Item 2.02. Results of Operations and Financial Condition.
The information solely with respect to New Fortress Energy Inc.'s ("NFE" or the
"Company") economic outlook included in Item 7.01 is incorporated by reference
into this Item 2.02.
Item 7.01. Regulation FD Disclosure.
Overview for Investor Update Call
NFE management will hold an investor call on Thursday, October 7, 2021 at 9:00
A.M. Eastern Daylight Time to provide an update on the Company's gas supply and
Since NFE's last communication in August 2021, there has been unprecedented
volatility in global gas and liquid natural gas ("LNG") markets. Our business
was designed to be largely insulated from commodity price swings while still
retaining significant flexibility to take advantage of dislocations in supply
and demand. Our goal is to generate stable and growing earnings for shareholders
as we continue to build out our natural gas and power infrastructure around the
world and also maintain the flexibility to generate incremental returns for
shareholders by capitalizing on the opportunities that turbulent markets afford.
We have one of the largest and most diversified portfolios of natural gas
downstream terminals, facilities and assets in the world. We believe a portfolio
of this breadth creates a degree of flexibility for us that is tremendously
valuable during periods of dislocation such as the one the market is currently
Our business is simple and transparent - we contract and buy LNG from the
world's leading producers and uses our best-in-class logistics to deliver gas
and power solutions to our customers. LNG prices are currently experiencing
dramatic increases, and customer demand for our products has reached an all-time
high. The value of our extensive and growing portfolio of downstream terminals
and facilities, together with our locked-in gas supply, provides powerful
flexibility to serve customer needs and participate in the opportunities created
by market disruptions like the disruption we are currently experiencing.
We believe we have been able to create significant incremental value for our
shareholders in recent months, and, as a result, we believe it is prudent to
update the market on our gas supply and earnings goals for the current quarter,
as well as the upcoming fourth quarter and fiscal year 2022.
Gas Supply & Economic Outlook
Since August 2021, LNG prices have increased materially. When we last updated
the market in August regarding our gas supply available for committed customer
volumes, we reported that we were nearly fully hedged for the next six years,
were flat for the remainder of 2021 and had a modest short position of four
cargoes open for 2022.
We believe the inherent flexibility in our portfolio enabled us to generate
substantial incremental returns for shareholders without changing our net
neutral long-short bias in the portfolio. In the aggregate, since our last
report in August 2021, our overall net gas position has improved in 2021 and
2022, from a flat position this year and four cargoes short in 2022 to more than
eight cargoes long for the same two-year period, for a net change of more than
12 cargoes. Of the more than eight cargoes, we have sold several cargoes and
expect to sell the remaining cargoes in the future.
This change in our net position has materially improved our economic outlook for
the second half of this year. Our third quarter goals are largely in line with
the goals discussed in August 2021. We have increased our goals for the fourth
quarter 2021 meaningfully from those previously discussed, and our fiscal year
2022 goals have increased, as well:
Illustrative Total Segment Operating Margin Goal*
Q3'21 Q4'21 FY'22
Q2'21 Public Investor Presentation $210 m $170 m $1.0 b+
Current Goal $208 m $374 m $1.1 b+
Difference ($2 m) $204 m $100 m
Long-Term Gas Supply
As a company, we have invested approximately $7 billion in terminals,
facilities, power plants, ships and logistics assets to develop our proprietary
downstream business. We believe this investment gives us tremendous
opportunities to grow earnings for shareholders while still maintaining a net
neutral commodity exposure.
In March 2021, we announced that we had reached final investment decision to
build our first Fast LNG asset. Our Fast LNG infrastructure construction
continues and is largely on time and on budget. At this point, we continue to
have conversations with a number of potential gas sellers, and although we have
not finalized our ultimate gas source, we continue to believe that there is a
high probability that we will do so before construction is completed in 2022. In
fact, given the current pace of negotiations, we believe it is likely that we
will consider developing multiple additional projects.
If successful, this project will be a material and positive addition to our LNG
supply portfolio. We believe a large and diversified portfolio of downstream
terminals and assets combined with a significant portfolio of LNG liquefaction
assets that are focused on gas markets which are "stranded" is the optimal
portfolio to produce stable and growing returns for shareholders. Moreover, the
flexibility of owning the critical infrastructure at each end of the business
can add materially to our returns while also mitigating risk and exposure.
* "Illustrative Total Segment Operating Margin Goal" means our goal for Total
Segment Operating Margin under certain illustrative conditions. This goal
reflects the volumes of LNG that it is our goal to sell under binding contracts
multiplied by the average price per unit at which we expect to price LNG
deliveries, including both fuel sales and capacity charges or other fixed fees,
less the cost per unit at which we expect to purchase or produce and deliver
such LNG or natural gas, including the cost to (i) purchase natural gas, liquefy
it, and transport it to one of our terminals or purchase LNG in strip cargos or
on the spot market, (ii) transfer the LNG into an appropriate ship and transport
it to our terminals or facilities, (iii) deliver the LNG, regasify it to natural
gas and deliver it to our customers or our power plants and (iv) maintain and
operate our terminals, facilities and power plants. For Vessels chartered to
third parties, this illustration reflects the revenue from ships chartered to
third parties, capacity and tolling arrangements, and other fixed fees, less the
cost to operate and maintain each ship, in each case based on contracted amounts
for ship charters, capacity and tolling fees, and industry standard costs for
operation and maintenance. There can be no assurance that the costs of
purchasing or producing LNG, transporting the LNG and maintaining and operating
our terminals and facilities will result in the Illustrative Total Segment
Operating Margin Goal reflected.
Investor Call Details
The conference call may be accessed by dialing (866) 953-0778 (from within the
U.S.) or (630) 652-5853 (from outside of the U.S.) fifteen minutes prior to the
scheduled start of the call; please reference "NFE Investor Update Call." A
simultaneous webcast of the conference call will be available to the public on a
listen-only basis at www.newfortressenergy.com. Please allow extra time prior to
the call to visit the website and download any necessary software required to
listen to the internet broadcast.
This Current Report, including the exhibit attached hereto, is being furnished
and shall not be deemed to be 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, nor shall it be incorporated by reference into
any of the Company's filings under the Securities Act of 1933, as amended, or
the Exchange Act, unless expressly set forth as being incorporated by reference
into such filing.
Cautionary Language Regarding Forward-Looking Statements
This communication contains forward-looking statements, including but not
limited to statements regarding the Company's gas supply for future periods and
committed customer volumes, expected sales of cargoes in the future, ability to
complete the Company's Fast LNG infrastructure construction on time and on
budget or at all, ability to secure access to gas prior to the Fast LNG
construction being completed, whether Fast LNG will be a material and positive
addition to the Company's LNG supply portfolio, the Company's ability to
mitigate risk and exposure and the ability to produce stable and growing returns
for shareholders. 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. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "projects," "targets,"
"potential" or "continue" or the negative of these terms or other comparable
terminology. Such forward-looking statements are necessarily estimates based
upon current information and involve a number of risks and uncertainties. Actual
events or results may differ materially from the results anticipated in these
forward-looking statements as a result of a variety of factors.
All forward-looking statements speak only as of the date on which it is made.
When considering forward-looking statements, you should keep in mind the risk
factors and other cautionary statements included in our annual, quarterly and
other reports we file with the SEC. We undertake no duty to update these
forward-looking statements, even though our situation may change in the future.
Furthermore, we cannot guarantee future results, events, levels of activity,
performance, projections or achievements.
Item 9.01. Financial Statements and Exhibits.
99.1 Press release, dated October 6, 2021, issued by New Fortress Energy
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document
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