Hello everyone, and thank you for joining the acquisition of Jamaica Downstream LNG and Power Infrastructure Platform. My name is Harry, and I'll be coordinating your call today. All lines are currently in listen-only mode, and there will be an opportunity for Q&A after management's prepared remarks. If you would like to enter the queue for questions, please dial star followed by one on your telephone keypad. I would now like to hand the conference over to Craig Hicks, VP of Investor Relations and Strategy. Thank you, the floor is yours.
Good morning, everyone. With me on the call today are Steven Kobos, Excelerate Energy's Chief Executive Officer, and Dana Armstrong, Chief Financial Officer. Also on the call are Oliver Simpson, Chief Commercial Officer, and David Liner, Chief Operating Officer. Before we get started, I want to inform those of you who may not have seen it in the press release this morning that we have prepared a slide presentation to accompany today's discussion. It can be found on our website at ir.excelerateenergy.com. I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Our actual results may differ materially from those expressed in these forward-looking statements, and we make no obligation to update or revise them. With that, it is my pleasure to pass the call over to Steven.
Thank you, Craig. Good morning, everyone, and thank you for joining us today. As you saw in the press release we issued this morning, we are pleased to have signed a definitive agreement to acquire the fully integrated downstream LNG and power platform in Jamaica from New Fortress Energy. This is a significant day for Excelerate. It marks an important milestone in the execution of our downstream growth strategy. With this acquisition, we'll expand and diversify our global platform while positioning Excelerate as the key provider of last-mile LNG infrastructure in a desirable Atlantic Basin natural gas market. Before we delve into the strategic benefits of this transaction, I'll turn it over to Dana, who will cover the financial highlights.
Thanks, Steven. We are acquiring the Jamaica Integrated LNG and Power business from New Fortress Energy for a cash purchase price of $1.055 billion. This represents a multiple of roughly nine times the Jamaica business's 2025 estimated Adjusted EBITDA. Specifically, we're acquiring the Montego Bay LNG terminal, the Old Harbour LNG terminal, and the Clarendon CHP plant. Additionally, we're acquiring all operations and infrastructure, including pipelines and the ground transportation fleet that connects the terminal to power plants and other customers. We look forward to working with the talented employees that manage the day-to-day operations in Jamaica. With this transaction, we'll own Jamaica's only two LNG terminals, as well as Jamaica's only combined heat and power plant. Steven will provide more details on the business and why we're excited about this opportunity. We'll fund this transaction using a combination of permanent financing and cash on hand.
We have backstopped the financing with an $850 million fully committed bridge facility. We expect the transaction to be immediately accretive to our earnings per share, and we expect the transaction to close as early as the second quarter of 2025. With that, I'll turn it back over to Steven, who will give you an overview of the business and the strategic benefits of the transaction.
Thank you, Dana. First and foremost, this acquisition is fully aligned with our growth strategy. It is an outstanding fit with Excelerate from both a strategic and a financial standpoint. As you can see on Slide four, this acquisition checks the box on our goal of investing in both LNG import terminals and complementary downstream infrastructure. Part of the reason this acquisition is such a great strategic fit is that it will enhance our aggregate long-term contract revenue and margins. This deal will also diversify our geographic exposure and customer base. At the same time, the addition of this downstream and last-mile infrastructure is going to secure pull-through demand and value-accretive offtake for our LNG supply portfolio. In short, it's a big step forward. Beyond the strategic benefits, we believe the addition of the Jamaica business will deliver significant near-term value to Excelerate and our shareholders.
First, the transaction will be immediately accretive to earnings per share and will significantly enhance our operating cash flow. Second, it provides contracts with very high-quality customers and a weighted average remaining tenor that is going to bolster our existing contract portfolio. Third, it will enhance our operational and financial profile. Lastly, the acquisition provides us with a new pipeline of growth opportunities both in Jamaica and in the Atlantic Basin, which I'll cover shortly. This is a great business, and these are fantastic assets. We are extremely excited to bring it into our portfolio. Now I want to take a few moments to walk through the details of the Jamaica assets and operations we are acquiring. This fully integrated platform is essential energy infrastructure for Jamaica. It supplies approximately 30 TBTUs a year and either directly or indirectly accounts for more than half of Jamaica's electricity generation.
