NextDecade Provides Third Quarter 2024 Business Update

Rhea-AI Summary

NextDecade provided a Q3 2024 business update on its Rio Grande LNG Facility construction. Phase 1 (Trains 1-3) progress remains on schedule and budget, with Trains 1-2 and common facilities at 30.5% completion, and Train 3 at 9.8%. The company is managing a D.C. Circuit Court decision to vacate FERC reauthorization, filing for rehearing in October 2024. Construction continues while appeals are ongoing. For Train 4, NextDecade secured an EPC contract with Bechtel valid through December 2024, and has commercial agreements including a 1.9 MTPA LNG sales agreement with ADNOC and a non-binding agreement with Aramco for 1.2 MTPA.

Positive

• Phase 1 construction progressing on schedule and within budget
• 96% of purchase orders issued for Trains 1-2 and 98% for Train 3
• Secured EPC contract with Bechtel for Train 4
• Signed 1.9 MTPA LNG sales agreement with ADNOC for Train 4

Negative

• D.C. Circuit Court vacated FERC reauthorization of Rio Grande LNG Facility
• Regulatory uncertainty could impact Train 4 and 5 final investment decisions
• Company holds only 20.8% equity interest in Phase 1 distributions

Insights

Financial Analyst

The Q3 2024 update reveals significant progress in NextDecade's Rio Grande LNG facility construction, with Phase 1 (Trains 1-3) showing 30.5% completion for Trains 1-2 and common facilities and 9.8% for Train 3. The project remains on schedule and budget, with strong procurement progress at 96% purchase orders issued for Trains 1-2 and 98% for Train 3.

The regulatory challenge from the D.C. Circuit Court's August decision to vacate FERC reauthorization presents a key risk, though construction continues during the appeals process. The company's commercial progress includes potential LNG sales agreements with ADNOC (1.9 MTPA), Aramco (1.2 MTPA) and TotalEnergies (1.5 MTPA) for Train 4, demonstrating strong market demand.

Legal Expert

The D.C. Circuit Court's decision to vacate FERC's reauthorization of the Rio Grande LNG Facility presents a significant regulatory hurdle. The court's ruling, based on FERC's failure to issue a supplemental Environmental Impact Statement, remains suspended during the appeals process. NextDecade's October 2024 petition for rehearing and rehearing en banc demonstrates a proactive legal strategy to maintain construction momentum and secure future regulatory approvals for Trains 4 and 5.

The regulatory uncertainty could impact the timing of Final Investment Decisions for future expansions, though existing construction authorizations remain valid during the appeal period.

HOUSTON--(BUSINESS WIRE)-- NextDecade Corporation (NextDecade or the Company) (NASDAQ: NEXT) today provided an update on developmental and strategic activities for the third quarter and early fourth quarter 2024.

CEO Commentary

“We continued to make excellent progress on the construction of Phase 1 at the Rio Grande Facility during the third quarter,” said Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer. “The facility continues to progress safely, in line with schedule, and on budget, and the site has significantly advanced in the past few months. The Bechtel team has done exemplary work, including continued pipe work for Train 1, completing the first foundation pour for Train 2, and preparing to begin deep soil mixing for Train 3. Bechtel has also laid feed gas piping and begun constructing walls for both storage tanks. We remain committed to working with Bechtel to prioritize safety and risk management as Phase 1 construction continues.”

“We have been managing the D.C. Circuit Court’s August decision to vacate the reauthorization of the Rio Grande LNG Facility with our partners and stakeholders, and we would like to thank the local Rio Grande Valley community, numerous local and federal elected officials, our LNG customers, our lenders, our equity partners, the Brownsville Navigation District, Bechtel, our suppliers, many industry participants and groups, and all other stakeholders for their widespread support of the Rio Grande LNG project and the Company. In October, we filed a petition for rehearing and rehearing en banc with the Court. The Court’s decision will not become effective while the appeals process is ongoing, and we remain committed to taking any and all available legal and regulatory actions to ensure that Phase 1 will be delivered on time and on budget and that FID on Trains 4 and 5 will not be unduly delayed.”

Significant Recent Developments

Construction

• Under the EPC contracts with Bechtel Energy Inc. (Bechtel), Phase 1 progress is tracked for Train 1, Train 2, and the common facilities on a combined basis and Train 3 on a separate basis. As of September 2024:
  • The overall project completion percentage for Trains 1 and 2 and the common facilities of the Rio Grande LNG Facility was 30.5%, which is in line with the schedule under the EPC contract. Within this project completion percentage, engineering was 76.1% complete, procurement was 57.6% complete, and construction was 5.5% complete.
  • The overall project completion percentage for Train 3 of the Rio Grande LNG Facility was 9.8%, which is also in line with the schedule under the EPC contract. Within this project completion percentage, engineering was 17.0% complete, procurement was 21.9% complete, and construction was 0.1% complete.

Strategic and Commercial

• In July 2024, the Company appointed Tarik Skeik as Chief Operating Officer. Mr. Skeik has over 20 years of experience delivering complex global mega projects in LNG, oil, and petrochemicals across North America, the Middle East, and Asia. He led the completion and start-up of six greenfield assets, and his experience includes the planning and execution through initial operation of projects including the Huizhou Chemicals Complex in China, Gulf Coast Growth Ventures in the U.S., Banyu Urip in Indonesia, Kearl Expansion in Canada, and QatarGas 2 in Qatar.
• In August 2024, the Company entered into an EPC contract with Bechtel for Train 4 and related infrastructure. Price validity under the EPC contract for Train 4 and related infrastructure extends through December 31, 2024.

