Good afternoon, everyone, and thank you for joining us. My name is Theresa Chen, and I am the Midstream and Refining Analyst here at Barclays. It is my pleasure to introduce our next company, Excelerate Energy. Joining me from Excelerate is CEO Steven Kobos. Welcome, Steven.
Thanks, Theresa. It is good to be here, and look forward to our webcast discussion.
Absolutely. It is always good to have you at our conference. We are at a point of the cycle and the broader macro backdrop where your infrastructure assets are more critical than ever. Maybe starting with the macro side of things and your view on the broader LNG and regasification backdrop. Looking beyond recent geopolitical volatility in the Middle East, how do you view near and long-term demand for LNG import infrastructure? How do you see Excelerate's regasification portfolio positioned to benefit from those trends?
Sure. Just right off the bat, I would say what I always say. We are bullish on the asset class. The asset class is tight. Speaking of these floating regasification import terminals, a little over 50 in the world. We own or control 12 of them. Amazing tightness in the market for those now. We look for that to be persistent into the 2030s. There has been so much investment, so much capital deployed on liquefaction, and there are a lot of people at this conference who do a remarkably good job at that. That liquefaction, it costs maybe 10x per million tons for liquefaction than what it costs per million tons of regasification.
The reason we are bullish over the intermediate and long term is there is all this supply that is coming online, a 50% increase through the end of the decade. FID is more than 200 million tons. This wave or this supply shock, whatever you want to call it's great. It's going to lead to affordability, but it doesn't do anything unless there's a home for it. We are the ones who create the homes for this coming wave through our investment in the downstream part of the LNG value chain, and there is a significant, and will be a significant, need for that. We're excited to be part of it.
Finding homes for all those incremental molecules does precipitate an incredible amount of investment need. Outlining this investment need and the path forward, you have provided some building blocks to continued growth in earnings across your asset base in the low double-digit range for dividend growth through 2028, underlined by earnings growth, clearly. What are the primary drivers that give you confidence in this outlook?
The confidence just comes from sequencing. We do have a lot of stair steps, a lot of milestones that have driven this. Obviously, 2026, we've had a full year of our Jamaica platform online. We've had a half year. We've put the Acadia, our new building, into Jordan. So that was about $20 million of incremental uplift from that. We've just announced, the last quarter, the contracting for Express at 35% uplifts over its last charter into Colombia, will be off of Cartagena. Very excited about that. We've got the Iraq project startup in Q2. I have promised Prime Minister Al-Zaidi, he gets a Q2 startup, and we are standing behind that and executing on that. We also have announced last quarter, Theresa, the acquisition of the Methane Patricia Camila, and that conversion, it's a fantastic asset.
We think it's going to be best-in-class FSRU. But that will come online early 2028. That kind of sequenced cadence, this growth is what has given us the confidence, the visibility. Did increase the dividend 13%. We've announced a multi-year, as you say, commitment on our dividend growth. That's still below 1% yield. But got a lot of growth, and we've got leverage. That yield is still below 1%. More to do. Our leverage is still 1.9x, very low. But that balance sheet gives us the ability to fund that growth and have that visibility. It's very exciting.
It's very clear. Turning back to Iraq, which remains the site of an important component of growth within your story. Your promise to the Iraqi Prime Minister, gas is going to flow second quarter 2027. Can you tell us about what underwrites this confidence in achieving that in-service date, and where do you see the most important execution milestones from here?
Sure. It's kind of an alpha and omega. Started with this company in 2000 and 2008, opening up Kuwait LNG. It's strange, 20 years have gone by, and we're just a few miles north of there now. We had paused a little bit in the spring for a couple of reasons. One, I wanted to see the new government in Iraq formed. I wanted to see that Prime Minister Al- Zaidi's government had the same commitment as their prior government before the elections in Iraq. That's why I was there in Baghdad in June and met with him in Washington in July. It's critical. It's clear that it's critical. Baghdad has not had reliable electricity since 2003. It gets very hot. Our CEO was there two weeks ago, and Baghdad is 117 degrees. It's too damn hot. We're going to do something about that.
