New Fortress Energy Announces Transformative Transactions in Puerto Rico
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Insights
The sale of two operating power plants by New Fortress Energy Inc. (NFE) to the Puerto Rico Electric Power Authority (PREPA) for $373 million is a transaction that carries substantial financial implications. The cash infusion from this sale could potentially bolster NFE's balance sheet, enhancing their ability to invest in other strategic initiatives or reduce debt. The decision to sell the plants, which were initially constructed to provide emergency power, suggests a strategic pivot for NFE towards focusing on their core competencies and long-term contracts like the 80 TBtu gas supply agreement.
From the perspective of PREPA, acquiring these power plants aligns with the broader trend of regional energy authorities taking more direct control over critical infrastructure. This could be seen as a move towards greater energy independence and stability for Puerto Rico, especially in the wake of natural disasters that have highlighted the vulnerability of the island's power grid. The transition from diesel to gas in other plants as part of the new gas supply contract could lead to cost savings and a reduction in greenhouse gas emissions, aligning with global trends towards cleaner energy sources.
The financial details of the transaction indicate a significant liquidity event for NFE, which investors will view favorably. The $373 million cash deal may lead to an improved earnings outlook and potentially an uptick in NFE's stock performance. The early termination of existing contracts and the anticipation of a settlement of outstanding obligations could further clarify the company's future financial commitments and operational focus.
Investors should also consider the impact of the long-term gas supply contract on NFE's revenue stability. The doubling of gas volumes provided to Puerto Rico under this contract represents a substantial increase in business for NFE in the region. This could be a positive indicator of NFE's competitive position in the energy market and its ability to secure large-scale contracts.
The shift from diesel to natural gas in Puerto Rico's power plants, facilitated by NFE's new gas supply contract, is a development of environmental significance. Natural gas, while still a fossil fuel, burns cleaner than diesel and is often considered a 'bridge fuel' in the transition towards renewable energy sources. This move could therefore be seen as a step in the right direction for Puerto Rico's environmental policy and its compliance with international emissions standards.
However, stakeholders should be aware of the broader implications of investing in gas infrastructure. While it presents immediate environmental benefits compared to diesel, it also commits the region to continued reliance on fossil fuels. The long-term environmental strategy should ideally include a roadmap for integrating renewable energy sources to ensure sustainable energy security for Puerto Rico.
Summary Highlights
- NFE sold two operating power plants to the Puerto Rico Electric Power Authority (“PREPA”)
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NFE awarded 80 TBtu gas supply contract in
Puerto Rico , more than doubling the volumes of gas it currently provides to these plants
The Company sold the emergency power plants it constructed on behalf of the
Following a competitive bid process, NFE was awarded and has entered into a new island-wide 80 TBtu gas supply contract with PREPA, ensuring continued gas supply to these power plants for up to four years. The expanded volumes under the contract will enable conversion of other plants on the island from diesel to gas, providing lower cost, cleaner energy to
As a result of the early termination of the contracts that have governed the construction, operations, and associated costs of these plants, NFE expects to negotiate a mutually beneficial settlement of all outstanding obligations in the near future.
“We entered the
A brief description of these transactions can be found on the NFE website for your reference.
About New Fortress Energy Inc.
New Fortress Energy Inc. (NASDAQ: NFE) is a global energy infrastructure company founded to help address energy poverty and accelerate the world’s transition to reliable, affordable, and clean energy. The company owns and operates natural gas and liquefied natural gas (LNG) infrastructure and an integrated fleet of ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. Collectively, the company’s assets and operations reinforce global energy security, enable economic growth, enhance environmental stewardship and transform local industries and communities around the world.
Cautionary Language Regarding Forward-Looking Statements
This communication contains forward-looking statements. All statements contained in this communication other than historical information are forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance or our projected business results. You can identify these forward-looking statements by the use of forward-looking words such as “expects,” “may,” “will,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these terms or other comparable words. Forward looking statements include but are not limited to: expectations related to maintenance and repair work of Puerto Rico’s power system and grid; ability to improve grid stability in
These forward-looking statements are necessarily estimates based upon current information and involve a number of risks, uncertainties and other factors, many of which are outside of the Company’s control. Actual results or events may differ materially from the results anticipated in these forward-looking statements. Specific factors that could cause actual results to differ from those in the forward-looking statements include, but are not limited to: unknown and unforeseen risks related to the development, construction or commissioning schedule of the facilities, including failure to meet design and engineering specifications, incompatibility of systems, delays and schedule changes, high costs and expenses, and regulatory and legal challenges, among others; the receipt of permits, approvals and authorizations from governmental and regulatory agencies on a timely basis or at all; we will be unable to operationalize our plans for the projects and derive the benefits expected; common risks related to successful integration of the businesses; breach or failure by the parties to comply with the covenants and obligations under the agreements; nonpayment or nonperformance of obligations by the parties; inability to realize the anticipated benefits from the project or our partnerships; adverse regional, national, or international economic conditions, adverse capital market conditions and adverse political developments; business disruption following the transaction; and the impact of public health crises, such as pandemics (including coronavirus (COVID-19)) and epidemics and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies and markets. These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of NFE’s forward-looking statements. Other known or unpredictable factors could also have material adverse effects on future results.
Any forward-looking statement speaks only as of the date on which it is made, and we undertake no duty to update or revise these forward-looking statements, even though our situation may change in the future. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in New Fortress Energy Inc.’s annual and quarterly reports filed with the Securities and Exchange Commission, which could cause its actual results to differ materially from those contained in any forward-looking statement.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240318619756/en/
Investors
Chance Pipitone
ir@newfortressenergy.com
Media
press@newfortressenergy.com
Source: New Fortress Energy Inc.
FAQ
What did New Fortress Energy Inc. (NFE) sell to Puerto Rico Electric Power Authority (PREPA)?
How much was the gas supply contract awarded to NFE in Puerto Rico?
What is the purpose of the transactions announced by NFE?
Who is the Chairman and CEO of New Fortress Energy?
When did NFE enter the Puerto Rico market?