LNG arrives at the Old Harbour terminal just west of Kingston. Old Harbour is a floating storage and regasification terminal that was commissioned in 2018. The terminal is serviced by an FSRU, which receives LNG supply from large-scale LNG carriers. From the terminal, gas is delivered by pipeline to nearby customers. These include Jamaica Public Service's Old Harbour Power Plant and the Clarendon CHP cogeneration plant. The Old Harbour terminal also transfers LNG to a small-scale LNG vessel that shuttles LNG to the Montego Bay terminal. Moving west, the Clarendon CHP plant sits a short distance away. Clarendon supplies electricity directly to Jamaica's electric utility, Jamaica Public Service. JPS is a joint venture between Korea East-West Power, Marubeni, and the government of Jamaica. Clarendon also supplies steam to the Jamalco Alumina Refinery.
On the northwestern side of the island, the Montego Bay LNG terminal is an essential facility that supplies both LNG and natural gas to Jamaica. The state-of-the-art LNG terminal consists of seven LNG storage tanks, truck loading facilities, a regasification plant, a natural gas pipeline to the JPS Bogue Power Plant, and an ISO trucking fleet. This platform is a valuable addition to the Excelerate portfolio and builds on our commitment to providing cleaner and more affordable natural gas to countries across the globe. Now I want to spend a few moments on the four pillars that we think form the backbone of why this business presents such a compelling value creation opportunity for us. First, these are incredible assets, and together they represent a fully integrated LNG and power platform in a desirable Atlantic Basin natural gas market with high barriers to entry.
The Montego Bay and Old Harbour terminals are Jamaica's only two LNG terminals. They serve power plants and industrial customers. With this acquisition, we are benefiting from years of capital invested in these facilities, providing us with a first-mover advantage. Now let's take a look at the long-term nature of the contracts and the high quality of the customer base. The Jamaica business contract portfolio boasts an infrastructure-like profile, offering stable margins, attractive long-term offtake tenor, and excellent recontracting opportunities. The chart on the right of Slide eight represents this well. You'll see there are no material expirations until 2038. This gives us two decades of visibility into future contracted revenue and cash flows. Additionally, nearly 100% of the contracted revenue has inflation escalators, which ensures healthy revenue growth over the long term.
As of December 31, 2024, 86% of the contracted revenue was take-or-pay, with an average remaining tenor of approximately 13 years. This represents approximately $2.9 billion of cumulative take-or-pay direct margin from 2025 through 2039. Our confidence in these future contracted cash flows is high, given the investment-grade credit ratings of the contract counterparties. On Slide nine, we've highlighted the opportunity this transaction unlocks for Excelerate to broaden our market presence in the downstream part of the value chain. This transaction will allow us to expand and diversify our asset footprint and positions us to access abundant and nearby LNG sources in the U.S. Gulf Coast. As I mentioned earlier, this transaction also complements our existing LNG supply agreements. Long term, we plan to deliver our own Venture Global LNG volumes into the market.
Our 20-year SPA for 0.7 MTPA is aligned with the 21-year weighted average remaining contract length for the Jamaica assets when including extension options. These assets also complement our existing operations and expertise. It extends our legacy of meeting the energy needs of our customers and establishing trusted partnerships with sovereign governments and major LNG producers around the world. Now let's turn to the growth opportunities this transaction provides. First, the Old Harbour terminal, together with a small-scale LNG vessel, provides us with an opportunity to fuel the increasing number of LNG-fueled commercial ships transiting the Caribbean. On the power side, the Clarendon plant has the opportunity to increase its generation capacity by providing an additional 150 megawatts to meet the anticipated increase in Jamaica's electricity demand. Finally, we continue to see opportunities to grow LNG fuel supply into the country for industrial and hospitality customers.
