Earnings Call Transcript - EE Q4 2025

Operator, Operator

Hello, and welcome to the Excelerate Energy Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Alex, and I'll be coordinating today's call. I'll now hand it over to Craig Hicks to begin. Please go ahead.

Craig Hicks, Moderator

Good morning, and thank you for joining Excelerate Energy's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Steven Kobos, President and CEO; and Dana Armstrong, Chief Financial Officer. Also joining the call are Oliver Simpson, Chief Commercial Officer; and David Liner, Chief Operating Officer. Our fourth quarter and full year 2025 earnings press release and presentation were published yesterday afternoon and are available on our website at ir.excelerateenergy.com. Before we begin, please note that today's discussion will include forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially. We undertake no obligation to update these statements. We will also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found at the back of the presentation. With that, it is my pleasure to pass the call over to Steven Kobos.

Steven Kobos, President and CEO

Thank you, Craig, and good morning, everyone. Thank you for joining us today. Whether you followed Excelerate Energy for many years or you are new to the story, I want to start by grounding us in who we are and what differentiates our business. At Excelerate, we operate a global LNG and power infrastructure platform. We help countries enhance their energy security by increasing access to global LNG markets. We do this by providing safe and reliable downstream energy infrastructure, particularly in markets where traditional onshore development is impractical or would take too long to deploy. Our business is built around critical assets, long-term contracts and dependable operating performance. That foundation has allowed us to operate through market cycles and deliver consistent results. Turning to 2025, it was a strong year of execution for Excelerate Energy. For the full year, we delivered record adjusted EBITDA of $449 million. This is an increase of about $100 million over the prior year. That performance reflects the contribution from the Jamaica acquisition, continued growth in our other LNG, gas and power activities, along with reduced year-over-year operating expenses. Operationally, we performed exceptionally well. Enterprise-wide reliability exceeded 99.9% for the year, our strongest performance to date. And remember, reliability isn't just an operational measure, it's a financial one. Consistent, reliable performance generates stable, predictable cash flow. We also ended the year with a strong balance sheet, significant liquidity and low leverage. That financial position allows us to enter 2026 from a position of strength. Today, we are introducing full year 2026 adjusted EBITDA guidance of $515 million to $545 million. At the midpoint, this is over an $80 million increase over our full year 2025 results. Our '26 outlook is grounded in assets and contracts that are already operating or moving through execution. This provides a solid and visible foundation for the year ahead. Looking more broadly, global LNG supply is going to increase materially through the end of the decade. As that supply comes to market, we expect demand for LNG regasification infrastructure to grow, particularly across the global South. Many of these markets are seeking reliable, scalable solutions to enhance energy security and reduce dependence on dirtier fuels. At the same time, power demand continues to rise. Population growth, industrial development and expanding digital infrastructure, including AI data centers, are placing new demands on energy systems. These dynamics reinforce the need for reliable LNG and power infrastructure, and they align well with the capabilities of our asset portfolio. Turning to Iraq, this remains a strategically important project for Excelerate. For Iraq, the project is mission-critical. It provides a reliable source of natural gas to help with an existing deficit to support growing power generation needs and strengthen the country's energy security by reducing exposure to regional supply disruptions. Construction of Hull 3407, our