NextDecade Corporation

Good morning and welcome to the next Decade Corporation 2Q2026 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 you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. And now, I would like to turn the call over to Megan Light, Next Decade's Vice President of Investor Relations.

Thank you, and good morning, everyone. Welcome to Next Decade's second quarter 2026 Investor Update Call-In Webcast. The Friday presentation and access to the webcast for today's call are available on our website at www.next-decade.com. Today, I am joined by Matt Schatzman, Next Decade's Chairman and Chief Executive Officer, and John Zuzlik, Next Decade's Chief Financial Officer. Before we begin, I would like to remind listeners that discussion on this call, including answers to your questions, contains forward-looking statements within the meaning of U.S. federal security laws. 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. The definition of and additional information regarding these measures can be found in the appendix for 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. First, I'd like to introduce our new Chief Financial Officer, John Zuclick, who joined the company earlier this month. John was previously the Chief Financial Officer at Sitco, where he led the finance organization and was responsible for setting and executing financial strategies, recapitalizing the company, building functions to strengthen forecasting, governance, and decision support. John brings significant expertise to NextDecade after 30 years in the energy industry. We're very happy to have him here next decade, an experienced strategic and operational leader who will help us transform from an LNG development company to an LNG operating company. Transitioning to become a safe and reliable LNG operating company is one of our highest company-wide priorities in 2026. We're making great progress toward this goal as Rio Grande LNG Phase 1 construction continues to advance safely, efficiently, and ahead of schedule toward first LNG production. In May, We safely energized the main substation at the site, and in June, we surmounted over 100 operational employees to Bechtel in preparation for first LNG production. We continue to expect first gas into the facility later this year, and first LNG production from Train 1 in the first half of 2027. On our last call, we told you that we're tracking ahead of schedule, ahead of the schedule reflected in our production guidance, and that remains true today. As we continue to progress toward first LNG and get additional visibility into the production schedule, we will continue to evaluate opportunities to sell uncontracted volumes, and we expect to be able to narrow our forecast window for first LNG. I'd also like to thank the entire Next Decade team for their hard work and continued diligence in preparing for commissioning and startup across the organization. We have a lot of work to do, but I have no doubt we're placing ourselves in a strong position for a safe and effective transition to an LNG operating company. During the second quarter, we also made measurable progress on one of our financial goals for the year by turning out a significant portion of our Phase 1 bank facility debt. John will discuss these transactions in more detail later in the call. In May, we filed a formal FERC application for Train 6, and yesterday, we were notified by FERC that the final environmental impact statement will be issued by June 25, 2027. We believe that Train 6 is one of the most economically-advantaged ground-field LNG expansions in the world, and we expect to capitalize on our strong demand for LNG to underpin Train 6 and expand our capacity to deliver secure, reliable, and affordable LNG to customers around the world. Now I'd like to give some additional color on what's happening at the site as we progress towards first LNG production. As of June 2026, Trains 1 and 2 were 74% complete, with engineering and procurement nearing completion. Construction at almost 60% and the start of commission. As of June, Train 3 was over 50% complete. Train 4 was 15.5% complete and Train 5 was 9.4% complete. We have over 6,000 workers on site daily and Bechtel is doing an outstanding job advancing construction while maintaining exceptional safety standards and performance. Train 1 continues to progress positively and all major equipment has been set. We safely energized the main substation at the site in May with 138 kV power and we seconded over 100 operational employees to Bechtel in June. These are all major achievements ahead of first energy production. Construction beyond Train 1 is also progressing safely, on budget, and ahead of schedule. Train 2 major equipment installation is underway and the second compressor string and turbine were set in July. Train 3 major equipment installation has also started including the first compressor string. Welding of the inner tanks continues to progress for Tanks 1 and 2 and Tank 1 pipe installation is underway. The Train 4 soil stabilization process was completed recently and foundation pours began for the main cryogenic rack. The Train 5 soil stabilization process also began this month and Tank 3 piling work is underway. Construction of the Bay Runner pipeline continues to be on track for a third quarter 2026 in service. Significant progress has been made on the inlet gas facilities, and the hot tap to valley crossing pipeline was completed. Across the site, construction of permanent buildings is nearing completion, dredging activities for the burst and the turning basin are substantially complete, and our channel deepening project is complete. Spectral is continuing to track ahead of what we have shown in our early volume guidance, giving us some buffer for unexpected events during commissioning and startup, while still achieving the production guidance we have provided. We achieved major milestones in development of Train 6 when we filed the formal FERC application in May, and yesterday we received FERC's Schedule of Environmental Review, which states that we will receive the final EIS on June 25, 2027. This schedule supports a positive final investment decision, or FID, on Train 6 in the second half of 2027, contingent upon obtaining sufficient commercial support and financing. Additionally, we submitted our application to the Department of Energy for FTA and non-FTA export authorizations for Train 6 in June. Our goal is to fully commercialize Train 6 and to finalize an EPC contract with Bechtel on a timeline that supports FID in the second half of next year. We're also focused on ensuring that critical long-lead equipment is available when needed. In support of this objective, during the second quarter, we executed a reservation agreement with Baker Hughes to secure the supply of the main refrigeration compressors for Train 6. Commercialization of Train 6 continues to progress, and we're in active discussions for long-term SPAs with a number of high-credit-quality counterparts. The commercial environment for long-term LNG contracting remains strong, and the underlying themes driving demand for incremental LNG supplies in the early 2030s have not changed. Fueling economic growth and industrialization in developing countries, supporting growing power demand, and energy security with energy security and supply diversification Thank you for joining us today. will meaningfully increase future next decade distributable cash flow across a wide range of financing scenarios. And we're focused on financing train six in a way that both enables us to achieve our goals of maintaining full ownership of train six and maximizing distributable cash flow on a per share basis. Since our last call, global LNG market dynamics continue to be impacted significantly because of the Iran conflict. Whether stability returns soon or it takes longer to materialize, the impact on the LNG market has been material. The ongoing closure of the Strait of Hormuz has taken almost 20% of the world's LNG supply off the market. Each month that Ras Plafond and Das Island remain shut in results in a loss of approximately 7 million tons of LNG. We now expect the restart of these facilities, once it is safe and viable to do so, will take many months. The two trains that were damaged at Ras Plafond will take years to repair and the expansion capacity, which has been under construction, could be delayed by a year or more depending on how long hostilities continue in the region. Before the Iran conflict began, the LNG market was concerned the impending supply wave of LNG might cause a supply overhang. The current uncertainty around the return of LNG supplies from Qatar and the UAE, the amount of time it will take to repair the Qatar trains damaged by the Iranian attacks, and the delays to expansion projects currently under construction in the region will potentially remove additional material amounts of LNG supply from the global market through 2030 or longer. At a minimum, the current expected range of LNG supply scenarios, including the potential for a resolution of the situation in the Middle East this year, points to LNG supply growth through 2030 in line with are below the market's 20-year average growth rate. Based on our updated LNG supply forecast, we expect spot LNG prices to remain elevated through at least 2030. One very effective way for buyers around the world to acquire LNG at attractive prices is through long-term supply. U.S. LNG SBAs indexed to Henry Hub are particularly attractive due to the diversified Olympic natural gas resource base in the U.S., which effectively shelters buyers from spikes in the price of LNG and natural gas in other parts of the world. Henry Hub pricing has been relatively flat to down since the Iran conflict began, and customers with long-term contracts out of the U.S. that are indexed to Henry Hub are currently able to deliver into Europe or Asia at levels below $8 per MMBTU. We expect buyers to increasingly value long-term contracts out of the U.S., which will spur additional capacity growth in the markets. and with our trains 6 through 8 under development, we're in an excellent position to provide a meaningful amount of additional capacity to meet that demand. Before and after the Iran conflict began, we've received strong interest for long-term supplies out of train 6. And now I'd like to turn the call over to next decade's new chief financial officer, John Zuklik, to discuss recent financial transactions and highlights.

