NextDecade Corp (NEXT) Q3 2026 Earnings Call Transcript

Good morning, and welcome to the Next Decade Corporation's third quarter, 2026 Investor Call and Webcast. At this time, all participants are on a listen-only mode. A question-and-answer session will follow management's prepared remarks. If you'd like to enter the queue, the command is star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. And now I'd like to turn the call over to your host, Megan Light, Next Decade's Vice President of Investor Relations. Thank you. You may begin.

And good morning, everyone. Welcome to Next Decade's third quarter 2026 Investor Update Call and Webcast. The slide presentation and access to the webcast for today's call are available on our website at www.next-decade.com. Today, I am joined by Matt Schatzman, Next Decade's Chairman and Chief Executive Officer, and John Zuglick, Next Decade's Chief Financial Officer. Before we begin, I would like to remind listeners that discussion on this call, including answers to your questions, contains forward-looking statements within the meaning of U.S. federal securities laws. These statements have been based on assumptions and analysis made by NextDecade in light of current expectations, perceptions of historical trends, current conditions, and projections about future events and trends. Although NextDecade believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that the expectations will prove to be correct. Next Decade's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Next Decade's periodic reports that are filed with and available from the Securities and Exchange Commission. In addition, discussion on this call includes references to certain non-GAAP financial measures, such as distributable cash flow. A definition of and additional information regarding these measures can be found in the appendix to our presentation. And now, I will turn the call over to Matt Schatzman, Next Dec Age Chairman and Chief Executive Officer.

Thank you, and good morning. We continue to make excellent progress toward first LNG production at Rio Grande LNG. Phase I construction remains safe, on budget, and ahead of schedule. We remain on schedule to introduce hydrocarbons into the facility before year-end. Today, we are narrowing our guidance for first LNG production from Train 1 to the second quarter of 2027, Consistent with the early volume guidance we provided earlier this year and are reaffirming today. Train 1's guaranteed substantial completion date is near the end of the fourth quarter of 2027. We expect Bechtel to achieve substantial completion in the third quarter of 2027, which is one quarter early. Trains 2 and 3D also remain ahead of schedule and aligned with our early volume guidance. During the quarter, the main cryogenic heat exchanger was installed for train 2, and the first compressor string was set for train 3. We expect both trains to achieve substantial completion about one quarter ahead of their guaranteed schedules, consistent with train 1. As outlined in our early volume and cash flow guidance, commissioning and early uncontracted volumes from RGLNG trains 1 through 5 provide valuable market exposure to next decade over the next few years, and the current LNG market dynamics are very favorable. Spot LNG prices remain strong and have increased materially over the last year due to the loss of supply from the Middle East. Based on current forward LNG and U.S. gas prices, we estimate that volume-weighted average implied margins on the projected uncontracted volumes from Train 1 startup in 2027 through the date of first commercial delivery under the Train 5 long-term SPAs at RGLNG, together with the impact of the Thank you. Each $1 per MBTU change in the estimated volume-weighted average implied margin on our uncontracted volumes from Train 1 Startup through Train 5 DFCD, including the impact of the additional 175 TBTUs sold in Q1, would change next decade's projected share of project-level distributable cash flow by approximately $350 million to $400 million over the forecast period.

As of September 2026, trains 1 and 2 were nearly 80% complete. Engineering and construction was almost, and commissioning was approaching 5%. Train 3 was more than 55% complete and above 90%, and construction approaching 25%. Train 4 was 22.5% complete, and train 5 was 14% complete. During the third quarter, electrical, mechanical, and utility commissioning advanced on train 1. Operations personnel succumbed to Bechtel in the second quarter are working alongside its team and will remain through commissioning and start-up to support a smooth transition to operations. During the third quarter, installation and pre-alignment of train 2's compressor strings were completed, and its main cryo-genic key exchanger was installed. Train 3's first compressor string was set.