newest best-in-class FSRU, is progressing well. The vessel has completed sea trials and is advancing through final commissioning activities. These include gas trials and cryogenic testing ahead of delivery in early second quarter. In parallel, site mobilization and early construction activities for the integrated LNG import terminal at the Port of Vlorë are underway. Engineering and procurement activities are progressing. Long lead items have been ordered, and we have executed the lease for the existing jetty. As the project has advanced into detailed engineering, we refined the structural design of the jetty to ensure it can support safe long-term terminal operations. These refinements required additional scope, including structural reinforcement, which has resulted in higher estimated construction capital. As the project moves forward, we are gaining better visibility and are refining our financial assumptions based on scope and commercial terms. Total estimated capital cost for the Iraq terminal is now expected to range between $520 million and $550 million, inclusive of the cost of the FSRU. The all-in cost of the vessel remains roughly $370 million with about $220 million remaining to be paid for the vessel in the second quarter of this year. From an economic perspective, while total CapEx estimates have increased, we are now expecting annual terminal operating costs to be considerably lower. The Iraq project is expected to achieve an EBITDA build multiple of approximately 5x. This is in line with the economics we outlined on our November earnings call at the minimum contracted offtake of 250 million standard cubic feet per day. Under the contract, deliveries can scale up to 500 million standard cubic feet per day, providing meaningful upside potential. The integrated Iraq terminal remains on track to commence operations in the third quarter of '26. Now I'll turn to Jamaica. In '25, our Jamaica LNG to power platform performed exceptionally well. It delivered safe and reliable energy supply to the country and provided us with stable contracted cash flows. It also demonstrated exceptional resilience during Hurricane Melissa, one of the all-time most powerful hurricanes, with minimal operational and financial impacts during the fourth quarter. Hurricane Melissa highlighted the benefits of LNG and floating regasification infrastructure in bolstering the energy security of Jamaica and potentially for other islands throughout the Caribbean. Following the acquisition, our focus has been on integration, operational excellence and maintaining high levels of reliability. We are proud to announce that full integration of the Jamaica platform was completed successfully in Q4. With the integration complete, we are advancing our strategy to optimize the Jamaica platform while pursuing new infrastructure opportunities across the Caribbean. With Jamaica integration complete and the Iraq project progressing as planned, our focus now turns to executing the next set of defined initiatives to extend our earnings growth trajectory. First, we expect the Express FSRU to be redelivered at the expiration of its current contract late in Q3. We have high confidence in redeploying the asset and improved economic terms over the prior contract. This should support incremental EBITDA uplift in 2027. Second, we are moving forward with plans for an FSRU conversion. Under our current planning assumptions, the converted FSRU will be available for commercial deployment in early 2028. Negotiations of the final contracts related to the conversion are ongoing, which is why this project is not yet included in our committed growth capital guidance. We're going to provide more detail once the necessary commercial agreements are finalized. Finally, future growth will be driven by a set of scalable LNG regasification solutions that we know how to execute. These include integrated onshore terminals, floating storage units paired with onshore regasification, and small-scale and modular configurations. Together, these solutions provide a disciplined and repeatable way to deploy capital and scale our global asset portfolio. With that, I'll turn the call over to Dana to walk through the financial results in more detail.