Before we take your questions, let me end by reiterating my excitement about this remarkable acquisition. This is a great milestone for Excelerate that expands our downstream growth strategy. It establishes our company as the key provider of last-mile access in a desirable Atlantic Basin natural gas market. These assets and operations will generate predictable cash flows supported by long-term contracts with high-quality customers. As we look ahead, we see robust growth opportunities in the region. We are confident that the addition of this business will deliver value for our shareholders and all stakeholders in Jamaica. With that, we would be happy to take your questions.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to exit the queue. Finally, when preparing to ask your question, please ensure that your device is unmuted locally. As a reminder, that is star one for any questions now. Our first question today will be from the line of Wade Suki with Capital One. Please go ahead. Your line is now open.
Great. Good morning, everyone. Thank you for taking my questions. Just first, if you wouldn't mind, would you all entertain or think about considering bringing in a partner for part of the assets, some of the assets? Power, I'm thinking more specifically. Is this something you think of as a long-term holding in the EE portfolio?
Wade, we just got started, man. I want to tell you, we're excited about this. Yeah. I mean, come on, Wade. We are a long-term holder. You know that. We're a long-term holder of all our infrastructure, and this infrastructure is no exception to that. We're excited about what we can do and what we can grow in Jamaica over the long haul.
Great. Thank you. Just real quickly on the supply agreement, sorry. It sounds like longer-term agreement. You're transitioning to your VG contracts. I want to say there was a Shell supply agreement, if memory serves, for Jamaica. Can you sort of clarify a little bit how that supply arrangement is, to the extent you can? Is it going to kind of play out here?
Yeah, Wade, I think let me just first make the point. You're exactly right that our long-term expectation here is that we're going to use our own Venture Global volumes. It's a great fit. I think I mentioned it's 30 TBTUs here, so if you want to put that in LNG speak, it's about 0.6 million tons. You're well aware that we've got 20 years of 0.7 million tons a year from VG coming online. When you look at just the base profile here, you're looking at, so you're looking at 0.6 million tons with extensions for 21 years. I really can't imagine a better dovetail or fit long-term than what we've assembled. We've been telling you guys that we're going to be assembling the tools. We need to put everything together. This is your, I mean, this is a pretty darn big proof point of that.
I don't know how much more we can really speak to at this point, though, Wade. I think I probably ought to leave it at that for now.
Understood. That's all I understand. If I could squeeze one more in, if you don't mind, I'm just curious, what does this mean for other kind of growth opportunities that y'all are pursuing to the extent you can sort of talk about things, some of these other projects, Southeast Asia, Alaska, those kinds of things? Does it push these off, or is that all sort of consistent with?
I think you know us too well, Wade, to think we're going to put off anything. I mean, we have been doing what we've been saying. We've been doing what we said we would do for a long time now. It's no surprise. This acquisition looks a lot like the type of M&A opportunity we've been talking about on our analyst calls for a very long time. It's got all of the parts that we like. It's adding predictable cash flows. It's got great cash conversion. It's got stable margins. It's take-or-pay. Longer-term that we want as we go down into the value chain. Thirteen years base, but we feel great about the twenty-one years with extensions on here because there's really no other alternative to it. It has all the parts that fit investment-grade off-takers. It fits nicely with our existing take-or-pay business.
We love it, but we're also pursuing organic opportunities. That remains the case, and we will continue to do that.
Wade, just to add to that, we talked about our permanent financing. We are highly comfortable that once we raise the permanent financing, our leverage ratio will stay under three times. This is accretive—this is enhancing of our cash flow. That will continue to improve over time. We do not anticipate any impact to our ability to fund our growth projects from a capacity perspective.
Great. Thank you. I'll go back into the queue. Thanks again. Congrats, by the way.
Our next question today will be from the line of Jeremy Tonet with J.P. Morgan. Please go ahead. Your line is open.
Hi, good morning.
Good morning, Jeremy.
Hi. Just wanted to take a step back if I could think about this at a high level. Nice to get a large chunk of the value chain here. Just wondering, how long did this process take to come together? Was this kind of a one-time opportunity with a motivated seller, or do you see similar type of opportunities out there? Just wondering, big picture-wise, how you think about all this?