Thanks, Matt, and thanks to everyone on the line for being with us today. I'm happy to be here at NextDecade and look forward to start meeting with the investment community soon. As Matt said, we recently completed two financing transactions that turned out a significant portion of our outstanding Phase 1 project-level bank facility debt. These transactions diversified our debt maturity stack and freed up bank capacity for financing Train 6 and additional expansion capacity beyond Train 6. In June, we entered into a credit agreement for a $1 billion term loan at a Phase 1 project holding company level, which bears interest at 7.05% and matures in June 2033. Interest on this term loan is payable in cash or in kind at our election until the first interest payment after June 2029. Proceeds from this term loan were used to reduce outstanding borrowings under the Phase 1 bank facilities. Migrating this portion of Phase 1 bank debt up to the Phase 1 holding company enabled us to achieve investment grade ratings for our subsequent 144A issuance. In July, Rio Grande LNG LLC, our phase one operating and financing entity, issued a $3.5 billion senior secured notes in a 144A offering. These notes, which are rated triple B minus by S&P and Fitch, were issued in four tranches. $1 billion of 5.25% senior secured notes due 2031 $500 million of 5.5% senior secured notes due 2034, $1.25 billion of 5.75% senior secured notes due 2036, and $750 million of 6.15% senior secured notes due 2041. I'd like to thank the Treasury and Finance team for excellent execution of our inaugural 144A issuance, which was no small lift. We built an initial order book of over $14 billion, and the transaction price is a tight end of our anticipated range. In conjunction with these capital raises, we unwound the portion of our interest rate swaps associated with the bank debt we retired, resulting in a $109 billion settlement receipt in July. We utilized the total proceeds of these three transactions, net of fees, to pay down approximately $4.6 billion of Phase I bank facility borrowings. We continue to expect that we will refinance the full bank facility balances at each project level entity ahead of the guaranteed substantial completion of the respective project and will continue to be opportunistic based on market conditions. And now I'd like to cover a couple of items from our second quarter 10Q. We took delivery of two LNG vessels and their respective charters began during the second quarter, including the new build Clean Texas, the first of three new builds we have chartered to service our long-term Phase 1 DES contract. We currently have three LNG vessels under charter and expect to take delivery of additional vessels over the coming course of this year ahead of first LNG production. We also subcharter some shipping capacity to third parties to better match our available capacity to our needed capacity. We will continue to charter and subcharter vessels over time as needed to better match our available shipping capacity to our anticipated needs. Vessel charters are accounted for as financed leases and are financials. Pursuant to lease accounting standards, the lease vessels are recorded as assets and lease liabilities on our balance sheet and are included primarily in depreciation and amortization and interest expense on our statements of operations. Income from subterranean vessels is included as an offset to operating and maintenance expense on our statements of operations. The second item I'd like to highlight from the second quarter financials is that we began breaking out our operating and maintenance expense this quarter as we approach first LNG production. In operating and maintenance expense, we have included costs related to the site and preoperational readiness activities. Once operations begin, this will also include costs directly attributable to revenue-generating activities. Year-to-date 2026, the costs included in operating and maintenance expense consists primarily of labor, property taxes, and a site lease. General and administrative expense continues to include costs relating to corporate management, governance, enterprise-wide support, and other support functions that are not directly attributable to operating assets or activities. As a reminder, our financials consolidate the Rio Grande LNG project entities and total G&A expense includes both next decade level overhead as well as general and administrative expense for Rio Grande LNG. We applied this cost splitting methodology retrospectively across our financials and we expect operating and maintenance expense to increase throughout this year as we approach commissioning and operations. And with that, we'll now turn the call over for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question, one follow-up. One moment while we pull for questions. Our first question is from Olivia Foster with Goldman Sachs. Please proceed with your question.