Dana Armstrong, Chief Financial Officer

Thanks, Steven, and good morning, everyone. As Steven outlined, 2025 was a year of exceptional performance for Excelerate Energy. For the full year, we delivered record adjusted EBITDA of $449 million at the high end of our guidance range and an increase of over $100 million or up about 30% compared to the prior year. The growth was primarily due to the contribution from the Jamaica acquisition, which we closed in May 2025, and increased LNG gas and power sales opportunities. Inclusive of Jamaica, we reported adjusted net income of $199 million, an increase of $46 million or up over 30% year-over-year. Adjusted net income increased due to the items noted previously, partially offset by higher interest expense related to our 2030 notes. Turning to the fourth quarter, we delivered $40 million of adjusted net income and $113 million of adjusted EBITDA, both in line with our expectations. Results decreased sequentially from the third quarter primarily due to a full Atlantic Basin cargo delivery in the third quarter compared to a partial delivery in the fourth quarter, along with increased business development expenses and modestly lower LNG gas and power direct margins in Jamaica following Hurricane Melissa. For the full year, maintenance CapEx was $57 million and committed growth capital was $106 million, including $10 million of growth capital invested in the Iraq project in the fourth quarter of last year. Now let's turn to the balance sheet. We ended the year with a strong balance sheet supported by robust cash flow generation and disciplined capital allocation. As of December 31, 2025, total debt, including finance leases, was $1.3 billion with $538 million of cash and cash equivalents on hand. The full $500 million of capacity under our revolving credit facility was available as of December 31. Net debt was $730 million, and trailing net leverage was 1.6x. Last week, the Board approved a quarterly dividend of $0.08 per share or $0.32 per share annualized payable on March 26, 2026. As previously communicated, Excelerate is targeting a low double-digit annual dividend growth rate commencing in 2026 and continuing through 2028. We expect the next dividend increase to be approved in the second half of this year. In December 2025, our Board authorized a $75 million share repurchase program. With this authorization, we have the flexibility to repurchase shares in a disciplined manner, balancing shareholder returns with continued investment in our growth priorities. For the full year 2026, we expect adjusted EBITDA to range between $515 million and $545 million. This outlook reflects continued performance of our contracted FSRU portfolio, a full year of contribution from Jamaica, a partial year contribution from Iraq, and incremental uplift from the back-to-back QatarEnergy and Petrobangla LNG supply agreements. In 2026, we expect maintenance CapEx to range between $100 million to $110 million. The year-over-year increase in maintenance CapEx is driven mostly by the timing of dry docks. The Express and Exquisite FSRUs are both expected to undergo dry docks during 2026. Under current planning assumptions, the Exquisite is expected to go to dry dock in the second quarter, and our new build Hull 3407 will be utilized to substitute for the Exquisite. This will ensure continued operations at the Engro terminal in Pakistan. The Express is expected to go to dry dock early in the fourth quarter. In addition, the dry dock for our vessel to Explorer, which commenced late last year, concluded in the first quarter of this year. The associated first quarter maintenance CapEx for the Explorer dry dock is included in our maintenance CapEx guidance range for 2026. Additionally, our maintenance CapEx range includes long lead time equipment for a dry dock that we anticipate to occur in early 2027. Beyond dry docks, our maintenance CapEx guidance range includes additional strategic spares and other equipment as well as capital spend for expected overhauls and upgrades across the broader asset portfolio. This investment in other non-dry dock-related maintenance capital is part of a deliberate multiyear initiative focused on maintaining high levels of asset reliability, which supports predictable cash generation across the platform. Turning to committed growth capital, we expect that to range between $370 million and $400 million. This range includes roughly $220 million remaining to be paid for Hull 3407, along with an expected $140 million to $170 million for the integrated terminal project in Iraq and another $10 million of additional growth capital for other committed growth projects. This capital positions us to take advantage of the significant wave of LNG supply coming online over the next few years, ensuring that the proper infrastructure is in place to convert that supply into reliable power and gas for end users. In summary, we believe our guidance and capital plans appropriately balance growth, returns, and financial discipline while preserving flexibility as we execute on our strategic priorities. With that, we'll now open up the call for questions.

Operator, Operator

Our first question for today comes from Eli Jossen of JPMorgan.

Elias Jossen, Analyst

I wanted to start on the organic growth across the business more broadly. As we look past Iraq in service this summer, can you help frame what we're most likely to see next from a capital sanctioning perspective and whether that's Jamaica expansions, more integrated deals like we've seen in Iraq, LNG conversions? And then more broadly, can we kind of step back and think about what the EBITDA run rate and growth of this business is headed towards as we look ahead a few years?