Is this Noah? Who's on the line? Oh, is it Jeremy? I'm sorry, Jeremy. I always get confused, man. Jeremy, thanks for the question. What I'd say is this is a great asset. It's a great asset. We were pleased to find this asset on the market. As I was just saying in the previous question, it really ticks a lot of the boxes that we've been out there looking for. I mean, it is part of a very large TAM. It is part of—I don't want to say that there's something unique about it, but when something ticks this many boxes and dovetails so well with our other infrastructure and matches the type of predictable, stable margins, all these things, inflation escalators, it's just—it was a great fit. I mean, we've been looking at this very hard for a while.
We have done a lot of due diligence, and we feel even better about it than we were when we first looked at it. We will continue looking at other M&A opportunities, for sure. As I said, Dana and I were both saying earlier, we're certainly going to—we're not slowing down at all on our organic opportunities and development, and we feel good about our capacity to execute that too.
Yeah, certainly understood. It's great to see an acquisition that's this much of the value chain downstream, capturing and all of that, and ticks all these boxes. I was just wondering if you see this as kind of a unique opportunity in the market, or are there other items out there that tick this many boxes? Just wondering if you could share any thoughts, I guess, as far as what you see in front of you.
Jeremy, we'll always appreciate deal flow if you've got your eye on one. I mean, there are other opportunities out there. That's a certainty. This is one that's really near and dear to our heart, and we like the geographic diversification. I just think it fits perfectly with our existing business. Are there other opportunities out there around the globe? Yeah, we're looking at a number of them, and a number of them do tick a lot of boxes. It's got to compete with—it's got to compete for every other opportunity that we are looking to develop organically. I can't really pick winners or losers right now. What I can tell you is enthusiastic about this one. We've looked at it under a microscope, and we feel great about it.
Yeah, makes sense. No, it looks like a great package here. Maybe just pivoting, rounding out a couple of smaller questions. If you could share any thoughts on the VG volumes that you're going to point towards Jamaica now, if they were earmarked for any other spot previously, how you think about that. I'm not sure if you mentioned—apologies if I missed it—but just as far as the regulatory process, what is needed to close here, regulatory approval-wise?
Jeremy, thanks for bringing up U.S. LNG. You know what a fan we are of U.S. LNG and how pleased we are to be part of that value chain. I'm going to hand that one over to Oliver, though.
Yeah. Hey, Jeremy. It's Oliver here. I think for the volumes, longer-term, I think, as we mentioned, these volumes fit very well with this position. I mean, with the VG volumes, we were looking at a number of organic projects. We can continue to look at those and assess as some of those projects come online, any future supply commitments that we'll need to enter into. I think we'll just manage that within the portfolio. For the sort of regulatory approvals and so on, I think we're not going to go into sort of any of the specific details here, but fair to say there's normal sort of closing conditions on a transaction like this. We have a definitive agreement for this, and we'll just work you through those over the coming weeks.
Got it. That's helpful. I'll leave it there. Thanks.
Thank you, Jeremy.
The next question today will be from the line of Bobby Brooks with Northland Capital Markets. Please go ahead. Your line is open.
Hey, good morning, team. Thank you for taking my question. I just wanted to first ask, could you discuss the LNG bunkering opportunity more? I was just curious, is this something that New Fortress was already doing and kind of the benefits from that piece of the business is already baked into the 2025 Adjusted EBITDA outlook that gets you to that nine times multiple? Or is this something that would be incremental under your ownership or something incrementally you're looking to expand under your ownership?
Hey, Bobby. It's Oliver here again. I'll take that one. I think the multiples we've talked about is just the base business. It doesn't include any of the growth. Any of the growth opportunities, obviously, would be incremental to what we've discussed. I think there's been some bunkering in Jamaica. I think a few have done some bunkering type operations. I think that that's a part of the business. Obviously, the location is fantastic with access to U.S. LNG and high traffic area for all types of vessels. We'll be looking closely at that, and we'll come back to everyone as we develop those opportunities. Again, it's not included in our sort of valuation of the base business.
Okay. Got it. Would you be specifically between the two gifts of the Old Harbour FSRU and the Montego Bay terminal, would there be a specific one that you'd be looking to do that bunkering, or is that still too early?
Yeah, it's probably too early to tell. I think you touched on the point that two great assets, so plenty of flexibility as to how to build this out. We're pretty excited about how to use these assets.
