New Fortress Energy Inc. (NASDAQ:NFE) Third Quarter 2022 Results Conference Call November 8, 2022 8:00 a. m. m. ET
Participating companies
Patrick Hughes – Investor Relations.
Wes Edens – CEO
Chris Guinta – Chief Financial Officer
Andrew Dete – General Manager, Commercial
Conference Call Participants
Ben Nolan – Stifel
Sam Margolin – Wolfe Research
Sean Morgan – Evercore
Sam Burwell – Jefferies
Martin Malloy – Johnson Rice
Greg Lewis – BTIG
Operator
Ladies and gentlemen, be patient. Have a nice day. And welcome to New Fortress Energy’s third quarter 2022 earnings call. Today’s convention is recorded.
At this point, I would like the convention to go to Patrick Hughes, Managing Director of Investor Relations. Continue.
Patrick Hugo
Thank you, Jake, and good morning everyone. Welcome to New Fortress Energy’s Q2 2022 Earnings Conference Call. As Jake said, this call is being recorded and will be playable in the investor segment of our online page under the subheading Events and Presentations. In the same place, also look for our third quarter 2022 investor presentation, which we’ll refer to on today’s call.
The presentation comprises a variety of vital data relating to forward-looking statements and non-GAAP monetary measures. We inspire participants to this vital data in addition to describing the threat points contained in our SEC filings.
Let us now turn to the call of . Patrick Hughes. Je do investor relations here at New Fortress Energy. With me are Wes Edens, our President and CEO; Chris Guinta, our Chief Financial Officer; Andrew Dete, General Manager of Business Operations, as well as several other members of our team.
With that, I pass the one to Wes.
Wes Eden
Thank you, Patrick, and thank you all for calling this morning. So, as usual, I will refer to the investor presentation that we published here this morning. That would be great.
So, let’s start on page number four. The third quarter was another wonderful quarter for the company. A very, very strong quarter of $291 million in EBITDA, putting us on track to reach our $1. 1 billion target for the year. A year ago of $170 million, and only in general, on a monetary basis, it was a pretty productive quarter.
In addition, we have made significant progress in our two main facets of our business, source and demand. On the source side, of course, I am communicating about FLNG activity. Chris will communicate about this in detail. We hosted a giant organization of investors, equity analysts and other attendees last week in Corpus Christi to share with them, not only the main points of what we’re doing there, but also introduce them to other very talented people on the team that we were. given who runs for us and we feel smart about it.
As for the call, there is a lot to say. Andrew will be spending a lot of time on this and it’s a consultation from both sides of the app. In the short term, the dislocation in the world is significant and we all know it. We will communicate about that specifically. In the long term, our project to bring electricity to the places in the world that need it most is the company project and the disorders and disruptions of the world that we have noticed in Europe, in particular, have only exacerbated the desires that other people have done. So we’re going to communicate a lot about that as well. So on both sides, it’s great.
Another monetary aspect of the quarter is that we have increased our guidance guidance for next year from $1. 5 billion next year to $2. 5 billion. Such a significant upward adjustment based on what we’re seeing in the world right now and Andrew will communicate about that here in a moment.
So check out page number five. This is a new page, a new format for us in the presentation of source and call and I find it useful. At the top, you can see the summary of the offer. Thus, TBtus volumes, 74 TBtus in 2021, 88 TBtus in 2022, come into play 161 TBtus as FLNG volumes, in particular, in the current part of 2023.
Many, many other changes in this business. 52 TBtus equals about 1 million tons of gas, so about 1. 5 million tons last year, coming in at 2 million tons this year, and then 161 TBtus, we’re making a big upward adjustment next year. but then right and you can see what our expectations are for the rest of our FLNG volumes in 2024, 2025 and you can see a pretty deep turn to the right in terms of volume. So take those volumes.
And now look at the moment line down, which is the margin we’ve made in our positions. Simply put, if you take volumes, lead times, and margins, this equates to adjusted EBITDA. So it couldn’t be a clearer and more transparent way in the company. You can see that in 2021 we achieved margins of $8. 14 for TBtu, 2022 $12. 50. Our management EBITDA of $2. 5 billion translates to a result of $15. 53.
So you see an improvement in margin each of those years. That’s compatible with your instinct of what’s going on in the global, right?As the global has crumbled, the opportunities for higher margins are there. Focusing a lot on is not the short term, but the long term.
So if you look to the right, what we’ve done is normalize the margins of what we think can be achieved in large part through selling electric power and fuel to our consumers around the world, and again, Andrew will spend a lot of time talking about it. But at $10, $12. 50 to $15, you ended up with illustrative EBITDA during those years ranging from $3. 3 billion at the bottom in 2024 to $6. 96 billion at most on the other side.
Now, all of this assumes that the amount of source we have in our stock is equivalent to what we’ve already actually committed, obviously, there are significant expansion opportunities around the world and in our portfolio. But it is a very discreet way to look for things and I hope you find it useful.
So, with that, let’s take a look at page number six. With smart news on the operating side, we are a leading generator of loose money. Cash today of $1. 4 billion, target operating money over the next 3 years of approximately $10 billion. So, just by cutting the CapEx we needed to complete our FLNG and other projects we have in business, we expect to generate over $5 billion in money over the next 3 years.
So, a significant amount of money and then, what do you do with it?The 3 apparent possible options can be discovered in the box below. So, first, you can make more investments in an obvious way.
Second, you can return the capital to shareholders, either by deleveraging the company and then issuing dividends, deleveraging the company and buying back shares or a combination of all of those things. We now have a significant amount of liquidity.
We talked to the board yesterday about doing a lot of research over the next 30 days or so. And our purpose is December 15 or around that date to come out and make shareholders transparent about our intentions, whether it’s short-term or long-term with respect to our specific dividend policy and what we intend to do with this capital.
It’s a serious exercise. As we say, when we take a look at our balance sheet and capital structure, it’s the proverbial old measure twice, once cut when talking about giant amounts of capital.
But it puts us in a wonderful position to potentially return capital to shareholders, do things to grow our business and those are the things we’re going to consider. So, more on this in a month or so.