Steven Kobos, President and CEO

Eli, this is Steven. I’m not sure if there will be more questions after that, as it covers a lot. Let me take a step back. We’ve discussed the upcoming LNG wave entering the market. Your question needs to be seen in light of what’s ahead. The whole LNG industry is shifting focus during the period you mentioned, moving from liquefaction to regasification. So, you are essentially asking where our priorities lie with this shift to regasification. I often say it’s like asking a parent which child they love most; we value all of them. Each sector has unique aspects that can benefit from this dynamic change. Recently, I returned from India where I met with Prime Minister Modi. He emphasized that India aims to increase natural gas consumption to 15% by 2030, a significant goal given they are currently at 6% in their energy mix for 1.4 billion people. We will keep concentrating on that area. There are numerous opportunities in South and Southeast Asia generally, and as seen with Iraq, these opportunities can arise in various regions with different market dynamics. Interestingly, Iraq faces a substantial shortfall in natural gas supply, which has worsened since Iran stopped exports last summer. They urgently need our project to help alleviate this significant deficit. Reflecting on the past four years in global energy, I believe the main takeaway is that cross-border pipelines are unreliable for various reasons, including neighboring relations or interference risks. LNG offers a global solution, enabling nations to diversify their energy sources beyond their immediate neighbors. Thanks for the question; it highlights why we’re confident that Excelerate is well-positioned at this moment. What’s expected? The foundational elements for projected EBITDA in 2027 are in place, and while we don’t provide specific guidance, the components are clear, and we can forecast where we see EBITDA heading in 2027. We plan to add further assets. Our experience with Iraq reveals that integrated deals benefit infrastructure companies like Excelerate that have done the groundwork to offer LNG alongside infrastructure combined. This will be our preferred approach moving forward; however, we also value understanding and responding to customer needs. We aim to sell what the customer wants rather than assume we know better than they do. We believe in providing infrastructure products and developing them in conjunction with LNG or as individually suited to market needs. The total addressable market is global, so it's not unexpected to see us appear in Latin America, the Middle East, or elsewhere, though for now, our primary focus remains on South and Southeast Asia.

Dana Armstrong, Chief Financial Officer

And just to add to the building blocks, Eli. So as Steven said, we don't provide multiyear guidance, but I think Steven summarized it really well that you'll have a full year of Iraq in 2027. We've spoken to that being about a 5x multiple, so you can do the math there. We previously spoke to Jamaica, which we expect to grow, as we said previously, between $80 million to $110 million on top of the base business over the next 5 years. We obviously have the Petrobangla QE coming online in '26. That's an incremental $15 million for 2 years then going to $18 million. And then now with Express, we expect to get on a new contract in 2027, adding uplift to our margins. So I think you can kind of get to a range for the next few years with those building blocks.

Elias Jossen, Analyst

That's great information. I really appreciate it. Now, focusing specifically on the Iraq LNG project, the global instability in the region appears to highlight the significance of the project. Can you discuss the project expansions and provide more details on the CapEx revision we noticed? I know you mentioned it in your opening remarks, but any additional insights would be helpful.

Steven Kobos, President and CEO

All attention is on the region, and that’s not a surprise. It’s critical and has always been a focus for us. The situation in Iraq is alarming, with only 8 to 12 hours of electricity available during summer. Imagine if a city like Houston faced that reality; it’s outrageous. The demand for energy is immense. Iran was supplying 800 million cubic feet of natural gas daily, and Iraq still only managed 8 to 12 hours of electricity in summer. This highlights the urgent need for LNG in the market. We anticipate that Iranian deliveries represented nearly half of their gas requirements, which makes finding a market globally with a pressing need for LNG quite rare. This urgency is why we are acting swiftly. While we are thinking beyond the 5-year contract term, we are being cautious in our discussions, focusing on the agreed 5-year timeframe and the minimum take-or-pay clause of 250 million cubic feet of gas. It’s important to recognize the potential upside of the project, as the fundamentals for global LNG demand are exceptionally strong. Regarding capital expenditures, while any project has its complexities, at its core, this involves basic materials like steel and concrete. The changes we’ve seen are due to a deeper analysis of geotechnical and geophysical factors, along with some negotiations with the Iraqi side that involved adjustments to both CapEx and OpEx scopes. Overall, we're confident in the 5x build multiple that Dana and I referred to in our remarks. This project excites us because it can significantly contribute to energy security, which is a vital issue. During my visit to India, Energy Minister Singh Puri remarked that energy security is viewed as a matter of survival for the economy. Ensuring reliable access to regasification is crucial for countries’ survival, and while it may sound dramatic, we firmly believe it to be true.

Operator, Operator

Our next question comes from Theresa Chen of Barclays.