Foundation pores began for train 4's main cryogenic rack, along with the excavation of its refrigeration area. Soil stabilization using the direct mixing method began for train 5. Tank 1 completed inner tank nickel plate welding and its first hydro test. Tiling advanced for tank 3 and began for tank 4. Sidewide dredging for the burst, turning basin, and channel deepening is complete. The gas inlet facilities are ready for startup and the Bayrunner pipeline entered service during the third quarter. More than 7,000 workers are now on site each day, with over 70% of them local residents. We are proud to provide safe, high-quality, long-term jobs that make a meaningful impact in the Rio Grande Valley. Across the site, commissioning of systems is underway to support initial hydrocarbon introduction before year end. We made meaningful regulatory progress during the third quarter. FERC approved our upgrade request for trains 1 through 5, increasing authorized LNG exports from those trains to 30.15 million tons per annum, consistent with our expected annual 5-train LNG production. As we mentioned on our last call, in July, FERC released its schedule of environmental review for TRAIN-6, and the final environmental impact statement is expected in June of 2027. In September, the U.S. Army Corps of Engineers authorized a key construction permit for TRAIN-6 in record time, reflecting our team's discipline preparation and effective regulatory engagement. We're advancing commercial discussions with multiple high-credit-quality counterparts for long-term Train 6 LNG offtake. Demand for our long-term LNG from Rio Grande LNG remains strong across a global customer base. Since the Iran conflict began in February, the global LNG market has tightened significantly, and Ford prices for 2026, 2027, and beyond have risen. Potential long-term buyers have also placed greater emphasis on energy security and supply diversification. These priorities have been prominent since the Russian-Ukraine conflict began in 2022 and have intensified this year. As we have said, long-term LNG supply from Rio Grande LNG offers buyers an effective combination of attractive pricing and supply security. The United States' abundant, diversified natural gas resources and our competitive LNG construction costs support affordable, reliable long-term supply and help protect customers from regional natural gas and LNG price spikes. We expect to advance long-term Train 6 off-take discussions while permitting proceeds, with the goal of securing sufficient commercial support to enable a positive final investment decision, or FID, in the second half of next year. Long-term LNG contract pricing has remained strong since we contracted Trains 4 and 5. Based on current market conditions, we expect Train 6 returns to be at least as strong as those Trains. Given that outlook, our goal is to retain a substantial economic interest in Train 6, which next decade currently wholly owns. Although we may consider a joint venture tied to a high-quality strategic LNG offtake, we continue to evaluate capital-raising options for our projected Trane 6 equity commitments with a focus on maximizing shareholder value. We expect additional FinCo capacity to fund part of Trane 6 equity requirement and are evaluating alternatives for the balance with a focus on the most accretive per-share solution. Finally, we selected the western end of the Rio Grande LNG site for Trane 7 and 8. We expect a pre-file with FERC before year-end. The schedule's placed train 7 and 8, roughly one year behind train 6 in permitting and development. I'll now turn it over to John.