Page seven is my last page before I pass it on to the rest of the team. If a picture is worth 1000 words, it can be worth 10,000 words. So it’s a graphic that you can print and take with you, because I think it says a lot about where the world is today.
When you look outside the yellow box, you’ll like to see, for the most part, the top 3 herbal fuel indexes. Henry Hub in this country, TTF in Europe, JKM in Asia, have evolved synchronously for many years.
What’s remarkable is that when we start having the dislocation here, you’ll see that the deadline for this to happen is July 2021, so nine full months before the start of the Russian invasion to get a significant update on the balance or imbalance in the global and that caused a spike in prices.
The question, of course, when I look at this graph is, what do I expect to happen when you stick this on the right and things become generalized?And what is the new general and what is the point at which he would be waiting for fuel to stabilize once this crisis is somehow resolved.
My own opinion is, I think, that the new general would possibly be at a slightly higher pace, perhaps, a much higher pace. And possibly it would be the age of reasonable energy, in particular, in Europe it is a thing of the past, and when things become generalized, if they are generalized, it will be placed in a higher position in general. But obviously it has a big impact on the margins of the company, the margins for us and that’s something you really have to keep an eye on. .
But there are a number of points that are not included in this table where I think they can have a significant effect. Specifically, in Asia, there has been a sharp drop in LNG imports to China, in particular, the 0 COVID policy there has had an obvious economic effect on them. In fact, they have especially reduced it. This is something we are watching closely. This is something we think it can really replace in particular.
But really, the other thing I would mention about this graph is that it communicates a lot about global evolution. So, it’s the United States, Europe, Asia, and of course there are many, many billions of other people who are outside. From doors, the world evolved and have a desperate need for energy. Andrew will get back on it here in a second.
But I think even regardless of what happens in Europe, there’s a huge demand and a need for strength in those other markets, so it’s something to watch out for. But an attractive image in the latter.
I’ll pass it on to Chris. Cris?
Chris Guinta
yes. Thank you Wes. Let me point you to slide number nine and update you on our LNG source portfolio and what we are actively doing to develop it, our immediate LNG developments.
On this slide, you can see a really extensive portfolio expansion from 2021 to 2025. Our existing contracts have more than 74 TBtu last year at 88 TBTu this year and will be 114 TBTu from 2023 to 2025. When FLNG volumes overlap, we have an additional 350 TBtu or about 7 metric tons consistent with the year will come online in the short term.
The first unit will enter service in May or June 2023, and then all five will be commissioned before the end of September 2024, so in less than two years. This will translate to volumes of 161 TBtu next year, rising to 464 TBtu by 2025. .
Let’s now move on to slide number 10 and talk about LNG progress. As you know and many of you attended, last week we hosted an occasion for investors and analysts at Kiewit Shipyard in Corpus Christi and this is a wonderful opportunity to give investors a review of the progress made.
As we discussed on the spot, nothing we do is too confusing or difficult, but it requires the team to be organized, effective, and accountable to others. The two key takeaways from last week’s event and the highlights of the quarter are, first, we are progressing seamlessly at FLNG No. 1 and we plan to complete the mechanical finishing touch on March 17, then deploy and commissioning the asset in May and COD in June 2023.
Second, we’ve made great strides in deployment options, adding inputs for our other locations, which we’ll describe in a few slides. As mentioned, our FLNG 1 is coming to an end.
In the modules at the top left of this page, a symbol appears where we group the modules that will be hoisted under the jack-up platforms. On the first platform goes module one for fuel remedy. The liquefaction module at the moment goes to the current platform, and then we will have a smaller module for utilities and accommodation that will move to the third platform. Each of those giant modules will be four to seven degrees tall and, when finished, weigh more than 5,000 tons.
Below is a symbol of the jack-up platforms where the modules will be installed. We have completed the demolition and are putting the finishing touches on all reinforcements and innovations in the foundation, as well as the complete assembly and upgrade of the marine systems. In addition, we are for deployment and operations once the NGLF structure is complete.
We have hired our start-up team that is running to get as many assets up and running in the backyard as possible. Once the formula is finished, we can start turning it on and checking it right away. In terms of installation, we make sure that all subsea connections, pipe laying, mooring, upstream paints are finished to ensure that once the NGLF is on site, we can start operations immediately. Operate the asset once it is on site.
Go to slide 11 and talk about the previous places, but expanded our FLNG features to implement them in 3 other places, where we can accommodate up to six FLNG units.
As Wes mentioned, we were in Mexico City for an assembly with President López Obrador and the director of the CFE, where we signed binding documents to deploy up to 3 sets to Altamira.
This would use U. S. feed fuel molecules. U. S. transported to Mexican waters via the Sur de Tuxpan pipeline. We have submitted all the permit programs and lately they are under final review. We have an active and vocal audience of all applicable licensing agencies in this proceeding. the authorisation procedure at the beginning of next year.
The box at the moment is the location of West Delta 38 where we filed our MARAD application to install two FLNG assets. This would reuse the existing, anti-fuel pipeline infrastructure from shore to our offshore unit.
As many of you know, our order on the dial was removed on October 28 and we expect the EPA to release our draft Environmental Impact Statement very soon. This puts us on track to get final permits in the first part of 2023.
The third location is a state-of-the-art partnership with Pemex to complete the Lakach field. NFE will complete seven wells and begin production in the summer of 2024. We will ship about one-third of the fuel ashore for Pemex to use and the remaining two-thirds will be used as fast fuel for our FLNG 4, which will use Sevan semi-submersible drilling. We like this model, which captures fuel reserves that have not yet been developed and fail and sends a part to secure and the rest to NFE so that the feed fuel is converted into LNG.
Let’s talk about this page last week on Corpus, however, it provides a roadmap of the sets we are building, where they are being built, and when they will be completed.
The page shows the dates of the mechanical finishing touches for the unit, and then it takes two to three months to mobilize, install and commission before the COD sounds. These systems are the result of simplifying design with an emphasis on repeatability.