Theresa Chen, Analyst

Maybe turning to Jamaica for a second. With the assets fully integrated at this point, can you elaborate on the near-term optimization opportunities and the additional growth options as well? From here, what do you think is realistic over the course of the next 12 months to a couple of years? Which infrastructure opportunities do you think are the most compelling?

Steven Kobos, President and CEO

I'll begin by addressing that, and then I'll let Oliver add his thoughts. The integration process went perfectly and was completed by the fourth quarter. We managed Hurricane Melissa exceptionally well. There's a mention in The Economist that touches on the high sustained winds of hurricanes, reminiscent of accounts since the Old Testament, which captures my attention. The Jamaican Prime Minister indicated that this situation has highlighted the reliability of thermal power and the floating assets that demonstrate resilience. I'm very pleased with that. Overall, we don't plan to change our multiyear guidance for the Caribbean. As you connect the dots, you may notice that we're considering implementing similar smaller scale hub-and-spoke models in other regions, but I’ll let Oliver expand on that.

Oliver Simpson, Chief Commercial Officer

From our perspective in Jamaica, when we acquired these assets, we established a platform in the region. In Jamaica, we see immediate opportunities to utilize the existing infrastructure and assets to deliver additional LNG to customers. We have experienced some success on a small scale and are exploring those solutions further. Following Hurricane Melissa, our infrastructure demonstrated remarkable resilience, which will serve as a strong selling point as we engage with potential new customers on the island. In the longer term, we are considering larger capital projects both in Jamaica and across the Caribbean, using Jamaica as a central hub for these initiatives. We are currently engaged in several promising conversations in the region, which we anticipate will lead to developments starting in 2027 and beyond. So, in summary, our immediate focus is on leveraging the assets in Jamaica, while looking to explore additional opportunities throughout the Caribbean in the upcoming years.

Theresa Chen, Analyst

Happy to know, Steven, that your success in Jamaica is officially a biblical proportion.

Operator, Operator

Our next question comes from Michael Scialla from Stephens.

Michael Scialla, Analyst

I wanted to see if you could help with the cadence of the capital spend this year. It seems like it's going to be first half weighted. Just want to see if you could provide any information on that.

Dana Armstrong, Chief Financial Officer

Yes, that's a reasonable assumption that it's weighted towards the first half because we detailed that $140 million to $170 million of that expenditure is for Iraq. Therefore, it will be focused in the first half as we anticipate starting services in the third quarter. We mentioned that the maintenance capital expenditures will occur in the second quarter for the Exquisite and in the fourth quarter for the Express. Additionally, the new build will also take place in the second quarter. So, a significant portion of that growth capital will occur in the first half of the year.

Michael Scialla, Analyst

Got it. And then, Steven, I wanted to see if you could expand at all on the conversations you had in India. It looks like you signed a joint venture there. And how should we think about that? Is it a longer-term project kind of beyond this 3-year window where you've got a lot of projects coming together? Or could it fit into the next 3 years?

Steven Kobos, President and CEO

I believe it can definitely fit within '28 for sure. To consider it, Excelerate does what we say we will do. We've been discussing the markets we're interested in for some time. There are sometimes announcements in those markets, and sometimes there aren't. It's not a matter of us not looking for the right opportunities. I think starting off on a smaller scale in India is the right approach for us. We want to be in India, and there's no doubt about that. I had a productive roundtable with Prime Minister Modi and energy CEOs, and I was the only American present. We definitely want to establish our presence there. It's all about getting into the market. The location is called Haldia, just south of Calcutta, where the pipeline is being developed. India is such a vast market, and the pipeline serving the 7 sisters provinces north of Haldia caters to 40 million people alone. There are many pockets of demand in India. So, Michael, I want you to consider that this is our first venture into India, but it won't be our last. Even if you don't hear about our activities in the market, we're still working on it, and we'll have more updates on Haldia.

Operator, Operator

Our next question comes from Chris Robertson of Deutsche Bank.