Okay. Got it. You mentioned there was also mention how the Clarendon power plant has an opportunity to go from 100 MW to 250 MW. I guess, could you just—am I right in assuming that that would require you guys to put out some CapEx to build that out? I guess I know there's a huge wait time for GE gas power generation turbines. How do you think of kind of securing that technology to increase that capacity? Is this kind of a long-term project that's probably not on the to-do list right away?
Bobby, this is Steven. You'd be surprised how long our to-do list is. It's epic. Let us get to closing. That is mostly permitted. It looks like a fairly easy execution. It looks like there's a strong need for more power in Jamaica. We're going to be the ones with the only two natural gas locations. Frankly, just high level in terms of growth, it looks like as good an opportunity for incremental power as any you could find anywhere. As I've said, we love the off-takers. We love the investment-grade nature of the off-take here. Let us get past closing, and then we're going to be looking at that really hard.
Awesome. I can appreciate the long to-do list. I guess just the last one on closing, the commentary you say is early as Q2 2025. I guess, is it reasonable to think that this gets closed in 2025? Maybe it slips into the third quarter and fourth quarter, it's most likely going to be closed. I just wanted to kind of hear maybe as early as Q2, what would it be as late as?
It's definitely going to be 25, Bobby.
Yeah. All right.
Thank you, guys. I'll return to the queue and congrats on the great news.
Thank you.
Thank you.
The next question is from the line of Craig Shere with Tuohy. Please go ahead. Your line is open.
Good morning. Congratulations on the news. Just quickly digging into Wade's LNG supply question, you did not get any assigned LNG supply from NFE as a part of the deal. Is that correct?
Hey, Craig. It's Oliver again. I think we're trying to avoid going into specifics here, but I think it is fair to say there is some supply. There are some supply obligations for the base business in the near term that is coming with this transaction. Can't really say too much more than that. Obviously, long term, the fit was that it fits well with our VG volumes and dovetails into those. Between the near term and then the long term, we have the volumes to supply this business.
Gotcha. I mean, I'm assuming that the Plaquemines VG, a couple of decade LNG supply is a lower cost versus any assigned cost of any assigned LNG from NFE. In addition, I'm assuming that there's pretty good value from LNG bunkering if that happens and the project leverage, operating leverage from expanding the Clarendon power plant. Obviously, the LNG terminals themselves are underutilized and have organic, very, very low-cost growth opportunities. Combining all this, would you say that analysts were kind of reaching for the stars to think that, hey, in three years, all-in capital on the island could be six or seven times multiple of EBITDA rather than nine?
Craig, I love the way your mind goes because it's going the same direction that we're going in terms of the opportunity set that's here. And frankly, let's look beyond Jamaica too because once we can break bulk here, we're going to have a lot of different dispersed opportunities in that part of the world. I mean, kept saying Atlantic Basin opportunity. It's a great geographic location. I can't think of anything better situated to the U.S. Gulf Coast, U.S. LNG. So we do think it's strategic. We do think that there is a lot of growth opportunities. And frankly, you're right. Those growth opportunities are fairly low CapEx lifts compared to a lot of other things out there in the world. So these are all things that are going through our head, and I appreciate you for flagging that.
Great. Does this raise—I mean, obviously, now you have trued up the VG volumes. Does this raise pressure to claim another decades-long Plaquemines-like supply contract?
Oh, come on, Craig. Just enjoy our stable infrastructure like business, man. Come on. I mean, I don't want to make light of it. I mean, we currently, as you know, our base business, Excelerate Energy, it's 90% plus take or pay on our existing infrastructure all over the world. I mentioned in my remarks that this is 86% contracted take or pay. What I didn't get to say is that the other 14%, it may not be contracted take or pay, but economically, it is being taken, and it will be taken because natural gas is the affordable alternative to heavy fuel oil or other higher-cost liquid alternatives. You can actually think about it as being 100% either 86% contractually take or pay or 100% economic reality take or pay. It is just a fantastic addition to our already stable, predictable margin business.
Great. Last one for me. It seems like a pretty clean cash deal with no assumed debt. Yet, they're very long-term contracted assets. Given you have very high return, but some at least nominal potential future growth investment on the island from bunkering to the power plant or what have you, is there any potential to backfill on project-level debt at attractive pricing, or would you just be looking at managing all this at corporate?
