still needs FIDs for Trains 4-5, with 6-8 further behind in permitting. No financial figures provided to quantify impact. Need to emphasize LNG industry context and competitive positioning. Second reflection: Should highlight recurring revenue aspect of maintenance contracts versus one-time equipment sales - typically higher margin business. Framework agreement signals competitive advantage in LNG infrastructure. Need context on typical timeframes between framework agreements and equipment orders/revenue recognition. Third reflection: Consider broader energy transition implications - natural gas/LNG as bridge fuel. Compare to Baker Hughes' other business segments to contextualize importance. Final check confirms positive rating (1) as agreement expands potential market share in growing LNG sector with both equipment and service revenue potential, though execution timeline remains uncertain.

HOUSTON, March 11, 2025 (GLOBE NEWSWIRE) -- Baker Hughes (NASDAQ: BKR), an energy technology company, and NextDecade Corporation (NASDAQ: NEXT) and announced Tuesday that they have entered into a framework agreement whereby NextDecade plans to utilize Baker Hughes’ gas turbine and refrigerant compressor technology (Equipment Packages) and enter into contractual services agreements to perform maintenance work for these Equipment Packages for Trains 4 through 8 at the Rio Grande LNG Facility.

“Utilizing Baker Hughes’ industry-leading rotating equipment and their maintenance services is critical to ensuring the Rio Grande LNG Facility operates efficiently and reliably,” said Matt Schatzman, chairman and CEO of NextDecade. “We look forward to continuing our collaboration with Baker Hughes as we progress our plans to make the Rio Grande LNG Facility one of the largest LNG production and export facilities in the world.”

“Baker Hughes is proud to continue our long-standing relationship with NextDecade, providing advanced gas technology solutions that enhance the efficiency and reliability of their LNG operations,” said Lorenzo Simonelli, chairman and CEO of Baker Hughes. “This agreement is a further example of our commitment to delivering innovative solutions in support of increasing energy demand.”

NextDecade is making excellent progress on commercializing Rio Grande LNG Trains 4 and 5. The Company expects to make positive final investment decisions and commence construction on Trains 4 and 5 and related infrastructure at the Rio Grande LNG Facility, subject to, among other things, maintaining requisite governmental approvals, finalizing and entering into EPC contracts, entering into appropriate commercial arrangements, and obtaining adequate financing to construct each train and related infrastructure.

NextDecade is developing and beginning the permitting process for Trains 6 through 8, which are wholly owned by NextDecade and are cumulatively expected to increase the company's total liquefaction capacity by approximately 18 million tonnes per annum once constructed and placed into operation.

Baker Hughes expects orders, in relation to this agreement, as NextDecade’s project progresses.

About Baker Hughes

Baker Hughes (NASDAQ: BKR) is an energy technology company that provides solutions to energy and industrial customers worldwide. Built on a century of experience and conducting business in over 120 countries, our innovative technologies and services are taking energy forward – making it safer, cleaner and more efficient for people and the planet. Visit us at bakerhughes.com.

About NextDecade Corporation

NextDecade is committed to providing the world access to reliable, lower carbon energy. We are focused on delivering secure, low-cost, and sustainable energy solutions through the safe and efficient development and operation of natural gas liquefaction and carbon capture and storage infrastructure. Through our subsidiaries, we are developing and constructing the Rio Grande LNG natural gas liquefaction and export facility near Brownsville, Texas, with approximately 48 MTPA of potential liquefaction capacity currently under construction or in development. We are also developing a potential carbon capture and storage project at the facility that is expected to make meaningful impacts toward a lower carbon future. NextDecade’s common stock is listed on the Nasdaq Stock Market under the symbol “NEXT.” NextDecade is headquartered in Houston, Texas. For more information, please visit www.next-decade.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of U.S. federal securities laws. The words “anticipate,” “contemplate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “would,” “could,” “should,” “can have,” “likely,” “continue,” “design,” “assume,” “budget,” “guidance,” “forecast,” and "target," and other words and terms of similar expressions are intended to identify forward-looking statements, and these statements may relate to the business of NextDecade and its subsidiaries. These statements have been based on assumptions and analysis made by NextDecade in light of current expectations, perceptions of historical trends, current conditions and projections about future events and trends and involve a number of known and unknown risks, which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements. Although NextDecade believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that the expectations will prove to be correct. NextDecade’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in NextDecade’s periodic reports that are filed with and available from the Securities and Exchange Commission. The taking of a final investment decision on Trains 4 and 5 at the Rio Grande LNG Facility is subject to, among other things, maintaining requisite governmental approvals, finalizing and entering into EPC contracts, entering into appropriate commercial arrangements, and obtaining adequate financing to construct each train and related infrastructure. Additionally, any development of additional expansion trains at the Rio Grande LNG Facility or CCS projects remains contingent upon receipt of requisite governmental approvals, execution of definitive commercial and financing agreements, securing all financing commitments and potential tax incentives, achieving other customary conditions and making a final investment decision to proceed. The forward-looking statements in this press release speak as of the date of this release. NextDecade may from time to time voluntarily update its prior forward-looking statements, however, it disclaims any commitment to do so except as required by securities laws.

Contacts

Baker Hughes Investor Relations:
Chase Mulvehill
investor.relations@bakerhughes.com
+1 346-297-2561

NextDecade Investors
Megan Light
mlight@next-decade.com
832-981-6583

Baker Hughes Media
Chiara Toniato
chiara.toniato@bakerhughes.com
+39 3646 382 3419

NextDecade Media
Susan Richardson
srichardson@next-decade.com
832-413-6400

FAQ

What is the scope of Baker Hughes (BKR) framework agreement with NextDecade for Rio Grande LNG?

The agreement covers gas turbine and refrigerant compressor technology supply and maintenance services for Trains 4-8 at Rio Grande LNG Facility.

How much additional LNG capacity will Trains 6-8 add to NextDecade's Rio Grande facility?

Trains 6-8 are expected to increase total liquefaction capacity by approximately 18 million tonnes per annum.

What conditions need to be met before NextDecade can proceed with Trains 4-5 construction?

Requirements include governmental approvals, EPC contracts, commercial arrangements, and adequate financing for construction.

When will Baker Hughes (BKR) receive orders related to the Rio Grande LNG agreement?

Baker Hughes expects to receive orders as NextDecade's project progresses, with specific timing dependent on project advancement.