I was obviously pleased not just that the project enjoys the support of the Iraqi government, but obviously Prime Minister Al- Zaidi got a warm reception at the White House. A strong USG support, too. Those were things I wanted to see. We've been in Iraq since the project was announced. We've removed like 150 million tons of material from the site, old crawler, derelict crawler cranes, all kinds of things. We have been and are positioning material overland from Oman to Dubai and by barge to Iraq. That's all ongoing. We have just good visibility about bringing it online. I'll just diverge and repeat what I said on the earnings call. People forget what's going on intrabasin. Kuwait, that receives about 6 million tons of LNG per annum, they're only down 10%-15% year-on-year since 2025. They've had over 45 shipments come in.
Those have all been intrabasin deliveries, Kuwait, Das Island, et cetera. We expect for Iraq to enjoy that same intrabasin advantage and look forward to bringing that online.
Okay. To your point, there is good empirical evidence that intrabasin flows continue and remain resilient. To your earlier comments about Iraq not having reliable supply of power and how this project will help to address that, you have a minimum offtake commitment of MMscf/d . How should we think about the potential for volumes to move above that level over time?
Look, one of the many reasons why I like Iraq, I like the fundamentals of that project. I personally think that like Kuwait, that has been importing LNG for 20 years. When you get past a deficit, and they have a severe deficit, there is still a spark spread there like the Kuwaitis face. You bring in more affordable LNG for power, you export the more valuable fuel oil. There is a very definite reason why Kuwait still imports LNG 20 years later, and frankly, why I think it will make sense for Iraq always to do so, regardless of how they do with their deficit. It is an integrated project. It is a minimum take. So ratably, it looks like the rest of our capacity deals because of that minimum take. That is 250 million scf. I believe their maximum is 500 million .
TBD, really how that maximum will look seasonally. I mean, certainly in summer, expect them to take as much as they can. We will see how that looks annually. It is not linear, but you could expect that there could be, say, another 30%-40% of headroom or uplift if they elected to take a maximum volume.
Fair enough. Turning to the Methane Patricia Camila, on that conversion, can you provide an update on the project's progress to date, and what are the major milestones here between now and the targeted early 2028 in-service date?
Was it clear how much I was geeking out about that ship? I do not mean it in a bad way, but our ops team had been stalking that candidate as we thought the best conversion candidate in the world. I mean, 170,000 cubic meters TFDE. Most importantly it was a BG and then a Shell asset, and they knew what to build. It has installed reliquefaction, which if we were adding it after the fact, that would be a $30 million kicker. So a fantastic ship. I do not really love the orange and black color scheme, but you cannot have everything that you want in life. Other than that, a fantastic ship. It is going to be best-in-class. She is not really going to have competition to speak of when she hits the water in 2028 because other people do not adopt our philosophy.
I think we are going to have a best-in-class asset and the TAM to choose from 2028. We have bought and ordered the regasification module out of Scandinavia. That is a big, huge single lift at the shipyard. I think we talked early on before we settled on the Pat Cam that we were talking about $200 million all in. I can tell you, tell everyone on the webcast, we are looking probably $230 million to $250 million all in on the Pat Cam as a converted ship. But again, she is going to be best in class, and we look for her earnings profile to be unchanged, even at that slightly higher ticket for it. So excited about that.
We are doing all the things we need to do. It is a complex project. We are going to deliver it safely and on time, but we look for that to be competing in early 2028.
Very good. Within this $230 million to $250 million range, can you help us think through the expected cadence of spend, including any major milestone payments, and is there any other color on the potential economics at this juncture?
Okay. That's all in with the vessel. I think everybody knows the price tag we think was fantastic on that ship, $79 million for what we're getting. I think we have a 10% down payment due here in a month or so. It's called $8 million. We've got the balance when we take delivery in January, so $71 million there. There's a sequence of modeling. I don't have the exact modeling, but we've ordered the regasification kit. I don't have the stage payments in front of me, Theresa, but our ever helpful IR lead, Craig Hicks, will help everyone with their model on that point. As I said, the final payments will be at sail away in 2028, so we're pretty excited about it.
There will be $70 million at the outset, $8 million later. But again, that 230 number is inclusive of the $79 million. We think we're getting a lot of bang for the buck. Look forward to it. We've always said five to seven build multiple, lower if integrated, higher if not, but we'll see. She's going to be well-suited for an integrated project if we can.
Okay.
That relique is a game changer that can impact your economics on your fuel that you're selling rather than burning the LNG by, call it, $10 million a year. So it really makes a difference in what the profitability of that asset can be.
