NextDecade Executes EPC Contract with Bechtel for Train 4 at the Rio Grande LNG Facility

Rhea-AI Summary

NextDecade (NASDAQ: NEXT) has announced that its subsidiary, Rio Grande LNG Train 4, , has signed a lump sum turnkey engineering, procurement and construction (EPC) contract with Bechtel Energy Inc. for the construction of Train 4 and related infrastructure at the Rio Grande LNG Facility. The contract is valued at approximately $4.3 billion, with price validity extending through December 31, 2024.

NextDecade estimates additional costs, including owner's costs, contingencies, financing fees, and interest during construction, to total approximately $1.7-1.9 billion. The total estimated project costs for Train 4 and related infrastructure are expected to be $6.0-$6.2 billion, aligning with the per-train cost of the three-train Phase 1 currently under construction. The company is targeting a positive Final Investment Decision for Train 4 in the second half of 2024, subject to commercial support and adequate financing.

Positive

• Secured EPC contract with Bechtel Energy for Train 4 construction
• Contract value of $4.3 billion with price validity through December 31, 2024
• Total project costs in line with per-train cost of Phase 1
• Targeting positive Final Investment Decision in second half of 2024

Negative

• Additional $1.7-1.9 billion in estimated costs beyond EPC contract
• Final Investment Decision subject to commercial support and financing

Insights

Financial Analyst

The execution of a $4.3 billion EPC contract for Train 4 at Rio Grande LNG is a significant development for NextDecade. This move signals strong progress in the company's expansion plans, potentially boosting its future production capacity and revenue streams. The total project cost estimate of $6.0-$6.2 billion aligns with previous train costs, suggesting efficient planning and cost management.

However, investors should note that the Final Investment Decision is still pending, contingent on commercial support and financing. The extended price validity through December 2024 provides a buffer against potential cost escalations, but also indicates a relatively long timeline before project commencement. The substantial capital requirement may impact NextDecade's balance sheet and liquidity position in the short term, potentially affecting its risk profile.

Energy Industry Expert

The expansion of Rio Grande LNG with Train 4 demonstrates NextDecade's commitment to scaling its LNG production capabilities. This strategic move could position the company favorably in the growing global LNG market, especially given the current geopolitical landscape driving demand for U.S. LNG exports.

The choice of Bechtel, a renowned EPC contractor in the energy sector, adds credibility to the project. However, the energy market's volatility and long-term shifts towards renewables pose risks. Investors should monitor global LNG demand projections and potential regulatory changes affecting fossil fuel projects. The 2H 2024 target for the Final Investment Decision allows time for market conditions to evolve, which could either benefit or challenge the project's viability.

Market Research Analyst

NextDecade's expansion plans align with the broader trend of increasing U.S. LNG export capacity. The global LNG market is projected to grow, driven by energy security concerns and the transition from coal to cleaner energy sources. However, competition in the LNG space is intensifying, with multiple projects under development globally.

Investors should consider the project's timeline in relation to market dynamics. The 2H 2024 target for FID means production from Train 4 is likely several years away. This lag could expose the project to changing market conditions, including potential oversupply scenarios or shifts in energy policies. The company's ability to secure long-term offtake agreements will be important for the project's success and financial stability.

HOUSTON--(BUSINESS WIRE)-- NextDecade Corporation (NextDecade or the Company) (NASDAQ: NEXT) announced today that its subsidiary Rio Grande LNG Train 4, LLC (Rio Grande LNG Train 4) has executed a lump sum turnkey engineering, procurement and construction (EPC) contract with Bechtel Energy Inc. (Bechtel) for the construction of Train 4 and related infrastructure at the Rio Grande LNG Facility.

Rio Grande LNG Train 4 agreed to pay Bechtel approximately $4.3 billion for the work under the EPC contract for Train 4. Price validity under the contract extends through December 31, 2024. NextDecade currently projects that owner’s costs, contingencies, financing fees and interest during construction will total approximately $1.7-1.9 billion, based on current estimates and expected interest rates. Total estimated project costs are expected to be $6.0-$6.2 billion for Train 4 and related infrastructure, in line with the per train cost of the three-train Phase 1 at the Rio Grande LNG Facility, which is currently under construction.

NextDecade continues to target a positive Final Investment Decision of Train 4 in the second half of 2024, subject to gaining appropriate commercial support and obtaining adequate financing to construct Train 4 and related infrastructure.

About NextDecade Corporation

NextDecade Corporation is an energy company accelerating the path to a net-zero future. Leading innovation in more sustainable LNG and carbon capture solutions, NextDecade is committed to providing the world access to cleaner energy. Through our subsidiaries Rio Grande LNG and NEXT Carbon Solutions, we are developing a 27 MTPA LNG export facility in South Texas along with one of the largest carbon capture and storage projects in North America. We are also working with third-party customers around the world to deploy our proprietary processes to lower the cost of carbon capture and storage and reduce CO₂ emissions at their industrial-scale facilities. 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. Additionally, any development of subsequent trains at the Rio Grande LNG Facility or CCS projects remains contingent upon 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240805221950/en/

Investors

Megan Light

mlight@next-decade.com

832-981-6583

Media

Susan Richardson

srichardson@next-decade.com

832-413-6400

Source: NextDecade Corporation

FAQ

What is the value of the EPC contract NextDecade signed with Bechtel for Rio Grande LNG Train 4?

NextDecade's subsidiary Rio Grande LNG Train 4, signed an EPC contract with Bechtel Energy Inc. valued at approximately $4.3 billion for the construction of Train 4 and related infrastructure at the Rio Grande LNG Facility.

When does NextDecade (NEXT) expect to make a Final Investment Decision on Train 4?

NextDecade is targeting a positive Final Investment Decision for Train 4 in the second half of 2024, subject to gaining appropriate commercial support and obtaining adequate financing.

What is the total estimated cost for NextDecade's Rio Grande LNG Train 4 project?

The total estimated project costs for Train 4 and related infrastructure are expected to be $6.0-$6.2 billion, including the EPC contract and additional costs such as owner's costs, contingencies, financing fees, and interest during construction.

How does the cost of Train 4 compare to the previous phase of NextDecade's Rio Grande LNG project?

The estimated cost for Train 4 is in line with the per-train cost of the three-train Phase 1 at the Rio Grande LNG Facility, which is currently under construction.