Thanks, Matt, and thanks to everyone for joining us on the call today. During the third quarter, we continued to execute our project-level balance sheet strategy of terming out bank facility debt through opportunistic debt capital markets transactions, which during the third quarter included approximately $4.1 billion of senior secured notes issued by Rio Grande LNG LLC, our Phase I financing entity. These refinancings extended and staggered our debt maturity profile while also releasing committed bank capacity for financing Train 6 and subsequent expansions. We have now refinanced over $7 billion, or 60%, of the $11.1 billion of initial capacity under the Phase I bank facilities, leaving drawn balances under those facilities of approximately $700 million as of September 30th. As we mentioned on our last call, in July, Rio Grande LNG LLC issued $3.5 billion of senior secured notes in its inaugural 144A offering. These notes, which were rated BBB- by S&P and Fitch, were issued in four tranches, with maturities ranging from 2031 to 2041, and with six rates ranging from 5.15% to 6.15%. We used proceeds from the offering, net of fees, to reduce outstanding balances on the Phase I bank facilities. In conjunction with the 144A offering and the $1 billion term load we entered into at a Phase I holding company in late June, we unwound the portion of our interest rate swaps associated with the bank debt those transactions repaid, resulting in a $109 million settlement receipt in July, which we used to further reduce our Phase I bank borrowings. Then in September, Rio Grande LNG LLC issued another in a private placement transaction. The notes, which bear interest at 6.72%, will advertise over a period of approximately 18 and a half years, beginning in June. I'm very pleased with the market response to our recent kind of interest in Rio Grande LNG project-level credit, the offering in July was four times over-subscribed in range. As we've said previously, opportunities and balances for try standings under the Train 5 bank facility as a simple transaction I would like to note are the July issuance of a $100 million installment and, subsequent to the third quarter, the October issuance of a final $150 million installment of the Train 5 6.56% senior secured notes, due 2050, which were issued pursuant to the note purchase agreement entered into in conjunction with the positive final investment decision on Train 5 in October 2025. The full $500 million of these Train 5 senior secured notes have now been issued and remain outstanding. There is also one minor accounting item that I would like to mention before moving to our next decade-level debt discussion. In the third quarter, we moved proceeds from vessel subcharging to other income net on our Next, I'd like to talk about our leverage above the project companies, up at the next decade level. Since I joined the company in July, we've received a fair number of questions about our capital structure and like to take a few minutes to better explain our current balance sheet, debt targets, and near-term capital priorities. In February of this year, we introduced a steady-state next-decade-level unconsolidated leverage target comparing next-decade-level debt to next-decade share of Rio Grande LNG project-level distributable cash flow less next-decade-level For purposes of this leverage ratio, next-decade-level debt excludes debt at the project and project-holding company levels, which is consolidated on the next-decade balance sheet but is non-recourse to next decade. This next-decade-level debt currently consists primarily of the super-FINCO and FINCO term loans we entered into to fund the majority of our equity commitments for trains 4 and 5 and relatively small corporate loans outstanding at the super-holdings level. And for purposes of this leverage ratio, next-decade share of Rio Grande LNG distributable cash, less next-decade-level G&A, which excludes non-cash compensation and also excludes G&A at the project and project holding company levels, effectively represents cash expected to be available for next-decade-level debt service after the impact of debt service at the project level. Using our base case guidance, which assumes $5 per MNBTU average margins on uncontracted cargos during our ramp-up period, the leverage target we provided previously is consistent with next-decade-level debt of approximately $2 to $2.25 billion when steady-state operations begin, following the date of first commercial delivery, or DFCD, for train-5 long-term SPAs in the second quarter of 2031. We believe this next-decade-level debt range will ensure a strong credit position into steady-state operations, given that the distributable cash flows from the Rio Grande LNG projects are underpinned by long-term SPAs on approximately 85% of the total expected Rio Grande LNG production volumes with high-quality, investment-grade customers with a weighted average life of 19.5 years and provide us strong visibility and predictability during steady-state operations. As a reminder, we are committed to using next decade's share of project-level cash flows generated during our ramp-up period from Train 1 Startup through DFCD of Train 5 SPAs to reduce a portion of the term loans we entered into to fund a large majority of our equity commitments for Trains 4 and 5. In our base case early volume and cash flow guidance, which assumes $5 per MMBTU margins on uncontracted volumes, we expect next decade's cumulative share of Rio Grande LNG project-level distributable cash flow to be approximately $2 billion, which we'll use to first pay down FNCO balances, then to pay SuperFNCO interest and or principal balances. In our base case, applying the projected approximately $2 billion of early cash flows to next-decade-level debt repayment results in next-decade-level debt that is within our target range of $2 to $2.25 billion when we enter steady-state operations.