We have the production schedule of the module and the marine infrastructure is in conditions of approximately 12 months to 14 months to mobilize the connection and the installation is a procedure of approximately two to 3 months. Commissioning is one month to two months, and in general, we can do it in long-duration sets in 18 months to 20 months from FID to COD.
In addition, we have already ordered all critical or long parts for each FLNG 1 to 4 unit and obviously use the same suppliers in each of the units. By a uniform design in module engineering, the maximum acquisition is not unusual for all units. So there’s Baker Hughes for compression, Chart for bloodless box, Siemens for fuel turbines, Shell Gor[ph] for marine equipment, etc.
So, in conclusion, you can see that our LNG source will accumulate in the next two years. Not only will this drive downstream portfolio expansion, but it will also position us perfectly to capitalize on existing market dynamics and the developing global need for reliable LNG. to decorate the security of power.
With that, I pass it on to Andrew.
Andrew Deté
Thank you Chris. Hello everyone. It’s wonderful to be with you last week in Corpus Christi. Amazing what Chris and many [ph] and the team did. It’s fun to stand on the platforms and look and see all the parts about to be lifted.
And in my role on the business side, a very important moment for us. So, since Chris just went through NFE, he creates 7 MTPA of new volumes in the short term. This brings our overall portfolio from around 2 MTPA to 2. 5 MTPA to 9. 5 MTPA, which, as Chris has shown, is 464 TBtus through 2024 based on the run rate.
So I’m on page 14 and what we need to do now is spend a minute defining our long-term business strategy to sell volumes in a way that generates sustainable long-term returns.
And what you see that the strategy is sometimes consistent with the same core project is that it’s had from the beginning expanding access to affordable energy globally, which we think is a smart deal and a big project.
And so, on page 14 on the left side, what we’re showing up is actually a table of world power density. The slogan is that 70% of the world’s electricity is powered through just 10 countries. And so what we see every day in those markets and what is that those other countries that are less energy-dense are only going in one direction and that’s toward more energy consumption, more electric power consumption.
I almost had to pay Wes a royalty to say that. But as longtime fans, Jamaica consumes about one-tenth of what we consume in the United States and Kenyans consume about one-tenth of what Jamaicans consume.
So what we’re seeing is a huge opportunity and a mass market, which is to supply affordable electric power in places that don’t have it today. And the more time we spend in those markets, the more we localize that demand. It is only reduced through supply, and in this case, through affordable supply.
So when we look at the right side of this page, which is the new knowledge of EIA, what they show is that, for the first time in 20 years of collecting knowledge about access to electric power, you see how many other people do it. It will not have access to electric power expanding for the first time in 2022.
It’s a bit like a canary in the coal mine about a bigger story about energy flows being redirected to Europe and sometimes the evolved global and the global one that’s running out of power on a global scale. Therefore, it sets the framework for what we believe to be opportunity. and why we think it’s vital to us.
And in the long term, what we continue is that through the integration of our LNG source with power generation, we can achieve differentiated sustainable margins in the long term. I need to give you a review today of how we are going to proceed.
So let’s move on to page 15. Today, NFE is a built-in strength enterprise. To date, we have supplied, converted, procured and built more than 3,000 megawatts of electrical power into another 8 power assets. And so, what we need to supply here is a glimpse of what we’ve done as we scale and compare the opportunity ahead.
The sales force is a downstream business. We are incorporated into the client and now we are adding sources to close that cycle well and we will produce more strength.
Electricity meets a critical need and service for consumers and businesses, is purchased on a long-term contractual basis and is highly resilient from a credit perspective. It is very complicated to update the ones that work, it is more expensive to disable them. And our credit experience in those countries has been incredibly positive, even in the event of a global economic downturn, we’ve been paid on time in all those jurisdictions.
So, 90% of the operating volumes of an NFE today are similar to electric power and the more than 3,000 megawatts of which we have been suppliers or owners will communicate what we are going to do in the future.
So let’s go back to page 16. On the left side are the dimensions of the source Chris talked about. We will succeed in 464 TBtu in 2024. Se will provide 130 TBtu in existing contracts and 334 TBtu will be new supplies.
Basically, we have a kind of rule of thumb that for every 10 TBtu, i. e. about one hundred megawatts and 334 TBtu translates to about 3300 megawatts of new energy demand that we’ll find with our LNG supply.
On the right side, we are already reaching 1,700 of the megawatts. This is the Barcarena power station, our six hundred megawatt power station in Ireland, three hundred megawatts in South Africa and two hundred megawatts of new electric power in Jamaica. We also have a progression pipeline in expansion markets of more than five gigawatts.
So what we need to show here is that, as our supply grows to that overall portfolio of 9. 5 MTPA, the opportunity to integrate that into downstream electric power demand is about the duration of what we’ve done before and we’re already reaching more than a portion of that volume.
On page 17, what I need to do is seize this opportunity and seek to extend it from a marginal perspective. So when we think of electric power, we think of some kind of long-term electric power sale in your PPA at competitive prices. Rates
Start with me on the guy on the left side of this page, which is $0. 125 consistent with power. It’s a position that we’re globally competitive in those developing markets. There is usually also a capacity payment or CapEx return, the difference between what it costs to build and the price of the plant, however, is around $0. 025.
So we’re at a hundred megawatts of undeniable cycle electrical power in the long run, because we can sell electric power at a general rate of about $0. 15 per kilowatt hour. gasoline
Our production charge on the FLNG plus transportation is approximately 7 MMBtu, which provides an overall fuel margin of approximately $10 for the MMBtu. The long term
So, at the back of this page, we go back to our margin page that we showed earlier to show that we are assembling our run rate passes of 464 TBtus 2024, 2025 with a margin of $10 or a margin of $4. 6 billion. And so it’s in line with what we’ve done in the afterlife and what we’re looking to do in the future.
Let me turn to page 18 and see how we do that. So what’s amazing about this opportunity for us today that has been another in this business in the afterlife is that it’s an incredible time to build source and have a long position, because truly there is an unprecedented market opportunity for LNG in the short term.
