Fitch Ratings has assigned Excelerate Energy Limited Partnership (EELP) a first time Long-Term Issuer Default Rating (IDR) of 'BB'.

Fitch has also assigned a 'BB' with a Recovery Rating of 'RR4' to its proposed issuance of senior unsecured notes. The proceeds from the notes will be used to help fund the company's acquisition of New Fortress Energy Inc.'s (NFE; B-/Rating Watch Negative) Jamaica assets and to pay down existing debt. The Rating Outlook is Stable.

EELP's rating reflects its stable cash flow profile, execution and re-contracting risk, and strong financial profile. The company operates around the globe in power hungry emerging markets and developed markets, with purpose-built floating storage and regassification units (FSRUs) for specific projects. The Stable Outlook reflects expectations for EELP's FSRU fleet to remain under contract over the forecast period and for the company to successfully integrate the Jamaica assets.

Key Rating Drivers

Contract Portfolio Supports Stable Cash Flow: Pro-forma for the Jamaica asset acquisition, EELP will receive about 90% of its EBITDA from long-term, take-or-pay contracts, providing cash flow stability. The company's role of provider of reliable energy to power hungry markets, strong operational track record, and the integration of its fleet to downstream industrial and power applications have resulted in contract renewals and capacity expansions. EELP's customers range from state-owned oil and gas companies, transmission operators, and industrial users of natural gas, where the use of the natural gas EELP supplies is viewed as essential for the counterparties.

Although Fitch does not rate many of the off-takers, the agency estimates that its credit quality would either be linked to the sovereign, for government related entities, or limited by the operating environment in which they operate. Fitch estimates the weighted average counterparty rating to be in the mid-to-high 'BB' range, and currently views customer and geographic risks as well diversified.

Near-Term Execution Risk: The Jamaica assets acquisition is a relatively large transaction for EELP, introducing integration risks. EELP will add a material amount of power plant operations in its business mix as the Jamaica assets include a natural gas fired 100 MW power plant. Given EELP's current focus on operations upstream of power plants, such as liquefied natural gas (LNG) procurement, FSRU operation, and terminal infrastructure, the business line diversification presents execution risks. Fitch will monitor the integration of the Jamaica assets and any plans to own more power plants.

Recontracting Risk: EELP has a weighted average remaining term on its contracts of 6.5 years, with a laddered maturity profile. Pro-forma for the acquisition of the Jamaica assets, the weighted average remaining term of its contracts is expected to be approximately 10 years. Over the forecast period, there is one contract term ending in each of 2027 and 2028, and one evergreen contract that requires 12 months' notice prior to termination. Recontracting in a timely manner is viewed as important to the rating, and Fitch notes that in the past the company has had contract renewals and expansions due to its integration with downstream infrastructure and strong operational track record.

Strong Financial Profile: Fitch views EELP's current and pro-forma financial profile as strong. As of Dec. 31, 2024, EELP's gross leverage was 1.7x. Over the forecast period, leverage is expected to reach around 2.7x by 2025 before trending to mid-to-high 2x level as a result of debt-financed acquisition and some contracts roll off. This is considered a modest leverage level. Fitch will monitor how EELP finances future growth plans. The company currently has a large cash balance, which it might use instead of taking on more debt. Fitch does not include finance leases as debt in its leverage calculations but does include vessel financings as debt.

Specialty LNG Vessels: The vessels are well positioned in the market due to a shortage of specialty LNG vessels and long construction period for new vessels. FSRUs are considered specialized vessels developed with specific projects in mind. The company provides around 25% of global regasification capacity of FSRU-based terminals, demonstrating its importance in the global LNG import market. While current day rates for LNG carriers have significantly come down amidst an increase of vessel supply and a delay in LNG production facility in service dates, Fitch expects EELP's vessels to remain in demand due to their specialization and the demand for LNG in the markets it serves.

Country Ceiling Not a Constraint: Fitch measures the relationship between cash flow generation in a given country compared to hard-currency gross interest expense in determining a multinational company's applicable Country Ceiling. During Fitch's forecast, EELP's Country Ceiling of 'AAA' would not constrain the IDR.

Peer Analysis

EELP's most directly comparable peer within our coverage is New Fortress Energy, Inc. (NFE; B-/RWN). New Fortress operates globally in emerging markets, producing LNG via its Fast LNG facility, providing LNG storage and regasification to industrial and power companies, and operating dual-fired power plants.