Christopher Robertson, Analyst

Just a quick question on the Exquisite. I guess what are your expectations around the redeployment at this point? Do you expect that asset will roll with the same counterparty at the improved terms? Or are there some interesting inbound inquiries from other potential counterparties at this point? And are you seeing any inbounds from any particular region or country?

Steven Kobos, President and CEO

Chris, first of all, I think you're speaking to the Express, and that's our fault for horrible naming conventions where they all sound... no, no, they all sound like they've got the same name, and I do it every single day. In terms of Express, what I would say is past 4 years, we've recontracted 4 of our, what I'll term legacy contract assets, and they've all been at uplift to EBITDA. Absolutely confident this will be the same. We are in discussions around the world about it. But again, it's kind of running a sense of what's most appealing to us in terms of start time, duration of contract, EBITDA uplift, can you integrate? Can you not? So we'll evaluate all those factors and get back to you when the time is right. But what I'd leave you with is we're going to do what we've done before. And many of you all, many of the investor meetings, many of the analyst calls in the past 4 years have been about when can you get your hands on the evergreen contracts. And the reason you all have those questions is you know we can get better uplift, and we're going to.

Christopher Robertson, Analyst

Thank you, Steven. I apologize again for the earlier mistake. Can you provide some insights about the new opportunities we have? We've discussed regasification infrastructure and integrated projects concerning LNG supply. Now that Jamaica is integrated and you are managing power assets there, what are the prospects on the power side, particularly regarding gas turbines and natural gas power plants? How are you approaching this in an integrated way?

Steven Kobos, President and CEO

I believe we share similar thoughts as many around the IOCs regarding this. If it can provide an advantage in pull-through demand, contract duration, and other factors, we will assess it and continue to do so. We are well-positioned to sell this because we provide and operate it. This puts us in a stronger position. Just as acquiring our first LNG positions allowed us to credibly offer integrated products, we see potential here as well. While I cannot specify when, the key factor is pull-through demand worldwide, and I'm pleased to discuss the anticipated growth in air conditioning in the Global South, which is projected to triple by 2050, reaching around 5.6 billion units. When discussing LNG, the total addressable market and focus on the Global South, power generation will ultimately drive this demand. Therefore, if the conditions for pull-through demand and the economics align, we will certainly pursue it.

Operator, Operator

Our next question comes from Bobby Brooks of Northland Capital Markets.

Robert Brooks, Analyst

I wanted to discuss the maintenance capital expenditures. You mentioned that this is part of a multiyear plan to enhance the asset portfolio and ensure maximum uptime. I'm curious about what some of those vessels might look like or what enhancements are planned. Will these improvements be able to increase current EBITDA generation from the existing assets at their current contracted rates, or will it be necessary to wait for recontracting to achieve better pricing?

Steven Kobos, President and CEO

Bobby, I'll pass it to David, but I want to emphasize the significance of our operational reliability. Achieving 99.9% uptime is intentional and requires planning; it doesn't happen by chance. We have a strong commitment to this asset class and will take the necessary steps to ensure its long-term reliability. However, this shouldn't be interpreted as specific run rate guidance. We anticipate scaling down by 2028 as part of our longevity programs. David, feel free to provide additional insights without revealing too much.

David Liner, Chief Operating Officer

We have a strong portfolio of assets, including our fleet, power generation, terminals, and small-scale operations. Our goal is to maintain our performance at a high level in 2024 and 2025, and we plan to achieve 99.9% reliability in 2026. To accomplish this, we are continually assessing any potential vulnerabilities that could lead to single points of failure or critical equipment issues that might significantly impact our reliability. We are focusing on this for 2026 and 2027, ensuring that we have backup equipment ready to deploy whenever necessary, whether it’s larger or smaller items. We want to ensure that we are fully stocked to sustain our performance going forward.

Robert Brooks, Analyst

Awesome. That makes a lot of sense. And I always love a mic drop moment for you, Steven. And then I wanted to kind of shift gears a little bit and appreciate about a $4.7 million step-up sequentially in SG&A in the fourth quarter and kind of above the range that you guys have been doing in the past 7. Just wanted to hear a little bit about what drove that. Maybe it was just as simple as one-off one-time bonuses from the record year in '25. And if you could provide any color on how to be thinking about that on a run rate basis going forward, it would be appreciated.