Hi, good morning. Thank you for taking our questions. I wanted to start on operations. With first gas expected at Rio Grande in the second half of this year and first LNG expected in the first half of 2027, could you walk through the commissioning milestones we should be watching over the next two quarters What are critical path items we need to see completed before we can introduce feed gas to the site and then produce first LNG thereafter? And then lastly, when should we expect updated guidance to narrow around these operational milestones? Thank you.

Thank you, Olivia, and thanks for the question. There's a list of things, obviously, that are going to happen prior to us introducing first gas into the facility and starting to produce LNG. I think some of the major milestones that we'll highlight when they occur are obviously the completion of the LNG tank, and that should be coming here before probably the end of the year. The completion of the pipeline facilities, which we expect to have completed by this quarter with Bay Runner. As we said in our comments, the interconnect, the hot tap with VCP is already in place. So we have that redundancy but Bay Runner is our primary feed pipeline and that's expected to be complete here in short order. There's a lot more obviously that's going on at the site. We're obviously painting and hydrostatic testing and putting in installation and all that work is proceeding as we've already said as planned or ahead of schedule and we do expect train one Assuming no major difficulties during the commissioning process to be ahead of the schedule, it's even reflected in the volumes that we've got out in the market today. As far as updating the guidance around when we're going to start producing LNG, I'm hopeful that we'll be able to provide that in the fourth quarter. We should know a lot more over the course of the next few months. And that will be – we'll start to introduce gas into the facility, as you mentioned, and we mentioned in our comments. This year, we're still working with Bechtel on exactly the procedure for the commissioning and what order we want to do things. So it shouldn't come as a shock if we don't introduce gas really soon, that that's somehow a message that things are slowing down. There's a couple different ways to do it. You can commission the warming, the facility, commission the flares first, to be very small, introduce the natural gas, or you can start commissioning the turbines first, and do the flares simultaneously or around the same time. So I wouldn't be focused too much on the filings as far as how much or when we start introducing gas. These are things that we're working through with Bechtel to come up with the most efficient way to commission the facility and do it as quickly and as safely as possible. Later this year, I expect to be able to provide the market Some more narrowed guidance as to the exact timing of when the LNG is going to be, is when we're going to start producing LNG. And then I think as the commissioning goes on, Olivia, and we build confidence in the facility and the operations, we'll be able to update the guidance on the volumes as well.