As Matt mentioned earlier in the call, market conditions have improved meaningfully since the Iran

conflict began eight months ago, and today's forward curves imply LNG margins that exceed our base case guidance. With current volume-weighted average estimated margins implied by the forward curves over our ramp-up period of over $6 per MMBTU, we would expect our share of project-level distributable cash flow to be over $2.4 billion for the ramp-up period of 2027 through the second quarter of 2031, or over 20% above our base case, which would result in projected cash flow generation in excess of what is needed to achieve our target debt range. And finally, I wanted to note that our downside steady-state guidance case assumes $3 per MMBTU margins on uncontracted volumes during our ramp-up period. In this case, we assume that we contract an additional approximately 2 million tons per annum of capacity from trains 4 and 5 under long-term SPAs, which would enable us to increase train 4 and 5 project-level debt and therefore reduce our next-decade-level debt down to a level consistent with our target. But given current market conditions, we do not expect to contract additional TRAIN 4 and TRAIN 5 volumes to achieve our steady-state next-decade leverage guidance.

With that, I thank you again for joining the call today.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. In confirmation, don't indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. As a reminder, we ask that you please limit to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Olivia Foster with-

Hi, team. Thanks for the time. I wanted to start on the operating front following the narrowed first LNG guidance on train one. Could you walk us through your expectations for commissioning milestones that underpin the second quarter 27 first LNG target? Similarly, could you walk us through your expectations for timing on the commissioning processes broadly, from first gas to first LNG to balance of plant commissioning to train one substantial completion? Thank you.

Yeah, hi, Olivia. As we mentioned in our commentary and in our presentation that's available on our website, we've narrowed our guidance for first gas into the facility to the fourth quarter of this year. We now expect first LNG production in Q2 of 2027 and substantial completion of train one in Q3 of 2027, which is one quarter ahead of the guaranteed schedule in our EPC contract with Bechtel. I think that – I believe that provides the market a very good indication as to the milestones that they should expect to see. I think we've laid them out fairly clearly. As we get closer to first LNG production and we have the opportunity to engage with the market, we will be able to provide even hopefully more specificity on the months that we expect to see the first LNG production and the exact month that we expect to see. Thank you.

That's clear. For my second question, I wanted to ask on the commercial front, particularly given ongoing LNG supply disruptions globally, how should we think about NEC's ability to announce long-term SPAs for a potential train 6FID by the second half of 27? What details can you share on the types of counterparties from which you are seeing the most interest, particularly following the Qatar headlines this morning? And then maybe zooming out in the context of ongoing supply disruptions, how would you expect a bid for LNG supply security to drive potential contracting activity on potential Rio Grande capacity beyond train six? Thanks.

Thank you. Yes, like I said in my comments, we've seen an increased interest in our LNG out of Rio Grande LNG as well as other U.S. LNG projects after the Ukraine invasion, and now that's ramped up even more with the Middle East conflict and the disruption of LNG in the region. I think it puts U.S. LNG, and specifically Rio Grande LNG, in an excellent position to sell more LNG out of our expansion capacity. I think the timing of this is absolutely perfect. As far as the timing of when we're going to be announcing SPAs, we've said that our plan is to commercialize the facility during the time that we'll be permitting it. So, we're in the midst of permitting at FERC. We've filed a formal application. We've received our schedule when And we expect to get the final EIS, and we expect the approval from FERC not soon thereafter the final EIS is issued. So we expect to FID in the second half of next year. So you should expect to hear announcements on SPAs over the coming months as we approach those deadlines around the FERC issuing its order and our expectations to FID in the second

That's clear. Thank you for the time.

Thank you. Our next question comes from Doug Irwin with Citi. Your line is now live.

Hey, team. Thanks for the question. I wanted to start with the ramp period volumes. You've obviously sold the 175 million tons already, but could you maybe speak to your ability to potentially sell some additional volumes here to take advantage of the current spread environment? Is that something you're maybe more comfortable doing now that you have a better line of sight, the first LNG untrained one?