Dana Armstrong, Chief Financial Officer

Bobby, it's Dana. In response to your question, there were two main factors that impacted our Q4 results compared to Q3. The first was the effect of Hurricane Melissa, which resulted in an EBITDA impact of approximately $6 million in Q4. Out of that, about $2 million affected our SG&A, mainly driven by our CSR efforts; we spent over $1 million on CSR to support the island. Additionally, there were some smaller employee assistance costs and other miscellaneous expenses related to Hurricane Ian, totaling around $2 million. These figures were definitely unusual. Secondly, within SG&A, as you know, we include our business development expenses. In the fourth quarter, those costs increased by about $2 million compared to the third quarter, with around half of that attributed to Iraq as we prepared for a project that we haven't been able to capitalize on yet, along with some other business development initiatives. The remainder was just some miscellaneous year-end cleanup. This isn't indicative of our normal run rate; rather, there’s a bit of variability in the SG&A figures, largely influenced by business development activities.

Operator, Operator

Our next question comes from Emma Schwartz of Jefferies.

Emma Schwartz, Analyst

I wanted to ask about the impressive growth potential of the platform. Could you consider acquiring another LNG conversion candidate in 2026? Also, is there anything stopping you from developing multiple FSRUs simultaneously? It seems that leverage isn’t a constraint, so I wanted to inquire about further investment.

Steven Kobos, President and CEO

I almost referred to the conversion in my earlier remarks and considered calling it conversion #1 as a hint. However, we won't wait until the delivery of conversion #1 in 2028 to get started. We recognize that the next five years are crucial for us. There's a significant total addressable market, and we're committed to actions that support our growth trajectory. I plan to update you once we have more information on this first conversion we've announced, but this is just the beginning. Keep an eye on Express and the uplift related to that, as we'll deploy this first conversion in early 2028. I expect we'll maintain consistency with our previous statements. We're targeting build multiples of 5 to 7, similar to other strong midstream companies, and I anticipate we will not provide differing information about conversion number one. I also hope that throughout this year, we will have more discussions on this topic.

Emma Schwartz, Analyst

Sounds good. My second question is about small-scale solutions. What are the build multiples or returns for these projects? Will you develop the internal capabilities to deliver them, or is mergers and acquisitions an option to scale up this side of the business?

Steven Kobos, President and CEO

We are always searching for the best approaches. It's not about complexity, but as you move closer to the end of the process, you should seek better returns. I appreciate that we have trucks, and I want to expand that presence in other markets as well. While the volumes may not be large, being near the final delivery stages does imply you should see increased returns from smaller operations. Otherwise, it wouldn't be worthwhile. And it is worthwhile.

Operator, Operator

Our next question comes from Zack Van Everen of TPH.

Zackery Van Everen, Analyst

Maybe starting on Iraq. Curious if you could swap the Express with the new build just based on the send out of that ship? And what upside opportunity could that provide placing the new build elsewhere?

Steven Kobos, President and CEO

Zack, I'll take that one. I don't want to. That was a conscious decision to put 3407 into Iraq. That's about staying there in the best regasification project that I'm aware of and staying in there for the long haul and being part of that. And knowing that it can go north of 500 that's a contractual limitation. It's not a limitation on uptake from that pipe that the Iraqis laid that 40-kilometer pipe they laid. It's not a limitation from what we're going to build. And we want to do more over the long haul, and we want to be as sticky as we possibly are, and that's about offering the Iraqis something better than anyone else on earth would. So it is a very conscious decision on our part to do it. It's part of the long-term plan. But you raised a good point. It sounds like you should be in the BD group kicking around optionality because we've had that discussion over the past year. But I can share with you what our landing point is.