Understood. Under this more efficient engineering framework with the relique on the vessel, as you work to commercialize the Pat Cam, what types of counterparty contract structures and/or geographies are generating the most interest at this juncture? If you could wave a magic wand, Steven, what would the ideal commercial outcome look like for this asset?
Well, it's no secret we like the movement to integrated projects. We think our balance sheet, we talked about our low leverage, 1.9x. Our balance sheet, it allows us to go have sensible discussions and buy the LNG we need for an integrated deal. We think that is a commercial advantage for us. We like the balance that we have that has given us that balance sheet as we continue to grow through that cadence milestones we talked about through 2028. But we're not going to be hidebound. If you got a really good offtaker and they want to go for a more conventional capacity or capital leasing type framework, we will evaluate that. I can tell you that, I've been around the company one way or another for 19 years.
When we were negotiating with Colombia, we had one deal team in Houston and another in a different hemisphere negotiating simultaneously, and we ended up liking the Colombia deal better. I don't remember that ever happening in the past. That's a function about what the supply-demand tension and the asset class looks like right now. Ultimately, it's about making good choices with what's in front of you, and while we have a bias, we'll continue to evaluate what makes the most sense for us.
Fair enough. Then on the Shenandoah, can you provide an update on the conversion opportunity here? With the Pat Cam underway, how are you thinking about the likelihood of moving forward with multiple conversion candidates at the same time?
What's interesting, isn't it, because we do have this tight asset class. It's not changing with any kind of speed whatsoever. We've been very measured, but we still bet on ourselves, and those bets have been paying off massively over the past few years, first with the Sequoia into Brazil, and then with Acadia. We'll continue to make those bets. By the way, yes, we geeked out about the Pat Cam . It's not a knock on Shenandoah. Very capable ship. She's providing useful work. She's making good money for us on the Atlantic Basin deliveries and other tasks. I think David Liner, our COO, on the earnings call hinted, don't be surprised if we do a conversion for a floating storage unit instead of an FSRU. We're very definitely pursuing some opportunities where that would make sense.
I'm putting some popcorn out for you guys so nobody's going to be surprised if you hear one of those announcements. But she's a capable ship. By now, some of you guys live and work in Boston, so you look out your window and you see the Shenandoah from time to time at Everett. She is making those milk runs, and if we do deploy her somewhere else, we'll have to find another asset that is capable of [limboing] under those Boston bridges. We'll still have to infill for her. But yeah, we're going to do more. The question is, and we can walk and chew gum, and we can execute multiple projects, Theresa, but we should very quickly and almost immediately be thinking about what is it that we want to deliver to the market in 2029.
Okay. Speaking of that relatively tight market with a finite amount of assets, the Express recontracting provided a 35% step-up in EBITDA versus the prior contract. From your commercial discussions, how would you characterize the current supply-demand balance for FSRUs more broadly, and what kind of trends are you seeing across the opportunity set today?
Well, I didn't realize I touched on that too soon, didn't I?
No.
No, it's changing. Really, everything that's being under construction or under conversion right now is dedicated for a project. The Pat Cam is going to be out there and be a free agent and be the best ship on the water in 2028. I don't. Given the time to market on these, you're very quickly running out of time to impact supply-demand balance before 2029, 2030. Sometimes the yards are even offering 2030 already for new buildings. By the way, the discussions about conversions, it's not a knock on new buildings. I love new buildings. You can easily take a 50-year useful life if you make a few tweaks to those designs. Just from market cycle, there's a lot to be said to having an asset like that. We may place another order for a new building.
If you're a shipyard and you're listening to this webcast, I would encourage you to sharpen your pencil if you would like us to get off high center and do that. It's useful to use these talks.
Absolutely. Calling all shipyards out there. Maybe turning to the Caribbean, how has the Jamaica acquisition strengthened Excelerate's ability to pursue additional LNG and power infrastructure opportunities across the region, in your opinion?
It is a bit of a game changer because it handed us a platform, an integrated LNG terminal, two import terminals, power plant. From the very beginning, I've said I view that FSRU in Kingston as a tank farm, and the ability to load full cargoes in Texas or Louisiana, float them over, and then break bulk from them. Our team that live in Miami, I'm like, "It's the American Airlines model." That FSRU is the Miami Airport. You take passengers in bulk and you break them into smaller parcel size and put them on smaller planes and deliver them around the Caribbean. We've done some of our first small-scale deliveries from Jamaica to other points within the Caribbean. We're busy proving our bona fides, our capabilities, our reliability in doing so. But those are just the first, which we then hope to turn into longer-term facilities.