On the left side of the page, we’ve made a bunch of detailed models about 2023 fuel balances in Europe and for those of you who stick to this, there’s a very variable problem, but we like to go back. at the kind of an undeniable metric, which is in 2021, there were 122 MTPA of Russian fuel source through pipelines, in 2022 there were 67 MTPAs and in 2023 we expect there to be zero.
That well replaces 1,500 LNG cargoes and more than 20 new LNG terminals are needed to do so. There’s a lot to be said for what will happen in 2023, but I think we think the market will remain short.
And the value chart on the right, which is the one we showed above, the one we all bring in our wallet today, is the short-term opportunity. Therefore, we are building a long position on this opportunity that we will realize over time with built-in LNG to feed.
Page 19 goes a little further in terms of infrastructure in Europe, because we need to describe some of those main points to you so that you can see how smart this opportunity is and how we are going to take advantage of it in the very short term.
Europe now has a significant refuelling infrastructure and a highly connected LNG market. Therefore, there are around 30 terminals, around 3,000 LNG shipping slots per year and the market is trading on a value index. While the main index is called TTF. Es the fuel network in the Netherlands and the other fuel networks in other European countries are quoted on a secure basis at the global price.
Now, the wonderful thing for us that is very different from the maximum of NFE life is that we have two things. We have an existing infrastructure and we have a centralized market price. So we don’t want to go through individual buyers. We can successfully sell on a centrally compensated exchange at an indexed price.
So, there are bottlenecks for this infrastructure to enter Europe and obviously, now that they are filling up, we are creating new capabilities, which we have highlighted here, namely the Eemshaven terminal in the Netherlands, which we have linked to Gasunie and is the first new terminal that comes from the Russian vision.
There will be other new terminals, namely in Germany, some in Italy and also elsewhere, that will expand this infrastructure, probably not enough to make this market something, but very limited over the next few years. But there will be infrastructure to be had for suppliers like us to supply fuel to Europe.
Again, replacing a hundred MTPA of Russian flows is likely 15 to 20 new regas terminals to scale this opportunity. Then, as we expand the portfolio of sources, we will be able to sell in Europe using existing infrastructure and at market price, giving us fair returns in the short term.
In the long run, what we actually know is that LNG as a fuel is the differentiated way to create a competitive advantage. It’s a genuine downstream service, provides competitive margins and is anything NFE has the expertise and delights in doing. there’s a little bit more information about how we’re looking for the long-term opportunity and how we’re going to implement all those LNG volumes and we’re looking to talk more about that.
Let’s move on back to Patrick.
Patrick Hugo
Thank you, André. I’m on slide 21. We’ll take a few minutes to talk about hydrogen. So, I think I would start by saying that we are making significant progress in the hydrogen sector, what we call 0 in the third quarter. And as Wes has said many times, we strongly believe in the role hydrogen will play as a cornerstone of a blank energy future.
In particular, we believe it plays a vital role in hard-to-reduce sectors of the business economy, such as refining, petrochemicals, metals and cement manufacturing, where it can have a real impact on decarbonisation.
But what we’re also seeing, actually, especially in recent months, there are many similar opportunities in secondary and tertiary spaces like transportation, hydrogen garage and renewable energy, and we’re proceeding to take a look at a number of opportunities in those spaces. from a strategic perspective.
That said, we’re in the early days of a true blank hydrogen economy. So, let’s start with Beaumont and the asset we’ve talked about over the past few quarters, and then we’ll go on to overlook a few other things before sending the call back to Chris.
We are proud to be: a true pioneer in the area with our first industrial-scale green hydrogen plant in Beaumont, Texas. We are building a 120-megawatt green hydrogen facility, which will be capable of generating 50 consistent tons per day of green hydrogen, or about 18,000 tons consistent with the year. At this level, it will be the largest of its kind in the U. S. Once it is consistent with the national, which we expect in 2024.
Beaumont itself is a giant shopping mall in southeast Texas that many of us know about beyond transactions and activities, many refineries in the domain and many others that use hydrogen today, so our weed consumers are there, either internally or outside our facilities. line.
To put it in perspective, only 3 or 4 refineries in the vicinity have a demand of more than 1,000 tons of hydrogen per day, and again, we are generating 50 tons on our initial scale. Therefore, 1,000 tons per day is more than 20 times what our plant alone would produce in our initial phase. Therefore, there is a lot of demand and a lot of prospect of expansion in the immediate region.
As many of you know, the quarter secured our appliance for long-term installation, adding our electrolyzers as part of our agreement with Plug Power. Basically, they manufacture the machines that produce hydrogen. The first of those sets will appear on our site in 2023 and we will fully meet and start operating, as I said, in 2024.
Also in the quarter, we signed an agreement with Entergy to supply renewable energy to our site. There really are many aspects to this agreement and so far they have been a wonderful couple. Entergy, of course, is helping with electrical connections, the top, transformers on the site you see on slide 21, but we’re also looking at other spaces for possible collaboration with them.
Now let’s move on to slide 22, because it turns out that the U. S. It will be the most productive position to build blank hydrogen projects, probably from anywhere in the world. Earlier this year, as many of you know, Congress made a blank primary investment in energy infrastructure, in fact, the largest climate investment ever made in U. S. history. U. S.
The so-called Inflation Reduction Act, as it is called, is expected to spur more than $4 trillion in infrastructure investment over the next 10 years. That will come with a tripling of annual hydrogen spending and other big commitments to things like carbon capture. and storage, solar power, electric transmission, the grid that makes it all possible.
We are focusing, of course, on the $3 blank hydrogen production credit consistent per kilogram, which takes our hydrogen business from marginal success to great success and enables our industry to produce green hydrogen in a cost-effective and scalable manner.
You will move on to the last slide of the hydrogen section, which is on page 23. As we shared our last call, we are executing assignments on the Gulf Coast and elsewhere in the United States. We mentioned, in particular, the Marcellus Assignment in our last call.
What we are doing here is building a true multi-asset blank hydrogen infrastructure and our plan is to capitalize on this business in the near future. Over the past few months, we’ve continued to put all the pieces together for Beaumont and we’ve learned a lot.