Regulatory

• In August 2024, the U.S. Court of Appeals for the D.C. Circuit (the “Court”) issued a decision vacating the Federal Energy Regulatory Commission (FERC) reauthorization of the Rio Grande LNG Facility on the grounds that FERC should have issued a supplemental Environmental Impact Statement (“EIS”) during its reauthorization process. On October 21, 2024, the Company filed a petition for rehearing and rehearing en banc with the Court.
• The Court’s decision will not be effective until the Court has issued its mandate, which is not expected to occur until after the appeals process has been completed.
• At this time, construction continues on Phase 1 at the Rio Grande LNG Facility.
• The Company expects to take all available legal and regulatory actions, including but not limited to appellate actions and other strategies, to ensure that construction on Phase 1 will continue and that necessary regulatory approvals will be maintained to enable a positive final investment decision (FID) on Trains 4 and 5 at the Rio Grande LNG Facility.

Rio Grande LNG Facility

NextDecade is constructing and developing the Rio Grande LNG Facility on the north shore of the Brownsville Ship Channel in south Texas. The site is located on 984 acres of land which has been leased long-term and includes 15,000 feet of frontage on the Brownsville Ship Channel. The Rio Grande LNG Facility has received necessary approvals and authorizations required for construction, including those from the FERC and the Department of Energy, which allow for development, construction, and operation of up to five trains and 27 MTPA of LNG exports. Please see Significant Recent Developments – Regulatory for more information regarding the Company’s FERC permit.

Phase 1 (Trains 1-3)

Phase 1 at the Rio Grande LNG Facility is under construction. Phase 1 includes three liquefaction trains with a total nameplate capacity of 17.61 MTPA of LNG production, two 180,000 cubic meter full containment LNG storage tanks, and two jetty berthing structures designed to load LNG carriers up to 216,000 cubic meters in capacity. Phase 1 also includes associated site infrastructure and common facilities including feed gas pretreatment facilities, electric and water utilities, two totally enclosed ground flares for the LNG tanks and marine facilities, two ground flares for the liquefaction trains, roads, levees surrounding the entire site, and warehouses, administrative, operations control room, and maintenance buildings.

As of September 2024, progress on Trains 1 through 3 is in line with the schedule under the EPC contracts. Train 1 foundation pours continued during the third quarter including compressor foundations, and the first concrete pour was completed for Train 2. Pipe work continued to progress on Train 1. Deep soil mixing for Train 2 continued, and rebar work was completed for the Train 2 main pipe rack. Equipment relocation to begin deep soil mixing is underway for Train 3, and tank wall construction has begun on Tanks 1 and 2.

Bechtel has continued to make meaningful progress on procurement for Phase 1, with a focus on completing purchase orders for critical and high-value items early in the construction process. As of September 2024, Bechtel has issued approximately 96% of the total purchase orders for Trains 1 and 2 and approximately 98% of the total purchase orders for Train 3.

NextDecade holds equity interests in the Phase 1 joint venture that entitle it to receive up to 20.8% of the distributions of available cash during operations.

Final Investment Decision on Train 4 and Train 5

Achieving a positive FID on Trains 4 and 5 at the Rio Grande LNG Facility will be 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.

The Company has finalized an EPC contract with Bechtel for Train 4 and related infrastructure. Price validity under the EPC contract for Train 4 and related infrastructure extends through December 31, 2024.

The Company continues to advance commercial discussions with multiple potential counterparties and expects to finalize commercial arrangements for Train 4 in the coming months to support an FID on Train 4. The Company entered into an LNG sales and purchase agreement (SPA) with ADNOC for the sale of 1.9 MTPA of LNG from Train 4, as well as a non-binding heads of agreement with Aramco for the sale of 1.2 MTPA of LNG from Train 4. The Company is working with Aramco to finalize a binding SPA. Additionally, the Company expects TotalEnergies to exercise its LNG purchase option for 1.5 MTPA of LNG from Train 4.

The Company expects to finance construction of Train 4 utilizing a combination of debt and equity funding. The Company expects to enter into bank facilities for the debt portion of the funding. In connection with consummating the Rio Grande Phase 1 equity joint venture, the Company's equity partners each have options to invest in Train 4 equity, which, if exercised, would provide approximately 60% of the equity funding required for Train 4. Inclusive of these options, NextDecade currently expects to fund 40% of the equity commitments for Train 4 and to have an initial economic interest of 40% in Train 4, increasing to 60% after its equity partners achieve certain returns on their investments in Train 4. The Company expects to complete the financing process for Train 4 after the EPC contract and commercial arrangements are finalized.

The Company expects to begin the EPC contracting process for Train 5 after a positive FID on Train 4. TotalEnergies also holds an LNG purchase option for 1.5 MTPA for Train 5, and the Rio Grande Phase 1 equity partners have options to invest in Train 5 equity which are identical to their options to participate in Train 4 equity.

Investor Presentation

NextDecade has posted an updated investor presentation to its website concurrently with this release. A copy of this release and the investor presentation can be found on its website at www.next-decade.com.

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 proposed 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/20241107732562/en/

NextDecade Contacts

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 current completion status of NextDecade's Rio Grande LNG Facility Phase 1 as of Q3 2024?

Trains 1-2 and common facilities are 30.5% complete, while Train 3 is 9.8% complete. Engineering for Trains 1-2 is 76.1% complete, procurement 57.6%, and construction 5.5%.

How has the D.C. Circuit Court's decision affected NextDecade's (NEXT) operations in 2024?

While the Court vacated FERC reauthorization, construction continues during the appeals process. NextDecade filed for rehearing in October 2024 and is taking legal actions to maintain necessary approvals.

What major commercial agreements does NextDecade (NEXT) have for Train 4 in 2024?

NextDecade has a 1.9 MTPA LNG sales agreement with ADNOC, a non-binding agreement with Aramco for 1.2 MTPA, and expects TotalEnergies to exercise an option for 1.5 MTPA.