Great Lakes Provides Update on Empire Wind I and II Contracts
- None.
- Termination of the Empire Wind II project and the resulting termination fee are negative aspects for the company and its shareholders.
Insights
Great Lakes Dredge & Dock Corporation's announcement of the termination of the rock installation contract for Empire Wind II by Empire Wind LLC represents a significant event that could influence the company's revenue projections and stock performance. While the termination fee will provide some financial compensation, the loss of future earnings from this project could impact the company's long-term growth trajectory in the offshore wind energy sector. The market for offshore wind energy is rapidly developing and Great Lakes has positioned itself as a key player. Hence, the termination might affect investor sentiment and could lead to a reevaluation of the company's growth prospects.
It's important to note that the offshore wind sector is subject to regulatory approvals and market dynamics that can lead to such contract disruptions. The ability of Great Lakes to secure alternative projects, as indicated by their pursuit of international opportunities, will be crucial in maintaining a diversified project portfolio and mitigating the impact of such cancellations. Investors should monitor the company's success in winning new bids and its strategic moves to adapt to industry changes, such as the accelerated solicitations for new Power Purchase Agreements (PPAs) that allow for price adjustments and more robust project development.
The termination of the Empire Wind II contract implies a one-time termination fee, which is a positive in the short term as it will contribute to Great Lakes' revenue. However, the loss of a major contract scheduled for 2026 removes a significant source of future revenue, potentially affecting the company's valuation. Investors should assess the impact of this event on the company's earnings forecast and consider the potential volatility in the company's stock price as the market digests this news.
Great Lakes' financial health will be influenced by its ability to replace the lost contract with equally lucrative projects. The company's track record and the anticipated awards for the next solicitation round in February 2024 will be critical for assessing its ability to rebound from this setback. The company's historical performance, including its claim of never failing to complete a marine project, may bolster investor confidence during this uncertain period.
The termination of a contract within the offshore wind energy sector, such as the one between Great Lakes and Empire Wind, highlights the volatility and risk inherent in this industry. Regulatory hurdles, such as the Article VII approval process and the evolving nature of energy contracts influenced by factors like inflation, underscore the complex environment that companies like Great Lakes operate within.
While the loss of the Empire Wind II project is a setback, Great Lakes' emphasis on its continued relationship with Equinor and bp as a preferred supplier indicates resilience and a strong industry reputation. The company's strategic focus on international opportunities could also serve as a hedge against domestic market fluctuations. The offshore wind energy market is poised for growth as states like New York pursue clean energy goals and the company's ability to navigate this landscape will be pivotal in determining its future success in the sector.
HOUSTON, Jan. 04, 2024 (GLOBE NEWSWIRE) -- Great Lakes Dredge & Dock Corporation ("Great Lakes" or the “Company”) (NASDAQ: GLDD), the largest provider of dredging services in the United States, announced today that Empire Offshore Wind LLC (“Empire Wind”) has informed Great Lakes in consortium with Van Oord (“the Consortium”), of the termination of the rock installation contract for Empire Wind II which was set to commence in 2026.
In 2022, the Consortium, was contracted by Empire Wind to perform rock installation for the Empire Wind I and II projects with installation windows in 2025 and 2026, respectively. The Article VII for Empire Wind I was approved by the New York State Public Service Commission in December of 2023. Empire Wind I is currently on track for rock installation in 2025. However, Empire Wind has informed the Consortium that they have terminated the Empire Wind II rock installation contract that was set to commence in 2026.
Termination of the Empire Wind II project initiates a contractually obligated termination fee payable to the Consortium that is intended to cover lost earnings potential related to Empire Wind II.
Eleni Beyko, Senior Vice President-Offshore Wind at Great Lakes, commented, “New York remains committed to meeting the State’s clean energy goals and they have taken steps forward with the accelerated solicitations for new PPAs to allow developers to adjust prices for inflation and develop more robust projects going forward. Awards for the next solicitation round are expected in February 2024. We look forward to the start of the Empire Wind I installation expected in 2025, continuing our relationship with Equinor and bp as a preferred supplier, and bidding on future projects. We continue to pursue additional opportunities including projects internationally for 2026 and beyond.”
The Company
Great Lakes Dredge & Dock Corporation (“Great Lakes” or the “Company”) is the largest provider of dredging services in the United States. In addition, Great Lakes is fully engaged in expanding its core business into the rapidly developing offshore wind energy industry. The Company has a long history of performing significant international projects. The Company employs experienced civil, ocean and mechanical engineering staff in its estimating, production and project management functions. In its over 133-year history, the Company has never failed to complete a marine project. Great Lakes owns and operates the largest and most diverse fleet in the U.S. dredging industry, comprised of approximately 200 specialized vessels. Great Lakes has a disciplined training program for engineers that ensures experienced-based performance as they advance through Company operations. The Company’s Incident-and Injury-Free® (IIF®) safety management program is integrated into all aspects of the Company’s culture. The Company’s commitment to the IIF® culture promotes a work environment where employee safety is paramount.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking" statements as defined in Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA") or in releases made by the Securities and Exchange Commission (the "SEC"), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Great Lakes and its subsidiaries, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. These cautionary statements are being made pursuant to the Exchange Act and the PSLRA with the intention of obtaining the benefits of the "safe harbor" provisions of such laws. Great Lakes cautions investors that any forward-looking statements made by Great Lakes are not guarantees or indicative of future events.
Although Great Lakes believes that its plans, intentions and expectations reflected in this press release are reasonable, actual events could differ materially. The forward-looking statements contained in this press release are made only as of the date hereof and Great Lakes does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.
For further information contact:
Tina Baginskis
Director, Investor Relations
630-574-3024
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