So, as you can see on slide 39 in our corporate presentation, we highlight very specifically our expected available volumes that are uncontracted for certain periods of time, like 2027 of Q1 of 29, Q1 of 29 to Q3 of 2030. So, I think you're referring to those orange bars on that slide, which is in total during our ramp-up period, 1,100 TBTUs of available volume. Right now, we have said in the past that, you know, we've got the question about whether or not we plan to forward sell more volumes. We're very, very comfortable with being long 1,100 TBTUs during this period of And importantly, we're about 700 plus million TBTUs long, excuse me, 700 TBTUs, not million TBTUs, 700 TBTUs long from Q1.29 to Q2.2031. That period of time is not trading as high as 27 and 28. I'd say on average, those margins are probably more in line with our $5 guidance case. And we see the risk in that period as asymmetric to the upside. We think, obviously, prices could retrace down the road, maybe come off a dollar or two. But considering the situation in the Middle East, we're really not anticipating that situation to resolve very soon. And we could continue to see volatility in the region, which could create more upside for those volumes. So at this stage, I think we're comfortable not forward selling more of this volume, especially those volumes on the back end of the period of time that's in question.

Yeah, that's helpful. And maybe a follow-up around train six financing expectations. I'm just trying to get your latest thoughts on how you expect to finance it, kind of what are the next milestones to look for, and kind of more broadly, does an improved margin outlook here during the first phase maybe give you a little bit of increased flexibility just throughout the process as you think about those options?

I'll turn that to John. Thanks for the question.

Yeah, thanks, Doug. As far as funding TRAIN-6, first of all, I'll just start back at the, and we talked about this a little bit, the contracting. We expect to contract a large portion of the capacity of TRAIN-6 with long-term SPAs. And we've kind of said in the past, you know, more than TRAIN-5, more than that 75%, likely less than Phase-1, 90%, so somewhere in there. But that large percentage of contracted volumes of long-term investment-grade SPA off-take parties is going to allow us to maximize the project-level non-recourse debt. That's number one in reducing kind of the equity need there. And then as far as the equity, we expect to maximize the use of our attractively priced FNCO debt structure. And that's exactly why you hear us now refinancing bank capacity in trains, you know, one through five to free up that capacity for train six. So we like that pricing. We like the delayed drop feature of that. So we think that's an effective thing. And then after that, obviously, the remainder will be funded with some form of equity or convertible instrument. And of course, we'll look to, at the time, we'll look to maximize sort of the accretion for the shareholder at that point. But that's something we'll look at at the time. And finally, I'd just say that when you think about the equity lift from our perspective, we think it's a very attractive project. We like to take a large portion, if not all, but we're also open to JVing with a strategic partner at some level of it, retaining a majority interest in it, but that sort of partnership that we may consider would also reduce the equity lift from a next-decade perspective.

Yeah, and I'll add on that last part that any sort of strategic structure that we're looking at, John and I are focused on maintaining a value for our shareholders that would not dilute in any way if we had just done it on our own. So it's not necessarily that we're trying to, that we would be giving away equity. We'd be basically structuring in such a way that it maintains or maximizes value for our shareholders. It doesn't take anything away.

Understood. Thanks for the time.

Our next question comes from Jason Gableman with TD Cowan. Your line is now live.

Yeah, hey. Good afternoon. Thanks for taking my questions. I wanted to go back to the exposure that you've locked in here, the 175 TBTU. Is that in line with the $6 per MMBTU margin that you're seeing over the next few years? I know you locked it in earlier in the year before margins really stepped up, so I'm wondering if you can remind us what margins are there. And then as capacity comes online, and it seems like construction is progressing better than previously expected, do you expect – is there kind of upside to the spot volumes that you could have over the next, call it, 12 months or so?

So, on the first question about the 175 TBTUs, we – you'll recall we disclosed that when we did those, the margins that we expected to achieve on that were north of $3. So, when we talk about the $6 weighted average price, it includes the impact of the volumes that were sold under those – that 175 TBTUs and the price that we sold it for. So, to answer your question, no, they're not the same $6 margins, but the margins associated with those sales are included in our weighted average $6 price, $6 margin that we're referring to. As far as the potential to produce additional volumes, all the volumes that we have in our Our projections do not include the potential to de-bottleneck the facilities, and there's always a chance that some of the trains could start up earlier than what we've projected, including train one, but we're very, very confident now in the volumes that we provide in our guidance based upon the current ramp schedule and the discussions we've been having with Bechtel and the progress we've been making with the project.

