NextDecade Corporation

Good morning. Welcome to Next Decade Corporation's fourth quarter 2025 investor call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow management's prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. To ask a question, you may press star one on your phone. To withdraw your question, please press star two. As a reminder, this conference is being recorded. I would now like to turn the call over to Megan Light, Next Decade's Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to Next Decade's fourth quarter 2025 investor update call and webcast. The slide presentation and access to the webcast for today's call are available on our website at www.next-decade.com. Today I am joined by Matt Schatzman, Next Decade's Chairman and Chief Executive Officer, and Mike Mott, Next Decade's Interim Chief Financial Officer. Before we begin, I would like to remind listeners that discussion on this call, including answers to your questions, contains forward-looking statements within the meaning of U.S. federal securities law. These statements have been based on assumptions and analysis made by Next Decade in light of current expectations, perceptions of historical trends, current conditions, and projections about future events and trends. Although Next Decade believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that the expectations will prove to be correct. Next Decade's actual results can differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Next Decade's periodic reports that are filed with and available from the Securities and Exchange Commission. In addition, discussion on this call includes references to certain non-GAAP financial measures, such as adjusted EBITDA and distributable cash flow. A definition of an additional information regarding these measures can be found in the appendix to our presentation. And now, I will turn the call over to Matt Schatzman, next decade's chairman and chief executive officer.

Thank you, Megan, and good morning, everyone. Thank you for joining us today. 2025 was another transformational year for next decade. We achieved milestones across multiple facets of the business, from construction and development to commercial and financial. Last year, we executed five 20-year LNG sale and purchase agreements, totaling 7.2 million tons per annum, with Total Energies, Ramco, Jera, EQT, and ConocoPhillips. These agreements, along with the 1.9 million ton per annum SPA executed with ADNOC in 2024, completed the commercialization of Trans 4 and 5 at strong LNG prices. across all 9.1 million tons per annum of SPAs executed for Trains 4 and 5, our fixed liquefaction fees total approximately $1.2 billion annually before escalation for inflation. We achieved positive final investment decisions or FIDs on Trains 4 and 5 in September and October respectively, bringing us to 30 million tons per annum of LNG production capacity under construction at the Rio Grande LNG facility. We fully funded each train and FID with approximately 60% debt and 40% equity and we fully funded next decade's equity commitments using a back leveraging approach that enabled us to secure funding with no material impact to common shares outstanding. A creative and unique approach that we're proud of as it creates a bridge to an efficient steady state capital structure without materially impacting our common shares outstanding. Next decade has an initial economic interest of 40% in train four and 50% in train five. Our economic interest increased to 60% and 70% respectively once our financial partners achieve a certain return on their investments in each train. Throughout 2025, we also continue to progress the construction of phase one safely, on budget, and ahead of the guaranteed substantial completion days in partnership with Bechtel. Bechtel has an unmatched track record of LNG execution on the U.S. Gulf Coast, and we expect our trains at the Rio Grande LNG facility to continue the streak of strong execution. As of January 2026, Trains 1 and 2 are almost 65% complete, and Train 3 is almost 40% complete. We have a high level of confidence in our early volume projections, and based on Bechtel's recent progress, we may have additional early volumes to sell. Michael discussed our volume projections in more detail with our guidance slides. As construction progresses, so do our operational readiness initiatives. We began a company-wide operational readiness program in early 2024. For the past two years, we've been diligently working to put people, processes, and technologies in place to ensure a safe, efficient, and effective transition to commissioning and operations and to position next decade for operational excellence. We've also been advancing our natural gas supply and transportation strategy and onboarding operational staff and back office personnel to support operations. Finally, early last year, we outlined our development plans for trains six through eight at the Rio Grande LNG facility. We initiated the pre-filing process with FERC for train 6 and a third berth in November and we plan to file a full application with FERC for this expansion in mid-2026. Our ultimate development goal at the Rio Grande LNG facility is to double our capacity from 30 million tons per annum to 60 million tons per annum or 10 trains. Our key priorities for 2026 are focused on maximizing the value of next decade and we've made meaningful progress toward our goals in the first two months of the year. First, one of our highest priorities is progressing construction at the Rio Grande LNG facility safely, on budget, and ahead of schedule. Ensuring our employees and Bechtels get home safely every day is of prime importance. We achieved excellent safety metrics in 2025 with a total recordable incident rate, or TRIR, of 0.22, and we in Bechtel are focused on maintaining a low TRIR throughout the construction of the Rio Grande LNG facility. Bechtel has shown impressive performance at the site, progressing construction of phase one ahead of the guaranteed substantial completion dates, while achieving high safety standards and working within our project budget. Now that trains four and five are under construction, we look to build upon the high quality work that has been done thus far with phase one. Second, we will continue to prepare our organization to begin commissioning activities at the facility this year. First LNG production in the first half of 2027. and transitioning train one to operations later in 2027. We are onboarding experienced, highly skilled team members, implementing systems and processes across the organization and ensuring we're in place to support a smooth transition into operations. The work we're doing now