Zackery Van Everen, Analyst

Got it. No, that's super helpful context, and I appreciate that. Maybe one more on Iraq. You guys historically have talked about new EBITDA from the FSRU. Could you maybe break out the split of that 5x multiple between the terminal, the ship, and the supply deal, just what maybe percent from each of those contributions for the project?

Dana Armstrong, Chief Financial Officer

Yes, that's an integrated deal. So that's not something that we're going to talk about on a split basis. We expected to report it. We expect to report all of it in the LNG, gas, and power part of our business, and we expect to report on that on a combined basis. So that's not something we intend to split out.

Operator, Operator

Our next question comes from Wade Suki of Capital One.

Wade Suki, Analyst

Just I think just to dovetail, I think it was off of Emma's question earlier, might push a little bit for a little clarity around that conversion. If I heard you correctly, and please correct me if I'm wrong, it may or may not at least the FSRU conversion may or may not be the Shenandoah, it could be another vessel. Am I reading between the lines here? Or am I just off base if you can.

Steven Kobos, President and CEO

Yes. That wasn't my intention with those statements, but we are not going to be limited in our approach. We could definitely pursue an FSU at the same time. It really depends on which of our commercial deals gain the most interest and appear appealing to us quickly. Shenandoah is a priority, but we will be showcasing a variety of assets because that's what the future of the LNG industry will demand. There will be many deals ranging from 0.5 million to 2.0 million tons globally, and we will not be using a one-size-fits-all approach for these assets. We will not restrict ourselves from any opportunities. So, please don’t interpret anything I’ve said as limiting our willingness to explore. We aim to distribute LNG to people worldwide, from top-quality FSRUs like 3407 to trucks.

Wade Suki, Analyst

Understood. And I guess next question might be on potential new build, kind of where that is in your priority considerations, potential specifications, maybe not something as robust as Hull 3407. Just kind of curious what your thoughts are there as you look at all the opportunities and potential growth avenues for you.

Steven Kobos, President and CEO

I genuinely doubt that 3407 will be the final new build. There are many reasons for this. We appreciate the specifications we've developed over the last 20 years and value having control over them. However, our decisions will primarily depend on the needs of the specific markets we are targeting. Generally speaking, we anticipate that new buildings will be appealing if we believe there's a good chance for increased output. Additionally, with new builds, especially in integrated deals, the boil-off is important, so having excellent tanks is crucial. I should have mentioned earlier that the 3407, which is heading to Iraq, has impressive natural boil-off from its tanks, enhancing our LNG operations. This will bring added value to us throughout the duration of the project. There are many factors to consider, but as I stated, I expect us to utilize all available resources in the next five years.

Wade Suki, Analyst

Understood. And just one last one, if I could, just with clarity just to make sure I heard you correctly. Did I hear you say that the new build could be used temporarily to fill in for the Exquisite? Did I hear that correctly in the second quarter? Or did I mishear it?

Steven Kobos, President and CEO

Yes. No, you've got very good hearing, Wade. You've got very good hearing. Yes. And for 2 reasons. One, we care about our customers. We want to make sure if our customer wants something during a dry dock, we're going to try to move heaven and earth to accommodate them, first point. Second point is I have high, high confidence in 3407. It's been a pleasure to see it go through sea trials coming up on gas trials. It's always nice to finally flow gas, though. It's nice to regasify before you start up. So you're not messing around with commissioning your regas system at the same time you're bringing a terminal online. So we will both fulfill our customers' desires and needs. And at the same time, it will allow us to commission the regas plant before she arrives in Iraq. So kind of a win-win.

Operator, Operator

Thank you. At this time, we currently have no further questions. So I'll hand back to CEO, Steven Kobos, for any further remarks.

Steven Kobos, President and CEO

Thanks, everyone, for joining us today. I would reiterate one thing I said on the call. The focus of the LNG industry moving forward is regasification, not liquefaction. Excelerate is the prime driver of that, and we look forward to continuing our discussion throughout the year. Thank you.

Operator, Operator

Thank you all for joining today's call. You may now disconnect your lines.