Venture Global, Inc. (VG) Q4 2024 Earnings Call Transcript

Good morning, and welcome to the Venture Global 4th Quarter and Full Year 2024 Earnings Call. At this time, I would like to turn the conference call over to Michael Perscarello, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Venture Global's 4th Quarter and Full Year 2024 Earnings Call. I'm joined this morning by Mike Stagel, Venture Global's CEO, Executive Co-Chairman, and Founder. Jack Bayer, our CFO, and other members of Venture Global's senior management team. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements and actual results could differ materially from what it's describing to be. I encourage you to refer to the disclaimers in our earnings presentation, which is available on the Investments section of our website. Additionally, we may include references to certain non-GAAP metrics, such to consolidate adjusted EBITDA. The reconciliation of these metrics and most relevant gap measures can be found in the appendix of the earnings presentation posted on our website. Finally, it is our policy to update or affirm guidance other than through broadly disseminated public schools.

Thank you, Michael. Good morning, everyone, and thank you for joining us today. This call is an important milestone for Venture Global, as this is our inaugural earnings report as a public company. We are excited to share our fourth quarter and full-year 2024 results, along with our guidance for 2025, which we believe will be an exceptional year for the company. I will begin the call with an overview of our fourth quarter and full-year 2024 key accomplishments and results before shifting to our LNG projects individually. I will then make some remarks on the LNG industry broadly before turning over the call to Jack, We will provide a more detailed review of our financial results and guidance for fiscal year 2025. Following all prepared remarks, we will open the call to Q&A. Turning to page six of the presentation, I am happy to report that Venture Global performed well during the fourth quarter of 2024, generating $1.5 billion of revenue, $871 million of net income attributable to common stockholders which we will refer to as net income and 688 million dollars of consolidated adjusted EBITDA bringing our full year 2024 revenue net income in consolidated adjusted EBITDA totals to 5 billion dollars 1.5 billion and 2.1 billion dollars respectively Additionally, we finished 2024 with over $43 billion of assets on our balance sheet and realized a return on equity of 41.3%. We achieved these results as we continued to commission and perform rectification work on our COPSGEE PASS project, commenced commissioning at our documents project, and progressed our subsequent LNG and ancillary projects, including CP2. At Cotsky Pass, we exported 32 commissioning cargos during the fourth quarter, resulting in 140 commissioning cargos in total for 2024, and we recently gave notice to our long-term SPA customers that the Commercial Operations Day, or COD, for the project will occur on April 15, 2025. At Plaquemines, we achieved the first production of LNG on December 13, 2024, and exported our first cargo on December 26, 2024, just 13 days later. This remarkable performance showcases the hard work and dedication of our team at Plaquemines and our innovative approach to constructing LNG facilities. I will provide further details on Plaquemines momentarily, but I'd like to highlight up front that every liquefaction train we have activated thus far at Flockman's has consistently demonstrated production levels equivalent to approximately 140 percent of the nameplate capacity of the facility based on the aggregate flow from our jets 140 percent this gives us confidence that following completion of our construction Flockman's will be able to perform at a recently FERC-authorized uprated capacity of 27.2 MTPA. Looking ahead to 2025, we expect that our consolidated adjusted EBITDA will be between $6.8 and $7.4 billion. This reflects a $7 per MMBTU to $8 per MMBTU fixed with perfection fee range for available commissioning cargos, which is consistent with recently executed transactions. We believe the next four quarters will constitute a period of meaningful growth for our company, and we are focused on delivering a consolidated adjustity to die in this range for our shareholders. We will also evaluate opportunities to deploy our surplus capital, including through potential share repurchases. Starting to page 7 of the presentation, I would like to touch on our compelling growth in hard machine assets over the last few years and give a preview of how we aim to continue to expand in 2025. As many of you know, our liquefaction trains are factory-built and arrived ready for installation into our facilities by the thousands of men and women we employ across a growing list of projects here in the United States. We are proud that the contractors and subcontractors supporting our projects employ people in over 30 states across the country. Through our commissioning programs, we currently have 18 trains producing at Cowshoe Pass and another 16 trains producing during construction at Plockmans. Additionally, we have installed 16 more trains on their foundations at Plockmans, accepted delivery of two more trains this week and have our final two trains currently in transit we expect that these trains will be incrementally commissioned and will increase the production from our second facility through our investment in our third project cp2 we have executed purchase orders for another 36 trains of which 12 are already being fabricated and will arrive on rolling basis at storage sites on the Gulf Coast beginning at the end of the second quarter in 2025. In all, by the end of 2025, we expect to have 54 trains either commissioned at Kauksy Pass or producing during construction at Falkmans, with another 16 trains fabricated and ready for insulation at CP2 subject to FERC authorization, capping off a rapid expansion from 18 trains to 70 trains in aggregate over the course of just 29 months. Combined with the extraordinary production performance of our new trains at Glockmans, which I discussed a moment ago, we believe this asset base will serve as ballast for our growth in the coming years, providing cash flow to help fund our future projects and expansions for decades shifting gears a bit i would now like to focus on capture pass which is covered by page nine of the presentation as mentioned during the fourth quarter of 2024 we were able to successfully export 32 commissioning cargos including four cargos utilizing venture global owned or chartered ships bringing our full year 2024 export total to 140 commissioned cargos we realized a weighted average fixed the collection fee of eight dollars and 79 cents per mmbtu for cargos in the fourth quarter and seven dollars and 28 cents per mmbtu across the entire year Although Capshoe Pass is yet to produce above its 10 MTPA mainplate capacity on an aggregate basis for an extended period due to ongoing power plant, free treatment, and other rectification work, the trains at Capshoe Pass have performed well beyond mainplate capacity on an individual discrete basis. While we continue to produce substantial quantities of LNG at Couch Street Pass, we are simultaneously navigating the remaining work related to commissioning, carryover, completions, rectification work, reliability testing, and other unfinished items. We have given notice to our long-term SPA customers that COD will occur on April 15, 2025, and our focus on completing final performance tests before this milestone, which we should achieve just 68 months after FID. We look forward to servicing our off-date contracts for the full duration of their largely 20-year tenors. For 2025, based on liquefaction fees achieved via cargo sold on a forward basis to date, we anticipate capturing a fully weighted average liquefaction fee of $3.85 per NMDTU across all forward-sold Capshie Pass production. I will sum up my remarks on Capshie Pass with a brief note on safety, which is our top priority here at Venture Global. Today, approximately 25 million work hours have been completed at Capshie Pass, with only 13 reportable incidents sustained. this performance has produced the total recordable incident rate trir of 0.10 far up performing the national industry average of 1.9 we are very proud of our outstanding team for achieving and maintaining the safety record especially while performing significant equipment rectification work in construction moving on to plaquemins and flipping to page 10 in the presentation I will focus on the remarkable progress we are achieving at our 20 MCPA mainplate project south of New Orleans. The incredible focus, diligence, and craftsmanship of our team allowed us to implement a complicated reverse cool-down process, which enabled the production of first LNG on December 13, 2024. By December 26, we had