and later this year will position us for operational excellence. Next, we are managing our near-term exposure to LNG market margins through the sale of projected early LNG cargoes. Earlier this year, we began marketing early cargos projected to be produced prior to the commencement of our long-term SPAs. Year-to-date, we have sold over 175 trillion BTUs on a free-on-board or FOB basis with fixed liquefaction fees that are expected to achieve margins calculated as the FOB LNG sales price, less our expected cost of natural gas feedstock and fuel of over $3 per MBTU. throughout this year and early next year, we expect to sell additional early volumes as we increase our visibility of expected early LNG production and gain assurance on timing from Bechtel. Our final key priority for this year is advancing the development and permitting of trains six through eight. We're bullish about the long-term LNG market and the need for incremental LNG supply starting in the 2030s. In addition, we expect the permitting climate under the current administration to foster faster permit approval, which could allow us to FID train six as early as the second half of next year, subject to commercialization, EPC contracting, and financing. One of our key priorities is progressing construction at the Rio Grande LNG facility safely, on budget, and on or ahead of schedule. Phase 1 progressed significantly during 2025, and as of January 2026, Trains 1 and 2 are close to 65% complete, and Train 3 is nearly 40% complete. Train 4, which achieved FID in September of 2025, is 7.8% complete, and Train 5, which achieved FID in October 2025, is 3.3% complete. Since our last update, Train 1 structural steel and equipment installation has become substantially complete. Early electrical commissioning of Train 1 is underway, along with ongoing piping installation and testing, cable pulling, and the installation of main compressors. Additionally, the marine loading and tug bursts are advancing with civil and topside construction, including Berth 1 loading arm installation. Construction activities are also continuing to progress for Trains 2 and 3 with continued structural steel erection, piping fabrication, rebar installation, and equipment setting. Progress on Train 4 since FID has been focused primarily on engineering drawings and issuing purchase requisitions for key equipment, and Bechtel is advancing soil stabilization and foundations in the Train 4 area. Progress on Train 5 since FID has been focused primarily on issuing purchase requisitions for key equipment, and the Train 5 area is in early site preparation. Phase 1 continues to track ahead of the guaranteed substantial completion dates, giving us very strong confidence in our projections of early LNG production volumes. We expect first LNG production from Train 1 in the first half of 2027. I'm incredibly proud of the construction team and the work they have done at the site alongside Bechtel. Our construction team and our operations team will continue to partner closely with Bechtel this year in support of safe construction and a safe, effective, efficient transition to commissioning and operations. Our ultimate development goal at the Rio Grande LNG facility is to double our capacity to 60 million tons per annum, or 10 liquefaction trains. Toward that end, we're continuing to advance the development and permitting of trains six through eight. Our plan is to design once and build many. and we expect these trains to benefit from utilizing our established Trains 1-5 design and technologies which we expect will enable us to accelerate the design and construction of our additional expansion capacity at the Rio Grande LNG site. Train 6 is being developed adjacent to Train 5 and inside the existing levee at Rio Grande LNG in an area that is currently being used as an equipment lay down area and on-site concrete batch plant. We initiated the pre-filing process with FERC in November of 2025 for Train 6 and a third birth and we expect to follow full application mid this year. We expect the Train 6 permitting process to be relatively easy and straightforward because Train 6 is identical in design to Trains 1 through 5, will be located inside the existing levy and was initially contemplated within our original design footprint at the site. The current administration has shown strong support for natural gas infrastructure and we believe it is possible we could receive the permit for Train 6 as early as mid-2027. We begin early discussions with counterparties for Train 6. We're seeing strong interest in the market for incremental LNG in the 2030s and beyond, which is the timeline when we estimate Train 6 to be operational, depending on the timing of commercialization, EPC contracting, and financing. We continue to believe the market is underestimating global natural gas demand growth in the 2030s and that global gas demand growth will continue to be bolstered by fueling economic growth in developing countries, supporting mass industrialization, and feeding growing power demand. Prioritization of energy security around the world also supports global gas demand growth, and natural gas is emerging as the clear winner in power generation for data centers and other AI-driven applications. We also expect recent pressure or near-term LNG prices to be a net positive for the industry as we predict it will spur additional near-term demand for natural gas in price-sensitive regions, which will create long-term demand as additional natural gas infrastructure is built and utilized. The commercial environment for long-term contracting remains strong, and we're seeing indications from many potential counterparties that the world is going to be short-gassing LNG in the early 2030s, which puts us in a great position as we seek to commercialize trains 6 and later trains 7 and 8. We're continuing to evaluate the location of trains 7 and 8 on either the east or west side of the Rio Grande LNG facility site. The location that is not used for trains 7 and 8 is expected to be used for future trains 9 and 10. We expect to advance the development of Trains 7 and 8 this year and maintain a goal of permitting them under the current administration. We currently have full ownership of Trains 6 through 8, and we believe these trains could contribute significantly to the future next decade distributable cash flows across a wide range of financing scenarios. This structure and financing options with the goal of maximizing distributable cash flow on a per share basis. Now I'd like to turn it over to Mike to discuss our recent financial highlights, an update on early volumes and cash flows, and additional guidance pricing scenarios. Mike? Thanks, Matt.