Great. And my follow-up is, since we're approaching startup, I was hoping you could refresh us on how the cash flow distribution will work from Rio Grande up to the next decade level. Is it just a straight 20% payout from day one, or is it a bit more involved than that? Thanks.

Thank you, and I'll turn the latter half of this over to John to kind of explain the whole thing as far as where the cash flow is going to go and how it's going to be utilized. We have not provided detailed guidance on the exact structure of the waterfall between us and the financial investors, but we have provided, I believe, is a lot of clarity around based upon certain outcomes, whether that's a $3 margin, a $5 margin. Now, we're giving you guidance on what each additional dollar of margin on a weighted average basis, what impact that would have on the cash flow that we expect to achieve during this period of time, which we call the ramp-up period. Let me turn it over to John to explain again what we plan to do with the cash flow that we're going to produce during the ramp-up period.

Yeah, thanks, Matt. I'll just reiterate that we look at over the entire ramp-up period, because to your point, there's a little bit more nuance than straight up, but that's exactly why we structure our cash flow values when we look at the entire ramp-up period from first time. So, and then there's the companies for those restrictions. At the point cash can leave the project companies, if they go to those distributions from the project companies, it's required to pay down, as we talked about, the finco. And so that's the next step in that $2 billion. Our current forward curve is $1 billion, which is kind of in line with the guidance we give that for every dollar of increase in margins over this period, we expect to generate an additional $350 to $400 million. Those of the debt at the next decade level would have us $3 million. After we refinance FinCo and SuperFinCo, we'd be able to use that cash, that incremental cash, once we've met our debt target to fund subsequent trains or even distribute. But we'll make those capital allocation decisions a lot closer to that point.

Great. Matt and John, thanks for the time and the answers.

Our next question comes from Wade Sookie with Capital One. Your line is now live.

Thank you. Good afternoon, everyone. Appreciate you taking my questions. Just going back to, I think, Olivia's question earlier on in the call on commercial activity and kind of the dialogue you're having there. I was just wondering if you might be able to kind of more broadly characterize the types of customers. Are these mainly consumers, maybe portfolio players, combination thereof, and any read-throughs regionally or whatever you can give us? That would be great. Thank you.

Thanks for the question, Wade. All of the above. I wouldn't say there's anything, you know, specific in the LNG market that I would highlight, except for, you know, a trend that we actually kind of started with our train four and five, and it obviously appears to be accelerating, which is an apparent diversification that is occurring in the Middle East with some LNG producers there. You know, I'll include, you know, our partner, Adnock XRG, who is an LNG producer, has invested in our project as an offtaker, but you're obviously seeing Cutter now diversifying their portfolio outside of Cutter beyond Golden Pass to where they're now buying from third-party projects. I think that's a very interesting thing that's occurring, and I think it highlights the fact that the global market for LNG is starting to look for reliability, not just price, and that now that we have a destabilized location that represents currently 20% of our LNG supply, customers are starting to focus more on that. They already were, but they're starting to focus on even more. It's highlighted more lately. So all of our customers are very focused on the reliability, the certainty of supply, as well as price. Price is still really important. It's a competitive market. Prices haven't increased from our last discussions. The ranges of outcome we still think are in the same range they were last time we spoke, equal to or higher than what we were achieving in train five, so still a strong market. But I think, importantly, this massive spike in LNG pricing has not driven the long-term market price up dramatically, and that's good for our customers. We can manage that, and we can still have very healthy returns on trains six, seven, and eight with the type of marketing prices that are currently out there, but it's very good for our customers and very good for demand growth in LNG because with the U.S. gas pricing where it stands today and we're expected to be over the next 10 to 20 years, we can provide a very reliable, cost-effective natural gas supply to these companies and the countries that they serve.