successfully exported our first cargo from the facility only 31 months after our Phase I FID. We have delivered 34 liquefaction trains to the site and produced LNG from 16 trains during construction to date, maintaining an unparalleled pace of execution for a Greenfield project of this scale, underpinned by our commitment to safety. So far, each of our 16 trains has regularly demonstrated pro-rata production levels that equate to approximately 140 percent of the nameplate capacity of the facility based on aggregate outflow from our judges this performance is enabled by the engineering and design improvements we implemented at placements which were informed by the significant operational data collected and lessons learned from kapshi pass these exciting results were only possible through our innovative approach in the relentless execution of our team. At Plaquemines, we have permitted and incorporated, for example, 400 megawatts of temporary power at the facility, which has allowed us to mitigate contractor delays, especially from the power island. This approach allows us to progress commissioning efforts and recoup project costs through the sale of commissioning cargos while we complete the construction of our combined cycle power plants, commission and test our treatment systems booster compressors and other balance of plant work streams in parallel although we are very encouraged by our commission success thus far we recognize the challenging and highly variable process laying ahead i want to note that achieving this considerable progress in our construction speed has been an active strategy and has come at an increased cost by investing capital and enabling increased construction staffing levels on site we have follow forward the production of lng by months against the original baseline despite substantial delays in portions of the facilities construction in particular with the power islands over the course of construction we have invested approximately 2.8 billion dollars of incremental equity to fund these expanded work fronts and mitigate delays we believe this is a differentiated approach from the rest of the industry enabled by our modular design early investment in module fabrication and engaged on-site construction management it is also emblematic of the creative problem solving and tenacity as a bedrock of our unique corporate culture which despite setbacks positions Plaquemines to achieve Phase I COD approximately 54 months post-FID. For 2025, we anticipate exporting 219 to 239 cargos from Plaquemines, and have contracted 78 of these cargos thus far, capturing a weighted average fixed liquefaction fee of $7.94 per MNVTU. Again, I want to highlight our leading safety performance at Blacklands. Today, over 50 million work hours have been completed at the project, with a TRIR of only .20, roughly one-tenth of the national average TIR of 1.9. And I want to turn to our next project, CP2, which is covered on page 11. cp2 is a 20 million ton per annum nameplate capacity facility consisting of 36 of our factory built with faction trains based on the performance of these trains that captured past the design improvements implemented at plockman's in the performance of those trains to date we believe cp2 will produce at least 28 mtpa further we currently estimate approximately 550 cargos will be exported during the construction of the facility across the commissioning programs of the project's two phases due to the company's innovative phase commissioning and startup approach. We have deployed over $4 billion thus far with our key equipment suppliers and contractors for CP2, supporting thousands of jobs in dozens of states across our country and are ready to commence on-site construction as soon as we receive all necessary approvals. As widely reported, the Department of Energy's paused on issuing LNG export approvals to countries that do not have their free trade agreement with the United States, commonly known as non-FTA nations, has been reversed by the Trump administration. While there can be no assurance as to the timing of regulatory approvals, we believe we may receive our non-FTA export approval from the DOE in the near term. We are also pleased that the Federal Energy Regulatory Commission's supplemental environmental impact statement issued last month reiterated that CP2 would have no significant emissions impacts, and we are awaiting a notice to proceed from FERC. The current regulatory environment is supportive of the U.S. LMG industry, and we have been thrilled with the backing we have received from President Trump and the current administration, members of Congress, governors, including Governor Landry, Louisiana state legislators from both sides of the aisle, and government and industry representatives from allied nations. Taking advantage of these permitting tailwinds, we have commenced the FID process for phase one of the CP2 project with our well-established banking synergies our bold investments in the project today will position cp2 as potentially the most advanced project in the history of the lng industry by the time we officially break ground in camera parish we currently aim to begin receiving major power island equipment and with faction trains number 55 and 56 in the first half of 2025 and are targeting first production of LNG in mid-2027. We believe CP2 has the potential to be a key source of LNG for critical United States allies such as Germany and Japan and others, and we look forward to our role in providing their citizens clean, affordable American LNG and bolstering their energy security. Continuing with this discussion of an advantageous regulatory environment, We are pleased to announce today our plan to expand the Platinum's project, which is detailed on page 12. We have begun the pre-filing process at FERC for a brownfield expansion, phase 3 expansion, configuration consisting of 24 liquidfaction trains and related infrastructure, which we expect to provide 18.6 MTPA of export capacity. We believe this expansion would be highly accretive as the new lifepaction cranes would leverage existing infrastructure developed during Flockman's Phase I and Phase II, including but not limited to LNG tanks, marine jetties, pipe racks, and marine offloading facilities. We are targeting FID for this expansion project in mid-27, after achieving first production of CP2, and believe this flexible, incremental capacity would position us to respond rapidly to market growth signals. In a capital-intensive commodity industry, capital will always flow to the most competitive projects, and we believe that an expansion of Plaquemines is one of the most economically efficient opportunities available to quickly meet growing LNG demand. Simply stated, we believe our Plaquemines expansion, along with projects we pursue in the future, has the potential to displace more expensive development projects with longer construction durations, enabling us to offer lower long-term LNG prices to global markets while also delivering very attractive returns to our shareholders. Turning to page 14, we have noticed a misconception among some investors and analysts that our production outside of our 20-year contracts is fully exposed to spot or merchant prices, and that our contracted revenue profile is insubstantial, neither of which is the case. 100% of the nameplate production capacity of Capsule Pass and Falkermans is contracted, including cp2 39.25 of 50 mtpa of the nameplate capacity of our first three projects is contracted an average tenor of slightly under 20 years representing over 100 billion dollars of illustrative total contracted revenue for our commissioning cargos we are continuously seeking to lock in advantages to fix the contraction fees and anticipate contracting forward sales of strips of cargoes on an ongoing basis we plan on contracting our currently uncontracted capacity at cp2 as well as our expansion capacity at flackmans under a blend of three to twenty year contract tenors in the coming years long-term contracts representing hundreds of mtpa of demand are set to expire offering a significant opportunity for venture global to secure incremental pricing certainty and build a balanced portfolio of contract terms throughout the history of our company incumbent industry participants including lng producers and global super majors have questioned our disruptive approach despite this skepticism we have continued to execute and prove our critics wrong our core business is building and operating machines that produce a valuable commodity and we are focused on delivering our product faster more safely and at a lower cost than the rest of the market we believe this is a winning formula in our commodity market and look forward to proving it with our earnings and returns in the years to come i'll now turn it over to our cfo jack there go out to our fourth quarter and full year 2024 financials, as well as our guidance for 2025.