We are applying those learnings to optimize our technique for long-term allocations, as well as being very attentive to our consumers and the genuine hydrogen demand situation, putting those hydrogen markets blank where they are needed. So we’re essentially employing all the smart stuff about the Beaumont Assignment and we’re getting rid of that style in other parts of the country.
To put it all in applicable terms, we are building the leading commercial-scale blank hydrogen company and our platform deserves to be, first and foremost, the equivalent of five Beaumonts. So that figure of 90,000 tons per year that you see on your screen is equivalent to about six hundred megawatts or about 520 megawatts of the Beaumont facility.
As you can see, there is much more to come on this front. We will respond soon with Beaumont’s key business milestones and the main points of our expansion and capitalization path separately.
Chris, to you.
Chris Guinta
Great. Thank you, Patrick. Skip to slide 25. I will provide the monetary functionality of the third quarter. For the 3 months ended September 30, we had adjusted EBITDA of $291 million, or approximately $1200 million on a 12-month basis.
The consistent margin with respect to the terminal segment was $251 million with an additional $88 million coming from the shipping segment and you can place more main points in the appendix. Net revenue source for the quarter: $86 million, or approximately $0. 41 consistent with percentage consistent one-time items.
This quarter, we sold 24 TBtu in overall volumes, which equates to a constant average margin of around $15 consistent with MMBtu, which is noticeably higher than what Andrew says we can do in the long run. Henry Hub averaged 8. 30 [ph], which is evidently a pass-through, however, it had an effect on earnings and prices over the constant period.
Turn to slide 26. We show side by side the balance sheet as it stood as of June 30, 2022 compared to the current state and, as you can see, it is an absolutely different picture. Thanks to the paints of our M&A Teams, we have delivered on our promise to monetize more than $2 billion in assets, fully investing our expansion initiatives.
We simplified corporate debt to just two tranches of bonds at 6. 75% and 6. 5%, respectively. We also have a $440 million revolving line and a $250 million line of credit, which gives us flexible and cheap capital, if needed, lately unused given our money position.
And finally, we have Jamalco’s bonds, which is asset-level debt, with no NFE recourse, but is consolidated on our balance sheet and is included here. As you can see, the liquidity profile is strong with over $1400 million capital available.
If you move on to slide 27, we have made significant progress on our monetary passes and will use that slide to communicate with credit rating agencies in the coming weeks. We think we’re well placed for an update and look forward to talking to them.
Today, as I mentioned, our EBITDA in the last 12 months is approximately $1. 2 billion, with seven terminals or near-completed, we have a debt-to-EBITDA ratio of less than 3 times.
As you can see from the chart on the back left, deleveraging is immediate as the FLNG unit comes online. There will be: We will have less than 2x leverage with our first FLNG asset below 1x once the moment comes online late next year.
Finally, at the back right of the page, we imply that our money position plus availability at the current capital facility is $1. 4 billion, which, combined with our operating cash flow, fully budgets for FLNG’s initiatives.
Finally, on slide 28, it shows our ongoing purpose of being a world-class operating company. In the third quarter, we delivered 24 TBtus to consumers and asset reliability remains above 98%. South Florida and the Caribbean were due to shut down safely and safely as hurricanes approached attractions this fall. it then resumed operations and was executed within 24 hours of the Coast Guard’s transparent day.
Last but not least, we had no security incidents in the third quarter and maintained our overall recordable incident rate of 0. 0.
With that, I call Patrick back.
Patrick Hugo
Thanks Chris. So, Jake, I think we’re in a position to answer some questions. So if you could only give the commands to callers, that would be great.
Q&A session
Operator
Of course. [Operator Instructions] And let’s start with Ben Nolan with Stifel.
Ben Nolan
yes. Thank you. I appreciate the time here. I sought to start only in the FLNG aspect, what is happening where. It looks like Altamira is on the front line for forklifts and I guess that would mean moving to Louisiana. First of all, is that correct and, if so, does it replace the MARAD procedure in terms of types of approvals and deadlines or something like that?
Wes Eden
Hi Ben. I’m Wes. See you last week. As Chris said, we signed agreements with the government of Mexico on Friday, right after our Corpus excursion. So we have definitive agreements that allow us to position sets in Altamira. , Which is great.
Therefore, it gives us a lot of certainty that, for example, with FLNG activity, there are two things that matter. One builds the unit and two have a position to place it. So, we are very pleased with our scenario in Mexico and believe it is the first of many opportunities made there.
Secondly, as far as MARAD is concerned, we have a very committed procedure with them. Our authorization team is interacting with them daily at this stage. As you know, there is a 364-day era that you will have to grant. You are licensed through the law.
If they have questions about the line, they can necessarily stop preventive surveillance while asking you to give them more detailed answers, and then start preventive surveillance once they are convinced that you have done so. We have gone through precisely this procedure here recently.
So they stopped the stopwatch on a task in mid-August. They reset the clock at the end of October, which we’re happy about, so we know those two sites are very active candidates for the first of those units.
I would say that at this point, Altamira has a modest advantage as they are a bit further along in the process. But our genuine purpose for next year would be to deploy assets on both sides. This would give us the greatest diversification of the company. , which would allow us to apply additional sets on most of that. So that’s where it happens. So I would say right now we’d be the first mid-year in Altamira, the time later this year in Louisiana.
Ben Nolan
What if it’s in Louisiana, if it’s a procedure, or if you replace it at all?
Wes Eden
We allow the floating rate and constant platform in Louisiana. We hope to do either there. So, or or not?I think, as Chris explained, we’re looking to be very clear about that. We have a fairly detailed view of the schedule that is unfolding.
So, the first one will have to leave the backyard in March, the time in November, and then every few months thereafter. That gives us a lot of flexibility in terms of the nature of the infrastructure. Obviously, as we said earlier, the substance of blenders is the same regardless of the marine infrastructure in which we install them.
Ben Nolan
It’s bien. Parfait. Et I think I have one more. But very quickly, any update on Ireland, it’s intermittent, but where is it right now?