That's clear. Thanks for the color. For my follow-up question, I wanted to ask on the geopolitical environment. With the ongoing conflict in the Middle East and the associated global LNG supply disruptions, can you describe any shifts you've seen in buyer activity in the market? How has this backdrop impacted your commercial discussions for Train 6? And lastly, how should we think about next decade's ability to announce new long-term SPAs? in support of a potential Trade 6 FID in the coming months and quarters. Thank you.

You know, I think the last earnings call, we're all very concerned about what's going on in the Middle East today and what's going on in Ukraine. There's a lot of negative things happening with respect to kinetic activities that, you know, people are dying around the world right now, especially in the Middle East and in the Eastern Bloc. and we'd like to see all that go away. From our perspective, from Next Decade's perspective in the long-term LNG market, clearly the volatility that this has caused and the upward price pressure in the LNG market is actually helping us. So the short-term spot prices will benefit Next Decade if they persist and we expect that they will. Our early cargoes and the cash flow will generate from Train 1 startup essentially all the way through Train 5, DSCD. And they're also obviously putting a lot of emphasis from suppliers on supply reliability. And the lack of reliability from supplies from the Persian Gulf has pretty much heightened the awareness of a lot of those buyers to focus on other supply sources. especially U.S. where we have become a very reliable and for all intents and purposes low-cost supplier of LNG when you look at it on a long-term SPA basis, long-term contracting SPA basis. So as I said in my comments, Olivia, we were marketing this before the Iran conflict began and it was going extremely well and we've been and we've been continuing to market and I can tell you that the level of interest has only increased in the past quarter as this conflict has persisted and that there's more competition for the volumes that we have for sale out of train six, seven and eight. As far as timing of SPAs, I think the market should expect to see some activities there over the course of the next six months. How much we do is, you know, we'll determine based on how fast we want to move in this area. Clearly, if things get more challenging in the world and prices continue to remain elevated or go higher, that may provide some uplift in contract pricing, and we'll think through that. But at the end of the day, the goal is to sequence our SPA contracting VPC contracting, financing activities around Train 6 in a way that synchronizes to a second half of next year FID. And the news yesterday from the FERC I think shouldn't be missed. That was an unknown. I think we had told the market we expected the FERC to move rather quickly on permitting. All signs pointed in that direction. and I think that's been confirmed with yesterday's schedule from FERC saying that they're going to review through an EIS, by the way. So instead of EA, it's the more complete environmental review. They're going to do that and provide a final EIS in June of next year. And that supports what we've been saying to the market in FID of train six and second half of next year. We expect the FERC order to come out Soon after that, it's not going to take many, many months to do that. We expect this to go very smoothly. And we'll provide the market more updates as we receive permits, for example, from some of the agencies that contribute to the permit here as soon as we can. So we're very, very positive there. Trains 7 and 8, we are working diligently to try to get that pre-filed before the end of the year. and the hope is that we'll see a similar type of timeframe from the FERC on 7 and 8 so we can get that done by the end of this year, possibly get the formal application filed by second quarter next year. Maybe we're looking at an FDIS the following June and we're looking at FID and train 7 and 8 a year after train 6. All that's basically you know what we've been saying for quite some time and it looks like everything's lining up to allow us to achieve those goals.

Thank you. Our next question is from Sunil Sival with Seaport Global Securities. Please proceed with your question.