Thank you, Mike, and good morning to those on the line. I will be referring to the Venture Global Incorporated Form 10-K as of and for the year-end of December 31, 2024. The 10-K is available on our website, and some of the key results are summarized on page 16 of the presentation. During this call, I will highlight results I believe are salient to this audience, and I encourage you to review the entirety of our financial statement. Beginning with revenue, our top-line revenue was $1.5 billion for the fourth quarter of 2024 and $5 billion for the full year, a $108 million and a $2.9 billion decrease, or a 7% and 37% decline, respectively, from $1.6 billion and $7.9 billion during the equivalent periods in 2023. This decrease in revenue year over year was driven by one lower weighted average fixed liquefaction fees of $7.28 per MNBTU versus $12.23 per MNBTU and lower natural gas commodity fees of $2.61 per MNBTU versus $3.20 per MNBTU, resulting in a decrease of $2.8 billion. and two, lower LNG sales volumes of 501 TBTUs versus 510 TBTUs, resulting in an additional decrease of $139 million. Our net item attributable to common stockholders was $871 million for the fourth quarter of 2024 and $1.5 billion for the full year, a $921 million increase and a $1.2 billion dollar decrease from a loss of 50 million dollars and net income of 2.7 billion dollars these shifts were driven by the stabilization of international lng prices resulting in lower total margin for lng sold and higher cost to remediate and commission the capuchy project personnel expenses reflecting higher headcounts and costs to develop the cp's declines were partially offset by the reduction of 30 to consolidated adjusted diva we realized 688 million dollars during the fourth quarter of 2024 and 2.1 billion dollars in 25 million this decreased and consolidated adjusted EBITDA year over year was driven chiefly by the stabilization of international lng prices resulting in lower total margin for lng sold and higher o-n-m intermediate and commission associated with personnel growth as mike discussed we exported and 141 commissioning cargos over the entire year, which decline from 40 and 1 TBTU of volumes are reflected in our results for Q4 and 501 TBTU of volumes. Advancing to page 17, we are guiding to a consolidated adjusted EBITDA. Incorporating in 48 cargos, EBITDA range was determined assuming a fixed adjusted EBITDA CP2 and regulatory and engineering design spent on one-time rectification O&M It's consolidated adjusted EBITDA range 25. I will now turn the call back over to Mike. Thank you, Jack.