Andrew Deté
Yes. So we are in the last review. Obviously, there have been dates that have already been published through the Irish government that have extended them a bit. We think we’re in a very good position there.
There is now public comment on the government for LNG and the assurance of the source review that the government has made definitely recommends ending LNG, so we work collaboratively every day to answer questions and do other things to make sure our license is finalized here sooner. the end of the year, but we are sure it will happen. And that includes the terminal and the six hundred megawatts of power, about which we must make sure that we are also transparent.
Ben Nolan
It is ok. Thank you, Wes and Andrew. Thank you for your time.
Wes Eden
Yes. Thanks Ben
Operator
We turn now to Sam Margolin with Wolfe Research.
Sam Margolin
Hello, good morning everyone. Thank you for answering the questions.
Wes Eden
hi.
Sam Margolin
You noted in your prepared remarks that you’re turning operating margin into much better money this year and that’s great. As FLNG production increases, some things change, such as how capital needs work and how finances come and go. Can you communicate a little bit about how — whatever you want to happen in terms of balance sheet or liquidity to manage operating capital positions as a major LNG producer?
Chris Guinta
Hi Sam. I’m Chris. So, the short answer is that we don’t expect it to be a big current capital loss at all. In fact, as at the moment we acquire LNG cargoes from existing suppliers and pay in advance, it is strictly a service. as not having investment grade, which is not unusual in the industry at this time.
When we start taking the source fuel, what we’ve done is that the source fuel source contracts that we’ll have outdoors, the CFE base rate or in Louisiana, will all be paid in arrears. And then, in the case of Lakach, we are the ones who pay Pemex.
Therefore, I hope that you can have positive operating capital in a short period of time. The actual start-up of the team, obviously, is not a big expense, that is, it is hard work and its power. which is functionally the load of feed fuel entering the unit, so don’t expect big brakes at all. It is vital to note, I mean, that we continue to increase the length of the revolver in the LC [ph] installation, which also allows us a lot of flexibility. It is a reasonable capital.
Sam Margolin
It’s fantastic. Merci. So, just a follow-up. Like you, as the slides indicate, the TTF futures curve fully supports this post-2025 margin view. A lot of LNG capacity perspective, capacity works as a $15 margin, let alone works at, say, a $3 to $4 margin, but I think yours does. So the question is, as you go through this business term, to what extent do you need to be competitive with that ability to compete when you’re moving forward in this?Strategy to gain power to power in covered places? Thank you.
Wes Eden
Ouais. Je means that one of the reasons Andrew explained in detail the economics of the electric power aspect and the dimensions of the world’s power shortage is to show what the company’s long-term trajectory was. We began to create our own long before the crisis and we did it to satisfy what we demanded to be practically inexhaustible in the other aspect.
The margins you realize are significant. If you look at our margins of $8, $12, $15 and compare them to the margins, the published margins of the fuel manufacturing giants at $1 or $3, $4, $5, obviously, are higher.
They are particularly superior because it is more difficult. You have to build terminals. The infrastructure wants to be built. You have to build power plants. It wants to provide operations for this. If it were simple to get higher margins, everyone would have them. So we made a big effort in the downstream aspect to solve people’s disorders and Knock would have done it successfully enough.
One of the other things that I think is underestimated is that one of the measures of the good fortune of this business is that the credit profile of this downstream business is huge. So we just experienced a global pandemic that is still feeling the effects in many parts of the world.
We have some of the hardest-hit spaces in which we operate, and we don’t have a single dollar of late payment from any of them. This means that the service we provide is imperative and they will have to have the power. . They have to have energy, it’s the maximum affordable option they’ve ever had.
So while it’s a much bigger commitment in terms of resources, capital, time, and staff, the sum of all those things is that you end up with the downstream portfolio that complements your upstream portfolio, generates higher margins, and solves genuine disruptions. global disorders than just being a wholesaler.
Therefore, we are a retailer, not a wholesaler in all grades and it is a vital commitment that you can now see very visibly what the benefits are only in terms of savings that filter down, but also the credits triyetes of it and also only the project in which we are looking to achieve things, therefore.
Sam Margolin
Thank you so much. Have a day.
Wes Eden
Thanks.
Operator
The next one will come from the hand of Sean Morgan with Evercore.
Sean Morgan
Hi, guys. So, I think the DOE app for Altamira is interesting. It looks like you’ll potentially be able to get fuel from Baja, Build[ph], which has been a bit of a holy grail for U. S. exports. In the U. S. , like other people think fuel is less expensive than some of Henry’s guests at the center where there is much more service export capacity outside of that. So when you think you have to move that fuel a little bit more, there are a couple of pipelines that are evolving, I think, in terms of getting the fuel all the way to the jetty, where do you think their kind of export pricing compares to some of the existing festivals in the U. S. Gulf?USA?
Wes Eden
We think the bottom line is that our economies are pretty similar, whether we produce LNG in freshwater fuel in Altamira or off the coast of Louisiana. It’s a host of other reasons. But at the end of the day, it’s very competitive in one position over the other.
Overall, 97% of global LNG is now produced onshore, 3% offshore. Obviously, with those five breakthroughs that we’re building right now, we went to the bottom of the list to be the world leader in producing those. There are only 16 sets that exist in the world today, we produce five more. This makes us the world leader. This intellectual property, I think, is incredibly valuable.
So, obviously, what we’re doing at the first two facilities, because we’re the existing U. S. pipeline. The U. S. , which is a fuel source in a position, is a smart price, is reliable, and is a wonderful position to do business.
The progression we are making with Pemex will be the first time we acquire fuel from a productive marine well. We believe the long-term implications are extraordinary.
And we believe that the IP to build the device works in those situations and allows us to access the literally blocked fuel and that’s the next increase of additional advantages for us that is available.
So it’s a step-by-step analysis, but the direct answer to your query is that we believe the economy is pretty much the same. There may be a plus or minus in one aspect or another, but they are not so different if you take into account the group of others and transportation. But we believe that the next step would be to get genuine popular stranded fuel and that this can gradually produce a very, very different result.