Fantastic. I appreciate that. And I appreciate you answering my second question there without me having to give it away on the long-term pricing. So I'll ask another one then, maybe shifting to the expansions, train seven and eight, kind of beyond train six. I think you mentioned these, perhaps moving forward, I want to say you said like a year lag. Are you thinking, just to clarify, are we thinking train seven a year later and then train eight a year after, you know, a year later after Or could you see these actually moving ahead pretty close, you know, close together, or if not, you know, simultaneously?

Yeah, thanks for the question. I'll make it very clear. Seven and eight are one project. They're not going to be sequenced one train at a time. We'll be pre-filing those here in short order, so the market will get a better indication of what the project looks like. But, you know, it's two trains. Expect another berth and expect a couple, maybe one or two tanks. So it is a standalone project separate from our GLNG train. And as we said in our comments and on our presentation, we are now highlighting that we're going to do that on the western side of our facility. We're going to leave the eastern side for any further development for potentially the next two trains. That's where we could put trains nine and ten if we do them in order. Got it. Thank you so much. Appreciate it. I should say we are going to do them in order. That may sound like we weren't. We're going to do them in order. Nine and ten will be on the east.

Perfect. Thanks again.

Our next question comes from Alexandra Bidwell with Weber Research. Your line is now live.

Good afternoon. Appreciate the time. Just wanted to circle back over to SPAs. You touched on pricing earlier, But can you give us any color on what you're seeing in terms of appetite for tenor? I know we've seen a number of recent SBAs out of the U.S. coming in north of 20 years. Do you see that as a meaningful representation of demand around tenor?

Thanks for the question. I think that tenor is still coalescing around 20 years is the standard contract. There are customers out there looking for shorter 10 to 15, but even European customers are willing to do 20 years. That was an issue. I think they figured out how they can do that. I think the longer-term contracts, there are some out there, but I think they're the exception, not the norm.

Okay, that makes sense. And then I wanted to also circle back on de-bottlenecking. Can you walk us through how you're thinking about any of those potential de-bottlenecking opportunities? Would you potentially pursue de-bottlenecking on T1 through T3 before T4 and T5 are finished, or is it something that's more of a long-term goal?

So, we've had a team in place that's been focused on, you know, optimizations for quite some time. So, you know, the plan is once we start operating these facilities, the keys are turned over to us at Substantial Completion for each train. The teams will, and even during commissioning, is to understand what the bottlenecks are going to be and to put them into a hierarchy of lowest cost to achieve outcomes to the highest cost and knock out that low-hanging fruit as quickly as possible. So, expect us to be focused on this from, you know, we're already focused on it, but from day one, once the operations are turned over to next decade, we get the keys, you know, we'll be trying to devolume that as soon as possible. And if there's any capital investment required, you know, clearly we'll be, if it hurdles properly for our returns, you know, we'll be focusing on trying to do that as soon as possible for trains four, five, and six, and probably working that into the construction if it makes sense.

All right. That makes sense. I'll turn it back over. Thanks.

Our last question comes from Craig Scher with Tui Brothers. Your line is now live.

Hi, thanks for taking the questions. I want to dig into Doug's questions about contracting out the six-plus dollar margins. I understand the 725 TBTU from first quarter 29 to second quarter 2031 is not that liquid and it's further out there. The pricing's not as good, and you're more optimistic than the market and you want to wait it out. That makes sense. But you still have the steering 75 TBTU open before that, and it kind of feels like if you're able to do something with that by the first half next year, that might make some of your train six, you know, total financing plans a little easier. And then with respect to your six-plus-dollar net batch that you kind of alluded to, is it fair to say that that does not assume any Herculean assumption around advantaged feedstock, which may be attractive? Is that right, the basis differential?

Yes, yes.

I'd say that the basis that we've taken a snap could continue to blow out. Our conference has changed pretty quick in startup. We're not producing LNG.

That's the question and answer session, and this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.