At this point, we would like to open the call for Q&A.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 4801 on your telephone keypad. Should you wish to cancel the request, please press star 4802. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of John McKay from Goldman Sachs. Please go ahead.

Hey, good morning, all. Thank you for the time. I just wanted to start, a lot of moving pieces, but I wanted to start on the 25 guide. Maybe you could just walk us through, again, a little bit some of the moving pieces on kind of your assumptions on the margin and then also, you know, how much of this continued need quick ramp of plaque means is uh is baked in there i think it's you know relative to the range you guys have given for the you know plus or minus one dollar and spread it's ultimately narrow even a range for the year so maybe just unpacking a few more of the moving pieces would be helpful thank you sure good morning john thank you uh thanks for the question we um the obviously the the largest moving piece is just the the board curve for the remaining of year and so you know since since the uh since the ipo the uh the forward curve is compressed on the

if you're looking at pts in particular but we also sell the asia too but the uh the european markets come in approximately 20 and henry hub has come up a little bit and so we factored in A CONSERVATIVE VIEW ON WHAT WE'RE ANTICIPATING FOR THE REST OF THE YEAR BLENDED IN WITH, OF COURSE, WHAT WE'VE ALREADY CONTRACTED. I'LL LET JACK GIVE YOU A LITTLE BIT MORE DETAIL ON SOME OF THE PIECES WE HAVE IN THAT.

THANKS, MIKE. SO I THINK IT MIGHT BE INSTRUCTIVE TO WALK YOU THROUGH HOW WE'RE FORECASTING THE EVITO up for the year and maybe an illustrative example would be helpful um you know a number of of of uh investors have have looked at net spreads and here we provide guidance in the form of a fixed liquid faction fee so i think it might be helpful if we kind of walk from that spread to to that basic transaction fee so starting with the net spread well this is an entirely market based measure so it's visible to all participants using available market data and for simplicity i'll provide some example numbers that reflect the current market so to calculate the net spread you start with ttf in this example i'll use a 14 per mbtu net spread which is roughly where the market is right now and then from this we subtract shipping at approximately 70 cents per mbtu and then regasification costs at $0.50 for MMVTU. Those two values can vary, but generally there's some correlation between them. And then we subtract 115% of Henry Hub, which for simplicity here, I'll just assume to be $4. So when you gross that up to 115%, that's $4.60 in this instance. So the math is $14 for TTF minus the $0.70 for shipping, minus $0.50 for regas, minus the $4.60 for Henry Hub grossed up, and that yields a net spread of $8.20 for MBTU. Now, let me compare this measure to how we calculate fixed liquefaction fees. So when we're contracting with off-takers, we negotiate and our contracts reflect a fixed lequefaction fee plus 115 percent of HENRE-HELP. These contracts for carvings are negotiated between a buyer and seller and generally capture the net spread as well as provide a margin for the buyer. For context, recently TTF has generally been trading at an approximately $1.20 for MMBT premium to Gulf Coast market forwards. So in the same example, $14 for MMBTU for TTF minus the $1.20 discount for Gulf Coast marker, which not surprisingly generally reflects the shipping and regas, minus the 115% of Henry Hub, so $4.60 in the $4.00 Henry Hub example I provided, that yields a fixed liquefaction fee of $8.20 for MMVTU, less buyer margin, which varies depending on the market. So, you know, in the guidance, we provided a range of effectively $7 to $8 of fixed inflection fee in our EBITDA forecast. And then you need to think about our contribution margin from that. So from that, the 115% of Henry Hub generally covers the LNG feedstock, transportation of pipeline gas to the facility and our internal gas burn at our power islands. We receive the liquefaction fee as gross margin to deduct other costs of liquefaction, including O&M, which is generally $0.50 to $0.70 per MBTU, depending on the facility. So the fixed liquefaction fee in this example of $8.20 minus the $0.50 to $0.70 per MBTU of O&M costs yields contribution margin between $7.50 to $7.70. sets and that's ultimately what is factored into our our EBITDA guidance hopefully that walk was helpful john the back half your the back top of your question about um uh the incorporation of the ramp up on placements we are incredibly pleased as as um i described in our in earlier comments with with the uh the rapid ramp up that the team's been able to achieve us that