Sean Morgan
yes. That’s useful, Wes. And just a quick follow-up of Altamira. I think the app is for 2. 1 and I think last week we talked about an export capacity of 1. 4 in total. So 2. 1, it’s just a margin in case you need to expand the Altamira project, and also, what is the maximum that the existing pipeline infrastructure can accommodate based on MTPA?
Chris Guinta
Cap, that’s Chris. So, yes, we need an excess of margin, precisely what is needed. The pipeline has a capacity of $2. 6 billion consistent with the day. We agree that there are active discussions to increase this capacity to a little over 3. Public documents imply that the old use in the pipeline is about 20%.
So what we’re doing here is solving an NFE problem, which helps them cover some of their company’s transportation prices and then also be their spouse as we market LNG globally.
Sean Morgan
It is ok. Thank you Chris That’s all from me.
Chris Guinta
Thank you, Sean.
Operator
Now let’s move on to Sam Burwell with Jefferies.
Sam Burwell
Hi, hey guys. I wanted to communicate about terminal sales and the flexibility it has to continue promoting to third parties next year and I guess also in 2024, given that it has terminals that want to be online. And something like that, slide 27, you discuss seven terminals today, nine in 2024. So, can you tell us what those seven terminals are, and then what would be the 8th and the ninth?
Chris Guinta
I’m glad you talked about terminals. You’re talking about the kind of subsequent opportunities.
Wes Eden
yes.
Chris Guinta
Thus, the seven terminals to which we refer are Old Harbour, Cammobay [ph], San Juan, La Paz, Puerto Sandino, Nicaragua, Barcarena, Santa Catarina. We hope to complete the progress we are discussing in Ireland and South Africa, which brings us from the 7th to the ninth.
Andrew Deté
As for the first question, we have some contracts that I think will come here until 2023, with Norsk Hydro and Barcarena being the biggest. I’m not sure I got the question, but we’ll continue to activate those contracts.
We are showing up 130 TBtus, so the 2023 run rate volumes. So, we have a little bridge between where we are now and where we will end up 2023 with Norsk Hydro being the lion’s share.
Sam Burwell
It is ok. That answers a lot. Thank you. I assume that the follow-up would be, in the MARAD procedure. I know you already referred to this in the ready comments and Q&A, but given your delight so far, how did it happen and what did you learn?”How would you characterize the repeatability of the procedure and do you think it can be done faster in the future, because it seems to me that the Gulf of Mexico in the U. S. will be able to do so. UU. es probably a wonderful position for you to expand LNG beyond the first five units. So I’m curious to hear what you think.
Wes Eden
Well, the MARAD procedure reaches many other agencies, right?And our interactions with them were very professional and very responsive. So, we feel that they have done one hundred percent of what they are obliged to do, either in the letter and in the script, and we are satisfied with that.
When you take a look at what they’ve done historically, they’ve been authorized, they’re guilty of authorizing all the constant rigs in the Gulf, I don’t know what the real number is, but it’s probably tens of thousands. So it’s a very, very experienced group.
So what we’re doing is not that new compared to what they’ve done. Obviously, what’s different is that we put a blender on it. A blender has a power plant because you want compression to convert that fuel into LNG. So air clearance is the only additional difference, but it’s a modest difference and we think your reaction has been quite appropriate, committed and very professional.
And so, with all that said, obviously we think it’s highly reproducible and there are a variety of other selling options that were looked at, whether it’s in Louisiana as well as Texas, the options would make sense to have follow-up advancements as it becomes a success, which is what we expected, but it’s great.
And I think when the modular technique for building liquefaction and putting it into existing marine infrastructure more sensitive is, A, particularly less expensive and particularly faster. So when I referred to that 97%, 3% is the proportion of what it is today. I think it’s very, very likely, which is one hundred percent likely.
That those numbers will reposition over time, because it makes a lot of sense, not just for offshore services in the U. S. but for services. In the U. S. , where fuel is reasonable and plentiful. There is reasonable and abundant fuel all over the world. It allows us to move from one position to another. less expensive and faster, it is simply better. That’s great.
Sam Burwell
It is ok. Thank you so much. Enjoy the color.
Operator
And let’s move on to Martin Malloy with Johnson Rice.
Martin Malloy
Hello, I have a query about zero. And I heard: I would like to know your opinion on the sampling of this hydrogen facility and how you see the optionality. Obviously, there’s a lot of commercial cargo in this area, but I think Entergy also has a proposed power plant. That’s big. They can absorb hydrogen and also have pipes and underground garage installations. And also, I guess, in relation to that, how do you see milestones in terms of scale?
Patrick Hugo
yes, Marty. So you’re probably right. There is a bit of diversity in the collection depot in the immediate vicinity. I speak literally on many feet and then a few miles.
So it’s playing — so the kind of refining network is the number I gave you earlier, which is 1,000 tons consistent with the day of hydrogen demand for only the 3 or 4 that’s there, and again, we’re generating 50 tons. So, as you can imagine, we are very popular and many other people are looking for the 50 tons of green hydrogen per day, which is an exclusive deal.
We are also working with Entergy according to their wishes in the region on the energy side, the facility you are talking about is called Orange County Advanced Power Station, and you also have a significant desire over time. And then I talked about the garage and transportation. So, you have things like Spindletop and a number of other existing pipeline networks to move hydrogen in the region.
So, there are a lot of features for us and what we are essentially looking to do is look at how to optimize this first phase. And then there’s: the smart news about electrolyzers is pretty undeniable at scale, because it’s fair: it’s largely a feature of assembly charging. Therefore, the first 120 will be from 2024, and then we will be able to charge sets later as increases are requested and there is more demand for green hydrogen in the region.
Wes Eden
Ouais. Je means that at the end of the day, you’re generating hydrogen, adding the production credit, which is close to zero.
Patrick Hugo
yes.
Wes Eden
And obviously, the economics of this is very difficult and other people are willing to pay the market value for it. As Patrick said, the dimensions of what is needed are greater than what has been produced.
So, well, I think that’s the merit of hydrogen production, the green hydrogen production, the blue hydrogen production, not just in the United States but around the world, it’s immense. The fact is, it’s a hobby.