NFE has a smaller share of take-or-pay contracts and is more exposed to commodity price fluctuations than EELP. Post Jamaica asset sale, Fitch expects over 80% of NFE's EBITDA to come from Puerto Rico and Brazil, while EELP derives 35% from Jamaica but with remaining evenly split amongst other regions. Fitch forecasts lower leverage and higher interest coverage for EELP, and projects NFE's leverage to average around 8.8x through 2026 and interest coverage at about 1.0x in both 2025 and 2026. Due to its lower business risk and stronger financial metrics, EELP is rated four notches higher than NFE.

Sunoco LP (SUN; BB+/Stable), while not operating in the same business line, is another peer for EELP within our rating coverage. SUN is a wholesale motor fuels distributor, provides pipeline transportation and storage of crude oil and refined products, and transports anhydrous ammonia, with operations mainly in the US.

SUN's business is highly contracted, but not to the extent of EELP's take-or-pay contracts. Although SUN's operations are not as global as EELP's, it does have geographic diversity, including operations in Europe and Caribbean. Over the forecast period, SUN is projected to have leverage remain close to its 4.0x leverage target, which is higher than that of EELP by over 1.0x. Fitch judges EELP's business risk to be higher than SUN's due to less business line diversity and substantial operations in emerging markets. Due to higher business risk not completely offset by lower leverage, Fitch rates EELP one notch lower than SUN.

Key Assumptions

EELP's new FSRU is delivered in 2027;

EELP acquires an LNG Carrier in 2025, with conversion to an FSRU by the end of 2027;

Dividends grow over the forecast;

Steady maintenance capex;

Using a combination of debt, equity and cash on hand to fund the Jamaica asset acquisition;

Fitch Oil and Gas Price Deck;

Base interest rates in line with the Fitch Global Economic Outlook.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

EBITDA leverage above 3.0x on a sustained basis;

Deterioration in counterparty credit quality or a meaningfully larger percent of cash flows from emerging markets;

An acquisition or pursuit of organic growth strategy that significantly increases business risk;

Any construction or ship issues that significantly delay or deteriorate cash flows.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Improved credit quality of the counterparties or a significantly larger percent of cash flows from developed markets;

EBITDA leverage below 2.0x on a sustained basis and successful integration and operation of the Jamaica assets.

Liquidity and Debt Structure

As of Dec. 31, 2024, EELP had $865 million of liquidity, consisting of $327 million of availability on its senior secured revolving credit facility (EE Revolver) and $538 million in cash and cash equivalents. The EE Revolver had $23 million of letters of credit, which are considered a reduction to EE Revolver availability. Pro-forma for the EE Revolver upsizing and NFE Jamaica transaction, Fitch expects EELP to have around $620 million of liquidity.

Maturities for EELP are manageable, with quarterly amortization of debt and the nearest pro-forma maturity being the EE Revolver and Term Loan due in March 2027.

EELP has various financial covenants under its existing facilities and financings. Under its credit agreement, two of EELP's financial covenants are to maintain a maximum consolidated total leverage of 3.5x and a minimum consolidated interest coverage of 2.50x. In the event all unsecured debt is equal to or greater than $250 million, the maximum permitted consolidated total leverage is 4.25x. Under its Experience Vessel Financing, there are financial covenants for EELP to maintain a maximum debt-to-equity ratio of 3.5x and minimum equity of $500 million.

Regarding its 2017 Bank Loans, there are various financial covenants, including that the project company must have a quarterly debt service coverage ratio of 1.10x. As of Dec. 31, 2024 EELP was in compliance with its financial covenants, and Fitch expects EELP to remain in compliance with its financial covenants over the forecast period.

In 2021-2024, waivers for the 2017 Banks Loans were obtained for immaterial non-financial covenants and are still in effect.

Issuer Profile

Excelerate Energy Limited Partnership (EELP) offers a full range of regasification services, from FSRUs to infrastructure development, to LNG and natural gas supply. Pro-forma for the Jamaica assets acquisition, EELP will also own and operate a power plant. EELP operates globally with customers in Argentina, Bangladesh, Brazil, Finland, Germany, Jamaica, Pakistan, and the United Arab Emirates.

Summary of Financial Adjustments

Fitch typically adjusts midstream energy companies' operating costs to include finance lease interest expense and excludes finance lease amortization from D&A. Fitch adds back stock-based compensation expenses to EELP's EBITDA. Fitch also excludes interest rate swap gains/losses from EELP's interest expense and adds back transaction expenses to EBITDA.

Date of Relevant Committee

27 March 2025

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Click here to access Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

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