that plot is really unprecedented ramp up for a greenfield project of this scale and uh we are excited about uh what we think uh we're gonna be able to achieve for the balance of this year and and uh provoked lockman's and and uh and cp2 as well the biggest news that uh um we're excited about related to the trains is the performance of the trains in our view has been spectacular so far and something that hasn't been seen before relative to nameplate capacity. And since we're in the business of, you know, manufacturing, installing sequentially our liquefaction trains to be able to achieve the performance out of the trains that we've been demonstrating now for the first 16 of the trains that have produced L&D at Plotkman's is incredibly exciting for us and we have in addition to you know view this year we're really looking at the medium and long term to be able to install as many of these trains as possible and produce and ultimately for 50 years from from, from, from, uh, from our look at fashion trains. We, there's a ramp up, uh, for Plockman's, uh, trains for the balance of this year that, uh, incorporates, uh, our views of the, of the performance of the trains and the sequence of the trains coming on. And it's, it's incorporated into the cargo count, um, that we, that we described before.

That's, that's really clear. appreciate all that color second question maybe just on the on the plaque means expansion um between signing longer term contracts there you mentioned also potentially adding some more contracts for um for cp3 can maybe just talk about where you're seeing you know your appetite uh sorry where you're seeing appetite in the market for signing these long-term contracts right now kind of when could we expect those in general and maybe just broadly the competitive market versus other Gulf Coast facilities?

Sure.

So, if you include CP2, we have 50 million tons of nameplate capacity. 39 and a quarter of that 50 are contracted on largely a 20-year basis. And so, of CP2, we're nine and a quarter of the 20. and we are going to contract the balance of roughly half of the nameplate capacity of cp2 on a blended basis let's say three to 20 years is probably going to be the range of tenors that we're going to target for the balance of the nameplate capacity of cp2 And then for the expected capacity production above namespace capacity, we also are going to layer on blended contract terms that will be, you know, multi-year tenors on those contracts. For the bolt-on that we just announced this morning that we moved into pre-FERP, the 24 trains that we're developing as a phase three at Plockerman's, that is larger than what we were expecting to be able to layer on. But on more extensive engineering, we were able to really leverage existing infrastructure like tanks and pipe racks and jetties and other systems, and that enabled us to layer up more potential trains there than we originally participated. But what that means, then, is we have more capacity there that we're able to contract on a long-term basis. And so our plan is to contract on a 10- and 20-year basis more of that full-time phase three capacity at Plaquemines. And at levels that we view our material discounts relative to the rest of the market. because of what we view are very sustainable cost advantages relative to the rest of the market. And so our plan there, and we're going to endeavor to demonstrate here, is to do more long-term contracts for this capacity. We think there's very, very good demand in the market for long-term contracts. and at prices that are very attractive to us. And again, as I described it, at points that we think are substantial discounts to where other projects are economic. And so we think that we're in a position to displace other companies' plans for their break because of our advantages. Our plan is to use these substantial expansions to do just that, to grab additional market share to grow earnings, but also to do it with more long-term contracts to continue to build a balanced portfolio. So over time, as we incrementally add our compaction trains, we will be blending in layers of more multi-year contracts that we think is an attractive way to capture more of the upside earnings of these large facilities than you would realize if you did it with all 20-year contracts but by blending in shorter terms into that we'll be able to in a balanced way, achieve substantially more earnings is the goal.

All right. Appreciate it, Mike. Appreciate the time.

Thank you. And your next question comes in the line of Jeremy Tonett from JPMorgan Securities. Please go ahead.

Hi.

Good morning.

I just wanted to come back to the guide, if I could, and, you know, we've seen assets running above nameplate here, pretty encouraging numbers. And so we just want to see, I guess, for Calc, you know, maybe there wasn't as much potential excess cargoes. That's the outline there. Just wondering for the potential, you know, could this number be higher? Could volume surprise the upside for the year? I mean, we were looking, you know, potential for EBITDA numbers, you know, 10 billion or more. And just wanted to see if, you know, we get higher volumes here. Could we start moving upside to the to the guide as you described?