Yeah, hi, good morning and thanks for all the color on the call. I was curious, you know, in terms of your gas supply contracts, if you could provide us some update on that. Obviously, you know, U.S. gas prices, especially in some basins, have seen a lot of volatility. And if you could talk about, you know, how does it impact your contracting strategy on the gas sourcing side?

Thanks for the question. As everyone I think is aware, we are located in South Texas, and we'll be buying our gas primarily at the Agua Dulce hub. That gas today prices off of the Houston Ship Channel Index. There isn't a first-of-the-month index at Agua Dulce yet. There's a daily index, but not a first-of-the-month index. That may change over time. In fact, I would expect that it would. The gas that is sold at Agua Dulce, and there is a market there that buys. Janier's Corpus Christi facility was connected to the hub. Certain markets in Mexico are connected to that hub as well. Today, that market price is a ship channel market price, basically. So when you're looking at our gas supply, I would focus your attention on the Houston Ship Channel Index. When you look at the Houston Ship Channel Index today, it trades... at a substantial discount to the Henry Hub, which is how we've priced 99% of our contracts. You know, we have a small portion of our LNG in Phase 1 contracted to Brent, but everything else is priced off of Henry Hub. So we think we're in a very enviable position with respect to some of the LNG projects, especially those in Louisiana, where we expect to be able to source our gas at a discount to the Henry Hub, at least for the foreseeable future, but in our view is probably long-term. And the reason for that is due to the prolific nature of associated natural gas coming from the Permian Basin, which continues to grow, has grown in the past quarter, the past six months, and we expect will continue to grow into the coming years, and as well as from the Eagleford Basin, which we also expect is going to continue to grow over the course of the next few years.

Understood. And then seems like, you know, you will sign some more contracts to shore up your margins in the next few months as you get more clarity on the train one start. I mean, obviously, we see on screens a lot of volatility in international LNG prices, especially in the near term. I was curious, you know, How do you think about, you know, that dynamic as you kind of approach your contracting strategy? Do we, what we see on the screen, it could measure off, you know, what you're seeing in the market, especially with the market depth in terms of your ability to contract? And obviously, how should we think about that in the contract or in the context of what you've signed up so far?

Yes, so I think what you're referring to is when you look at the forward curve for TTF or JKM relative to the forward curve for Henry Hub, which is the starting point, and then of course, as I said, you look at Ship Channel and the forward curve for basis for Ship Channel versus Henry Hub, you're getting a very clear picture of what our potential margins could be for the uncontracted volumes that are still available for us to sell. Clearly, Based on where those prices are trading today, especially in 27 and 28, they are above the margins that we have guided to, which is $5 margins, which is inclusive of the cost of our gas relative to how we're selling the gas. Whether it's FOB or DES, you'd have to exclude shipping from that in order to get a margin. It is looking better. in those years than what we've guided to. As you go further out on the curve into, say, 2930, the market is backwardated. That is a bullish sign, by the way, when the markets are backwardated. And what we would say is that the liquidity, when you're thinking about this and looking at what is most likely the liquidity of that curve, clearly there's more of it in the front end of the curve than there is in the back end, and more is trading in the front end than the back end. So I would say that the value in your analysis, the value of the front end of that curve is probably extremely high and the value based on the back end is probably not as reliable. As I said in my comments and what we showed in this slide, the wave has changed. It has ebbed. It is now below. We're not looking at a wave that exceeds The average growth of supply over the last 20 years. We're looking at a growth curve now, inclusive of our project coming online during this period and other LNG coming online. We're now looking at a supply curve that is going below that average. And based on that, and I think you see this in the forward curve, because the market actually realizes this, prices have strengthened dramatically from when we came out of our guidance originally. And we would expect that sort of pricing to Maybe not at the levels that we're seeing next year or right now, but we'd expect that pricing to remain elevated, and I expect it will allow us to track definitely towards our guidance, maybe higher from time to time, which I think is very positive, and I mentioned in the previous question. In other words, the market looks good for us, and we don't really anticipate this changing anytime soon. I will add, and I think you didn't ask this question, but for context for everybody, you're seeing this in the crude oil markets right now as well. A lot of volatility every day and prices going up and down based upon kinetic activity in the Middle East. Somebody gets bombed, prices go up. Somebody talks about we're going to have peace talks and the price goes down. And this is reflected in some of the stock prices as well as we've correlated with that sort of volatility in the marketplace today. I think the way the market is trading right now, oil, maybe the way it's trading certain stocks, is not really looking at the forward and what is going to happen over the next few years. It's just pricing off of the short term. And that is, I think, wrong. We are very, very quickly approaching a wall, unfortunately, both in the crude market and the LNG market. We're running out of SPRs. SPR deliveries are slowing down. Refined products, inventories are being reduced. Remember, the Middle East has a lot of refined products as well as they export, as well as crude. And in LNG specifically, Europe is not filling storage to a level that you would normally see and running out of time to do so. Add to that The rough storage situation in the UK, as I understand, they have yet to get approval from the regulator to inject gas in rough storage. So Europe, UK is very quickly reaching a critical point where they're not going to have potentially enough supply to get through the winter next year. And if we have a cold winter, things can get much, much worse. So this is the dynamic that we're looking at in the market today, and it is not improving. And it's clear that the situation with Iran is not going to improve anytime soon. So that leads to definitely more volatility, but probably with much greater upward pressure than we're currently seeing.

