Item 1.01. Entry into a Material Definitive Agreement.
On November 21, 2022, indirect subsidiaries of New Fortress Energy Inc. ("NFE"),
NFE Upstream Co, S. de R.L. de C.V. ("NFE Upstream"), a limited liability
company organized under the laws of Mexico, FLNG Lakach Upstream Holdco Limited
("NFE UK"), a limited company organized under the laws of England and Wales, and
Pemex Exploración y Producción ("PEP"), a "state production company" organized
under the laws of Mexico and a subsidiary of Petróleos Mexicanos, the
state-owned oil and gas company of Mexico, entered into an Integral Exploration
and Extraction Service Contract (the "Development Agreement"), pursuant to which
NFE Upstream will provide services to (the "Development Services"), and receive
contractual payments from, PEP for the extraction, production and delivery of
natural gas and condensates from the Lakach deep-water natural gas field in
Mexican territorial waters in the Gulf of Mexico. The Development Agreement will
become effective upon the satisfaction of customary conditions and will have a
term of approximately twelve years, which term may be extended by the parties
subject to the availability of remaining reserves and regulatory approvals.
Under the terms of the Development Agreement, NFE Upstream will be responsible
for the development, planning, construction, operation and maintenance of all of
the infrastructure that is necessary for the extraction, production and delivery
of natural gas and condensates from the Lakach field. PEP maintains title to and
legal ownership of all such hydrocarbons pursuant to an entitlement granted by
Comision Nacional de Hidrocarburos, or CNH (the "CNH Entitlement"). PEP also has
the exclusive right to market all such hydrocarbons.
In consideration for the Development Services, NFE Upstream will receive a
formula-based contractual payment for each unit of gas production that NFE
Upstream delivers to PEP, which formula resembles industry-standard gross
profit-sharing agreements between upstream service providers and the owners of
the corresponding hydrocarbons.
The Development Agreement is governed by Mexican law and contains
representations, warranties, covenants, terms and conditions that are consistent
with terms customary for PEP for similar development agreements with third
parties, including, but not limited to, limitations of liability, excuses for
non-performance due to force majeure, liquidated damages for non-performance,
deliveries of certain performance bond instruments and termination rights.
NFE UK will serve as the joint and several obligor of NFE Upstream's obligations
under the Development Agreement, and NFE has agreed to guarantee the financial
obligations of NFE Upstream under the Development Agreement, subject to
specified conditions and limitations.
The foregoing summary has been included to provide investors and security
holders with information regarding the terms of the Development Agreement and is
qualified in its entirety by the terms and conditions of the Development
Agreement. This summary is not intended to provide any other factual information
about the parties or their respective subsidiaries and affiliates.
Item 7.01. Regulation FD Disclosure.
On November 22, 2022, NFE issued a press release announcing signing of the
Development Agreement and Lakach GSA, a copy of which is filed as Exhibit 99.1
hereto and is incorporated herein by reference.
The information set forth in (and incorporated by reference into) this Item 7.01
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to
the liabilities of that Section. The information in this Item 7.01 shall not be
incorporated by reference into any filing under the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, except as shall be
expressly set forth by specific reference in such filing.
Item 8.01. Other Information.
Concurrently with the Development Agreement, on November 21, 2022, an indirect
subsidiary of NFE, NFE Lakach Gasco FLNG, S. de R.L. de C.V. ("NFE Lakach"), a
limited liability company organized under the laws of Mexico, and PEP, entered
into a Natural Gas Export Purchase and Sale Contract (the "Lakach GSA"),
pursuant to which NFE Lakach will have the right to purchase from PEP the
natural gas that NFE Upstream delivers to PEP under the Development Agreement.
PEP will sell to its onshore customers in Mexico the remaining balance of
natural gas production that NFE Upstream does not purchase, as well as one
hundred percent of the condensate production that NFE Upstream delivers to PEP.
Under the terms of the Lakach GSA, NFE does not bear any downstream marketing or
pricing risk after delivery to PEP.
Item 9.01. Financial Statements and Exhibits.
99.1 Press Release, dated November 22, 2022, issued by New Fortress Energy Inc.
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within
the Inline XBRL document.
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