So, there is a ramp-up of the production capacity at Plaquemines as we layer on more trains, and we are, as we say, we're incredibly excited about the performance of the train after years of incorporating our data and our process engineering and data science to see it play out with the performance of the trains has been incredibly exciting for us and the whole team. We are trying to be reasonable and conservative and balanced about our e-model projections and uh and uh and uh give ourselves give ourselves um appropriate um kind of uh bands for the performance you know to achieve the uh the job projections the uh 10 billion dollar number that you're referencing is obviously sensitive to uh the um what the forward curve is what's realized over the course of this year. And so as we continue to contract forward strips of our production for Plaquemines this year and next year, then the relative sensitivity of our earnings goes down as we do that. You know, it's the TTF price or the JPN price, you know, relative to the Henry Hugg price that generates that spread that Jack went around, described earlier. And, you know, all of it's going to be sensitive to the demand side as you know, fills up its storage because it's low in storage and uh in you know we watch what what the what the demand looks like uh coming out of the rest of the market um uh not to see including including asia i will remind we will remind you know everybody though that we are you know manufacturing uh installing turning on operating liquefaction trains for decades. You know, ultimately, we think we'll be operating these machines for 50 years or more. And we have a very bullish view that five years, 10 years, 15 years, 20 years from now, the world will be using more and more electricity. And a large portion of that is going to be supplied by gas. And being a low-cost producer of liquefaction capacity, is enormously valuable, and that's what we're layering in. So as we layer in these trains, and I spent some time in my comments, a couple of paragraphs really trying to describe the scale of the trains that we're layering in that will compound the earnings that we're able to achieve in the market in the future. And, you know, to go from 18 trains to 70 trains that are either, you know, producing, sitting on pads, on ships, arriving, being manufactured, to go from 18 trains to 70 trains in 29 months. and then to have those trains outperform expectations the way we're demonstrating right now is something incredibly exciting to us. And we're very focused on continuing to do that as safely as possible and methodically as possible. I answered more than you asked, Jeremy. Got it.

That's the next question. go that's that's helpful thank you for that and just wondering you know with uh future lng development just wondering if you could provide some backdrop how you see the regulatory environment now it's a bit choppy under the prior administration just wondering how you see things currently and did that uh kind of feed into your thought i guess with uh potential with with plaque here in the in this time frame that's you know very quick to get something new going here uh no we think our our view is that that uh the permitting environment that we're in and going into now is likely the best in decades and the uh the uh it makes us very uh bullish on on the the ability to um to uh

permit our expansion plans it puts us in a position to be responsive to market demand and in the we think as as uh in our view the low cost liquefier and the fastest to ramp up in the market that it positions us to be able to be responsive to demand and as as we were describing a few minutes ago puts us in a position because of that with those two factors uh to uh offer prices to customers that are extremely depractive on a long-term and medium-term contract center, that is going to be extremely difficult for other boards to compete with or justify FID decisions for prospective projects. So we think we're, and which has been our plan, are in a position to displace those growth plans for global competitors that that's helpful and just to be clear uh quote um lines of communication to to trump at this point and moving forward and just wondering if you could talk a bit more i guess on the contrast today versus before well the uh and uh there is uh obviously there's an lng pause and we're waiting we're waiting for our non-fta export authorization for cp2 and um we can't as said in my comments you can't predict an exact date but we feel we feel pretty good based on what's been said publicly and privately that uh that uh uh people are going to get their non-fta permits from the department of energy uh the uh work um chairman new chairman's been designated uh by by trump as happens with a change in um administration and uh we feel that the the direction is to um move projects forward as they satisfy the requirements and then ultimately what's left is is uh businesses um follow the rules get their permits and then they have to compete uh commercially to sell their product into the market and in the commodity market that that we're in uh you know price and timing um are going to determine market share and so we argue is that that permits will go uh faster than they have in the past the permitting process and that uh people will get their permits so that that's something that um uh has really been our primary constraint from a timing standpoint because we are in a position where we're repeating from our supply chain in the factories that produces our trains really, really, irrepetitively, systematically, successfully, as we described in what's already going on in our supply chain. We've dramatically grown our team that has executed the exact same trains that we've installed now at Cowshoe Pass and are installing at Plotkman's and about to receive for CP2. And we'll do the same thing for our whole time expansions at Flockman's and others in the future. So, we think we're in a very, very positive environment.

Got it. Thank you for that. I'll leave it there. Thanks, Jeremy.

Thank you once again. That is starting to ask a question. And your next question comes from the line of Jane Anna Salisbury from Bank of America. Please go ahead.

Hi. Good morning.

Good morning.

I just had a question about page 10 and the weighted average fixed liquefaction fee, the 794 at Plaquemine that you've had already. And thank you so much for walking us through the math of how you define that. That is kind of where it is at now, I suppose, for the rest of the year, but it seems a little bit lower than what I would have thought it had been year to date.