But again, with the hint on FSUs, we're going to deploy more capital around the Caribbean and take advantage of that platform. Those could be FSUs, it could be small-scale assets, it could be other smaller import terminals around the Caribbean. But there's more CapEx to deploy around the Caribbean. I'm still excited about that as a platform, Theresa.
Okay. As you kind of prove yourself in the region and pave the way for incremental opportunities, my next question was going to be about where you see the most attractive options for capital deployment across the Caribbeans and Latin America, and you kind of answered that. Well, I wanted to ask you about the size and scale of the opportunity set and the cadence of investment, if you will.
Yeah. It's significant. An FSU is going to be taking an older LNG carrier and modifying it, and then presumably, you're going to be feeding that to other infra onshore. So those are smaller bits. Smaller Montego Bays can be in the $30 million-$50 million range. There are good size opportunities to deploy CapEx across the region, and it's not just in adding these small-scale vessels for the break bulk. There will be other opportunities for pull-through demands. We're looking at those. Pretty excited about Colombia. It's a great, robust market. I don't know how many times we go to countries where people say, "But that's an energy place," but everybody's energy markets are complex.
There are always parts of it, or there are always commodities that you need, and Colombia does need the gas now, and we look forward to being an important part of that for some time.
Okay. Very clear. Beyond the Caribbean, beyond Iraq, where do you see the largest opportunities for incremental growth across the EM markets? What characteristics make a country particularly attractive? And to your earlier point of warming to the integrated deals, if they make economic sense. From an LNG to power and FSRU deployment perspective, where do you see the neediest and most visible areas of growth?
Well, there's a reason I'm flying to Gastech in Bangkok, and it's not because I like sleeping on airplanes. There is still a lot to be done there. But look, we're going to Cartagena. Similarly, we got five of our assets kind of stuck in Waltham, Atlantic Basin. Not stuck, I mean deployed. We have an amazing geographic diversity around the world. We like it. We think that's important. We think it's a differentiator. Done a lot of talking about the Caribbean because it's almost a set piece opportunity with a lot of interconnection within it. But in general, we love all our children equally around the world. We want to be reliable partners for sovereigns, for NOCs, for whoever is relying upon us to keep the lights on. And we're going to keep doing that everywhere and trying to maintain that global diversity of mix.
What are you looking for? We like markets that need nat gas. And I really think have always encouraged our team to think about the market, not just the project. Like, how sticky is the market? But, ideally you want these markets that maybe have had a decline curve in domestic gas. They've got installed infra, it makes it easier to scale quickly. Those are sort of, they're not unicorns, but when you see those, you really like them. But you've never really seen us pursue an isolated gas-to-power project on some lonely coastline somewhere. It's usually been places that have connectivity throughout their country or regionally, and a deficit, more expensive liquid fuels you can replace. Things that will mean that you are critical and that there's an economic reason for them to preserve the relationship. We're looking for all of that.
Again, we won't. I love birds in the hand.
Fair enough. Last question from me. With this ample opportunity set ahead of you in terms of organic growth across multiple regions, how are you prioritizing capital allocation more broadly across growth projects, balance sheet management, and sustained returns to shareholders?
I think we are fortunate in that we've not had to choose one over the others. I mean, the priority's always going to be good growth projects, first and foremost. But I think we've shown we've got so much capacity. We've, as I've mentioned, 1.9x leverage. I think it's $452 million of cash on hand, undrawn, $500 million revolver. We've got the capacity. We were looking at these same stairsteps that we started our conversation with. That gave us the confidence to increase the dividend by 13% this year. We've communicated low double-digit increases through 2028 to The Street. Feel great about that. We've also, from time to time, done opportunistic share repos.
I think what we've shown is we've got the capacity to pull all three levers, but the growth is what drives these great cash flows, give us this balance sheet, which allow us to pull the other levers as well. At this point, it's an all of the above strategy, which I think we've proved, but with the bias, as always, to growth. I mean, given the TAM that we have, it has to be.
Yes, and we look forward to the execution. Thank you very much, Steven, as always.
Yeah. Thank you.