For first-quarter 2024, NextDecade reported an operating loss of $38 million compared to an operating loss of $27 million in first-quarter 2023, the company said in its May 9 earnings report. (Source: NextDecade)
Editor's note: This article has been updated with comments from a NextDecade’s spokesperson.
NextDecade Corp., which continues to move forward development of Phase 1 of its $18.4 billion Rio Grande LNG (RGLNG) project, highlighted doubts about its ability to continue as a “going concern” but reiterated that Phase 1 is fully financed. The company still aims to take a final investment decision (FID) for Phase 2 later this year.
“The Rio Grande LNG project will play a critical role in helping meet the growing global LNG demand. Phase 1 (Trains 1, 2 and 3) is fully financed and under construction with more than 90% of volumes contracted under long-term sales agreements (SPAs),” NextDecade's spokesperson told Hart Energy.
“We fully expect Train 1 to be operational in late 2027. Additionally, Train 4 is progressing as expected with an anticipated FID in 2024,” the spokesperson said.
NextDecade reported that it had $45.8 million in cash and cash equivalents and available commitments of $26.2 million under a revolving debt facility, “which may not be sufficient to fund the company’s planning operations and development activities for future phases of the Rio Grande LNG facility,” the company said in its quarterly report filed with the Securities and Exchange Commission (SEC).
“There is substantial doubt about the company's ability to continue as a going concern,” NextDecade said in the SEC filing. “The company plans to alleviate the going concern issue by obtaining sufficient funding through additional equity, equity-based or debt instruments or any other means and by managing certain operating and overhead costs.”
Since its inception, NextDecade has incurred operating losses. Management expects operating losses and negative cash flows to continue until the start of operations at the RGLNG facility. However, NextDecade will need additional capital to fund its operations and execute its business plan, the company said in the filing.
“Because our businesses and assets are under construction or in development, we have not historically generated significant cash flow from operations, nor do we expect to do so until liquefaction trains at the Rio Grande LNG Facility begin operating or until we install carbon capture and storage (CCS) systems at third-party industrial facilities,” NextDecade said in the filing.
For first-quarter 2024, NextDecade reported an operating loss of $38 million compared to an operating loss of $27 million in first-quarter 2023, the company said in its May 9 earnings report.
Phase 2 LNG decision
NextDecade’s first three trains, part of the Phase 1 development, are being constructed in Brownsville, Texas, and will have a 17.6 million tonnes per annum (mtpa) capacity. Plans for Phase 2 will include two trains, 4 and 5, with 9.4 mtpa of capacity.
NextDecade is building the five-train facility in two phases that will ultimately offer 27 mtpa of liquefaction capacity.
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NextDecade’s Chairman and CEO Matt Schatzman said in the first-quarter press release that the company continues preparations to achieve its long-term objective of becoming a leading LNG owner and operator.
NextDecade is on track to take FID and issue a full notice to proceed to Bechtel Energy for Train 4 and its related infrastructure at the Rio Grande facility in second half 2024, NextDecade said in the release.
“Achieving a positive FID on Trains 4 and 5, the fully permitted expansion capacity at the Rio Grande LNG Facility will be subject to, among other things, finalizing and entering into engineering, procurement and construction (EPC) contracts, entering into appropriate commercial arrangements, and obtaining adequate financing to construct each train and related infrastructure,” NextDecade said.
NextDecade has undertaken certain pre-FID activities for Train 4, including the FEED and EPC contract processes with Bechtel and could enable the finalization of the EPC contract for Train 4 by the end of the second quarter 2024, the company said.
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