Can you kind of just kind of talk about, I guess, the buyer margin and if that's a bit more material maybe than i had uh calculated sure i'll say a couple comments and then i'll let jack uh provide some additional detail the uh we we we we had um uh sold contracts uh historically forward for some of that flackman's contract which is you know what we What we strive to do is to run, you know, multi-tenner strips of forward sales. And so some of those pargos were sold into this year, you know, historically. And they were just lower prices than what the, you know, the forward curve was during the winter. And so, that's just blended into higher-priced contracts from the current forecured.

Jan, this is Jack. I'd also maybe juxtapose what we experienced at Capuchy past, where we were able to capture higher market prices and higher margins because of the maturity of that facility. For 2025, thus far there, we've achieved $8.97 per M&B. ETU margins. With Plaquemines with the initiation of first LNG and then the ramp up, that is always the most challenging period of a plant's evolution when you're getting those trains up and running and you're going through all your teething issues and identifying the challenges that are complicit in or a part of the whole construction and commissioning process. And so there we were, I would say, contracting on a much more real-time basis, extensively using our own shipping fleet as well to load the LNG that was being produced that allowed us the flexibility to ramp but also go through those teething issues. and that that's why you're seeing a pretty market differential almost uh more than a dollar uh between the the contracting thus far for blackness and and the contracting uh year-to-date account should pass okay guys so basically longer term the sort of count to see past versus where prices are is a better indicator to use of where where buyer margin would be i would i would say our range currently as providing guidance is highly reflective of where we've been attracting many of our cargoes and certainly is consistent with the cargos we've sold in the last number of days given the pace of production that we have and our marketing team is constantly in the market managing the production that we have and finding buyers for that and we're very comfortable with the with the range we provided as reflective of where the market is currently transacted we've been going through um this uh inflection point just in our growth where we're

transitioning from just just having one facility with 18 trains and we're turning on another facility that will take us from 18 trains to 54 trains and so as we just turned that project on We're now layering in more strips of floor contracts. And so if we had been adding less trains or growing slower, obviously our teacher earnings would be lower. But the percentage of trains that we're turning on that have been contracted in multi-year floor periods would be lower. And so then when we layer on CP2, we'll be layering on those 36 trains on top of 54 trains. And so the impact will be different. And we don't try and make guesses on what the LNG prices are going to be. we just systematically, you know, our cost average layering on our contracts incrementally over time. And so we're layering on more tenor as we, as plan passes in the growth.

That makes sense. Thank you. And then as a kind of higher level follow-up, there's obviously a lot of concern that potential Russia-Ukraine peace could lead to Russian pipeline flows returning to Europe in the near and medium term, which could sort of materially bring down global LNG prices. How would your future development plans for CP2 and Plaquemines change if that environment came to be, if at all?

Well, we obviously watch that and think about that a lot. You know, we think that the short-term impact that might or will happen as more gas comes online will be temporary, and so it's a question of duration, you know, a long-term contract price today delivered from the U.S. and Europe, you know, at the power plant is a very, very low kilowatt hour electricity price that we think that there's a lot of demand for, you know, five, six, seven cent kilowatt hour equivalent electricity at the power plant. And so we think that really low price power electricity gets hoovered up pretty quickly and with demand expanding to utilize it and we think that's the case and you know that the medium along uh term for for sure but also we think in the words will be short term uh the prices before the ukraine russia war um are also instructed when you had all the gas flows going that pricing was also higher than I think people remember, and very attractive prices. You know, for us, we continue to build and get very attractive returns, you know, $3 net spread prices over the long term still give us, you know, very attractive, you know, IRRs for building our projects and you know the high teens the low 20s if that happened you know forever so we we can build extremely competitively we think that's way below replacement costs for projects and we also think that uh there is tremendous uh global demand for electricity you that can that can be produced at that at that price point over time so uh we will uh are in a position to modulate if we have to um our our growth um the full tons at blackman um the phase three there uh we're beginning the prefer process now which we think will go pretty quickly uh but will still you know still take you know a year to 18 months uh and so during that time we'll be we'll be watching how how the market how the the market pricing is behaving and we'll we'll be responsive to that of course great thank you if that's all for me yeah yeah

thank you and your next question comes from the line of chris robertson from deutsche bank please goliad hey good morning everybody thank you for taking my questions hi mike good morning chris uh this is just a broader market question i guess as you're going out into the market seeking additional contracting for cp2 you can you talk about what types of customers you're currently engaged with if they're in the more traditional markets like northeast asia and northwest europe or are you seeing increasing engagement from places like south or Southeast Asia in emerging markets, and of these customers, which ones are leaning more towards shorter-term duration, like three to five years, versus leaning more towards the 20-year tenor?

That's a great question.