It is a relatively small component of the overall energy picture. That’s all I think the Inflation Reduction Act provides capital for a number of other facets, adding their production, but also batteries, adding carbon capture and storage. There are a number of other facets that are very powerful.
And the demand, in my opinion, for green hydrogen is a practically inexhaustible era and we can do it at economic levels. then expand considerably. And so, you can’t build a moment one until you’ve built the first one, and that’s what we’re focusing on now.
And then I think you expect efficiencies across the landscape, not just in hydrogen production, but also in its transportation, its utility, all the other facets that will make it a hobby that then plays a vital role in decarbonization.
Martin Malloy
Super. Et my question at the moment, I just wanted to consult for your opinion on progress towards the investment grade score and do you think you’ll want to set up some of those fast LNG projects before you can?
Wes Eden
Well, if rating agents are listening and expecting them to, we think we now deserve to be investment grade. I mean that money generation and converting EBITDA into loose money are vital and quite serious. And rate agents have been wonderful partners with us along the way. We had a wonderful conversation with them, we’re actually posting that income because we intend to stop by and review with them.
One thing we need to get from the credits of the rating agencies, we need to get the credits from the inventory analysts and the investment network in general, is that the dimensions of the money generation that we are about to delight in are enormous.
I mean it’s not an exaggeration to say that when you take a look at the 500 corporations of the S.
So, as a company, we have an ordinary opportunity to produce a significant amount of money and we have done so largely without raising other people’s capital, it has been generated internally.
So when rating agencies, inventory market analysts, investors observe our activities, it’s not just about coin generation. The question is, can you do it without asking other people for coins?It really is a question that we can answer with a resounding yes.
When I say we have a significant amount of money on the balance sheet, what we are doing and plan to generate a lot more. And the repeatability, the durability of this is, of course, where those 3 opposite numbers are very, very inverted.
That’s why Andrew and others have spent a lot of time looking for long-term attributes, not just the short-term dislocation and market opportunities there and the resulting excess money flow, which will happen.
But also to do in the long term what we originally set out to do, which is necessarily to supply electricity and fuel to meaningfully compel communities around the world who want it and are doing it right intelligently. So it’s obviously a very smart deal for us in the long run. We truly have a significant impact on the communities we serve. So, it’s all considerations for that.
My delight with agencies is that it’s not an event, it’s a procedure and it constantly does what you said you were going to do. And I feel like our report card, if you look back from the day we made public until now, it’s pretty unblemished that we’ve achieved it financially or particularly greater than what we said we were going to do.
And I think they take into account the things of some and tend to be followers. This is the nature of the corporate aspect in the score compared to leaders. But we are very positive about our long-term chances.
Martin Malloy
Thanks.
Operator
Now let’s move on to a Greg Lewis consultation with BTIG.
Greg Lewis
Thank you and good morning to everyone and knowing that we are on time, I will only ask one question. Wes, while we think about the speed around fast LNG and I guess right now there are seven MTPAs on the board. Obviously, you see opportunities in the market, but you’d like to keep coming back to the big picture. If we think about the cause in terms of the duration of your FLNG solution, is this the right way to think that we will eventually succeed at a point where we keep our projects in the Caribbean, our projects in Brazil and elsewhere, i. e. we build those scenarios to fulfill our call for those projects as we see them in the long term or will we be or make a situation where we still do? Are you in a normalized environment selling fuel on the open outdoor market of your company’s end markets?
Wes Eden
Sí. Es really an impressive question and it is. I’ll tell you my take on that, but it’s not imaginable that we’ll literally look forward to the future. First, we scaled our FLNG production to meet the visual demand of the markets. Serve.
That said, we only fulfill a fraction of the actual wishes in places like Mexico, Brazil, South Africa, or even Ireland. So, the advantages of just building the infrastructure and continuing to grow organically in those markets are huge.
Now, the longer-term consultation that I mentioned earlier is who the new general is when he’s done with this, and I think it’s obviously a debate, not an answer, and there are many other elements.
The only thing I would say is the top-down portfolio, we know it’s a wonderful complement to the business because it provides a duration. So when other people communicate about returns, they also communicate about duration.
I sat on the other side of the table because many of you among the million other people in my life told me that you can earn only 15% or 20% or get back the investment. The truth is that the other people who can make 20% go back for 25 years are called Warren Buffett and a few others.
Therefore, the duration issues and duration we get from those long-term portfolios are particularly valued. sustainability.
Another thing that is underestimated in my opinion is that the flexibility you are given when you participate in those long-term contracts is important. And what I mean by that is that the world chronically underestimates the amount of fuel and electric power it needs.
I think it is truly a human characteristic and, therefore, it is not something express for emerging countries. I would say the same thing happened throughout Europe, where countries essentially knew they needed significant amounts of source to meet their needs. They are under the name and assume they can buy more on margin on the spot when they need to.
In fact, this additional demand is what, in the general market, becomes more demand at the same price. In normal times, this necessarily allows you to have an oversupply and then take advantage of it in the market. It’s a nuance, but it’s very, very significant.
But we deeply consider that the combination of upstream and downstream supply, which is demand. These two things in combination are not only smart business partners, but they are really mandatory if you literally need to manage the business well and the margins you generate are markedly different. .
If you step back and look at any of the other fuel manufacturers across the spectrum, they have wonderful companies, but they do something. They produce fuel, ship fuel or some of them use fuel in other facilities, nobody does it in the same way that we do.
And I think the economy and the margins that we’re generating are testament to the fact that it’s such a smart thing to consider. So that’s a long answer to your short question, but I appreciate it. Thank you. smart.
Patrick Hugo
Jake, I think we’re at the most sensible moment of our time. I’m Patrick. We’d like to close the call. I suspect we would possibly have more questions. So, of course, for those who may not have gotten an answer to your questions, don’t hesitate to touch me. So, Jake, if you can also end the call, that would be good.
Operator
Of course. Ladies and gentlemen, this concludes your convention for today. We thank you for your participation and now you can log out.