Craig, I mean, that's to be determined. If your question is, how do we finance future growth opportunities in Jamaica? I mean, as you said, we have plenty of—as we said earlier, we have plenty of capacity. It could be project level. It could be corporate. That's something we'll evaluate as we pursue these growth opportunities.
Okay. Thank you very much.
As a reminder, for any further questions, please dial star followed by one on your telephone keypad. Our next question will be from the line of Chris Robertson with Deutsche Bank. Please go ahead. Your line is open.
Good morning, everybody. Thank you for taking my questions, and congratulations on the announcement.
Thanks, Chris.
Just wanted to dive in here on a quick question regarding the FSRU. That FSRU, the Höegh Gallant, I believe it is, is that going to be 100% owned? Is there any minority interest in that, or how should we think about that?
Hey, Chris. It's Oliver. I can't speak to the Gallant specifically in the ownership, but under the transaction, there is an FSRU. There is a plan for an FSRU at Old Harbour. I don't think we're going to give too many more details on that at this stage. Obviously, the transaction comes with the FSRU to support the business.
Okay. Thanks, Oliver. Just turning back to kind of following on Craig's questions here with regards to some organic growth opportunities. Obviously, you mentioned the power plant at some point and then LNG bunkering. Is there anything else we should be thinking about on the island, whether it's heavy fuel oil or diesel to gas switching in the transportation sector, other parts of the power sector, things like that? Is there any other growth opportunity that could be low-hanging fruit that you see?
Yeah. I think when you look at the island and the generation mix today, I think it's around 30% is heavy fuel oil and diesel. I think, obviously, gas plays a big role, but I think could play a bigger role. Also, I think you've seen through the small-scale business has been developed. There's been other opportunities from hospitality and sort of small industrial customers. Certainly, we'll be continuing to look at those. I also see that the location of Jamaica, I think, has been alluded to from a sort of breakbulk perspective within the region. I think it's a fantastic place to have these assets and not only look at stuff in Jamaica, but with stuff more recently.
All right. Last question for me, pretty quick here. When the Venture Global volumes come into play, how are you guys thinking about servicing those volumes in terms of shipping transportation needs?
I mean, I think that's all.
Do you use your own equipment or?
Yeah. I think that's all to be addressed in due course. Obviously, those volumes don't come on for a couple of years. I think we have our strategy for those, but I don't think we've spoken sort of publicly to that. Obviously, it's a short distance from the U.S. Gulf to Jamaica. We'll look at different possibilities to optimize around this.
All right. Thank you. I appreciate the time.
Thank you, Chris.
The next question is from the line of Wade Suki with Capital One. Please go ahead. Your line is open.
Thanks for letting me in again. Don't mean to push it. But wondering, does EBITDA include assessment costs to the extent you can verify that?
Sorry. You broke up, Wade. Could you repeat?
No problem. Is that better?
Yes.
Yes, better.
Can you hear me?
Yes.
Great. Great. Thanks. Sorry about that. No, just wondering, does EBITDA include vessel costs?
It includes all of our operating costs, sir. Yeah. I mean, you're not referencing CapEx, but it includes operating costs, of course.
No, no, no, no. Right. Exactly. Yeah. Thank you. Just real quick, I'm not sure if I heard it earlier or not, but can you give us a sense for what maintenance CapEx is for these assets? I think you mentioned sort of minimal, but any color you could give us around that?
Yeah. I mean, it's not significant, Wade. We haven't gone into details, but it's fairly minimal. These assets are good assets. They're great assets. The maintenance CapEx is not that much.
Wonderful. Okay. Thanks again and congrats.
Thank you.
There are currently no further questions in the queue, so we'll pause briefly for any final questions to come in. With that, this will conclude today's Q&A, and I will now hand the call back to Steven Kobos, President and Chief Executive Officer, for closing remarks.
Thanks, everyone, for joining us on short notice this morning. As you can tell, our management team is very excited about this transaction. We look forward to talking with you all about it more in the days to come. With that, we'll conclude our call. Thanks so much.
Thank you for joining, everyone. This will conclude today's call. You may now disconnect your lines.