Our marketing is very broad, so we're speaking to all interested buyers. And what's new for us, though, is as our balance sheet has grown and our business has matured, we're in a position now where we don't have to primarily just offer 20-year contracts. So we're able to offer a blend of shorter term contracts in 12 years, 10 years, 8 years, 3 years, 5 years. Then we can blend into our portfolios, taking advantage of not just our main plate capacity growth, but the excess capacity growth in our commissioning cargos. And so we see very strong demand still on the 20-year contracts because those long-term fuel prices are extremely attractive. you know but i would say it's pretty it's the the interest in tenor is pretty broad because the demand side are filling um various buckets of their fuel portfolios and you know if you're a utility and you run you run a blended portfolio of term you know half of it traditionally can be longer term a quarter another quarter can be you know shorter five to ten years and then your final quarter can be less than five five years and so there's there's always contract roll off of all those terms from customers that creates demand okay yeah thanks for the detail on that um as it relates to the fid process for cp2 do you need to secure any additional long-term contracts there renegotiate any previous contracts in order to satisfy any lender requirements to move forward with fid or is it all just regulatory and procedural at this point as it relates to that facility uh we're going to get we're in a good position that are not in order million tons that we've uh contracted for cpq already and and uh and we're we're in a we're in a strong position from from uh uh from uh an update perspective the uh remaining pieces are just finishing off the regulatory receiving um the big one is receiving the non-fta from the department of energy uh for uh as as any kid in their comments um a week a week or two ago reiterated um as it relates to the supplemental environmental impact statement that they are asked for that we have uh no significant impacts which are their kind of magic threshold words and so they reiterated that Previously, they reiterated the overall FERC authorization, and so FERC is running through its remaining process as it relates to that supplemental EIS that according to their schedule will run its portion in the next few months, and we're running our FID process for CP2 in parallel to that.

Got it. That's very helpful. I'll turn it over. Thank you very much for the time. Thank you.

Thank you. And your next question comes from the line of Shardier Pereira from Guggenheim Partners. Please go ahead.

Hi, good morning, team. Good morning. I'm here for Shard. Congrats on the inaugural call and thanks for taking the questions. A lot of questions have been answered.

I think maybe taking it to a little bit more to the broader LNG market environment, especially as we look to Europe, maintaining their gas storage quotas coming off of historically low storage levels in 25 and more broadly looking at long-term lng supply agreements have you participated in any incremental discussions on that front um yeah we're we're between uh uh between placements and uh cp2 we have uh substantial new supply that's coming into the market that is um is going to be critical to supplying Europe's needs and Asia's needs, and so we do follow it closely, we do answer questions when we're asked about our views on it, and also kind of our views on the timing of being able to execute and provide additional capacity. uh in our in our view the markets are much tighter um from a supply demand standpoint globally than i know a lot of consultants um uh guide to and we think that the the uh demand in the market is in the need even beyond just the need to to resupply storage is uh is more significant

and you think it's it's growing and and so we're going to watch that really carefully as we go through our permitting process for additional capacities beyond cp2 to be in a position to rapidly rapidly respond to those dry signals okay thanks for that and maybe just a quick follow-up on cp2 and the expansion projects just with where you're seeing and i think i heard this on the last question too where you're seeing the 26 27 forwards and the contracted market signals are those fully supportive of uh kind of going to FID on those projects and just

as we're thinking about the volatility does it change anything on timing hurdle rates or the need for longer term subscription for those projects to support the project financing uh uh no we're in a good spot on CP2 from a return standpoint, even at much lower prices than we have in the poor curve. So the returns that we have there are still very attractive and put it sort of a strong competitive position relative to where the bulk of the rest of the market which needs to contract. And so we feel really good about where we stand from the CP2 standpoint, even if demand is flatter than we think it's gonna be.

Excellent, I appreciate it. Thanks so much, Ben. I think that's the... Thank you.

Thank you. That ends your question and answer session. I would now hand a call back to Mr. Mike Sable for any closing remarks.

Thank you very much. Thank you. Thank you, everybody.

We appreciate all the time and the questions and look forward to answering more questions in income days, and we encourage you to please watch the gas flows going into our facilities because it's a great way to track on a continuous basis our performance. The teams are working safely, as always, but very hard to layer in incremental trains and production capacity. We are very happy, as I've mentioned a few times, about the performance of our trains. And as we continue to build our facilities, we think about the earnings that will be possible to produce from those facilities over many years to come and how, as you layer on incremental trains, how that increases. And we will be very prudent in taking a view on short-term changes in market prices and volatility as it relates to the timing of our growth. But we will also be looking to be opportunistic in earning or achieving market share because we even at low market prices still achieve very attractive very attractive returns out of CS prices go higher we do better but we still do we just we still do well and in uh in these lower markets as well lower price markets as well so uh thank you very much we appreciate it and and look forward to speaking to you in the near term and in years to come. Thank you, everybody.

Thank you, and this concludes today's call. Thank you for participating. You may all disconnect.