Thank you. Our next question is from Wade Suki with Capital One. Please proceed with your question.

Good morning, everyone. Appreciate you all taking my question this morning. Just to maybe expand a little bit, Matt, on the previous question from Sunil, it doesn't sound like there's been much of a change. Let's call it leading edge, 20-year SPA pricing. Feel free to confirm or deny, but any color around that would be great. And then just thinking, again, more on intermediate term type contracts, I think You kind of alluded to it in your comments, but if you can give us a sense where those are kind of shaking out what's called five-year type of contracts. I assume those are sort of north of $5 today. And then how are you all thinking about sort of those intermediate type of volumes in the context of your kind of overall portfolio management?

Thanks, Wade, for the question. The contracting market, as I said, is very, very bullish right now. That said, It's not bullish enough to push a Henry Hub type contract into the $3 range. We're still somewhere definitely north of $2.50 but south of $3. Where we end up will depend on I think a couple things including the ongoing activities in the Middle East and the volatility there but also impacts of interest rates. The cost of new capacity is sensitized to Construction costs, labor costs, interest rates, because we finance these projects, and inflationary pressures could push those costs higher, could push interest rates higher, and that may, it's not just a matter of, it's not just a matter of push the cost of it, it may be something that, or new entrants that are trying to get in those, the level that they are going to be able to sell for is going to continue to increase. As you know, This is a competitive market. So you can't just go out and pick whatever price you want to sell for and say that's my price and you must take it. People have options. Typically, as I said in the past, what we've seen is new entrants who are trying to get their projects off the ground, offer the most competitive prices, take the most risk on this. We're not in that situation. We're going to make sure that we price this at a level that we believe achieves The best returns we can get for our investors. And I think that because of the efficiencies around Train 6, and I believe this will exist for Train 7 and 8, as I said in my comments, we think this is one of the most economical brownfield projects in the world today. I think that puts us in a position to be very competitive, but we do not have to discount. We will sell at market when we do it. We don't have to discount in order to try to get the customers to sign up for us, with us. So, I think y'all should still expect a range in the $250 to $3 range, 150% of Henry Hub, and yes, the market has not changed. There's plenty of buyers for that product. As far as the, and there's not a new product wave that I'm aware of that people have come up with that's financeable that works better. Benet Henry Hub, plus a fixed liquefaction fee. On the five-year front, I think what you can expect is that we're going to, as I said, the back end of this curve is not as liquid, and I don't think it's as reliable as from a pricing perspective. I don't see, other than the curve getting closer to that weighted average, excuse me, the compounding annual growth rate that we've seen for the past 20 years, That doesn't mean that we're actually going to achieve that. That's currently the forecast based on everything kind of working itself out in the Middle East. Hitting that curve requires things to start to normalize the Middle East here before the end of the year. If that continues, we're going to be below that line and prices could be much higher. So I would be wary about locking in prices on the back end of the curve because I think there's more chance that We could lose supply, then gain extra supply. But I definitely am very focused on the front of that curve. So I think the value that we're seeing in the market, even though we may be able to achieve more if we kind of just went spot on it, I think that value is starting to look very attractive. But we're not prepared to contract to that until we have more certainty around the train one, train two startup. We don't want to be short in this market. I'd rather risk Not making as much and selling it at a slightly lower price than that on a spot basis potentially than going and selling forward right now and then have some issue crop up with train one startup and end up being short in this market, which I think would be really, really bad right now.

No, I appreciate that. Thank you so much. All makes sense. Just switch gears a little bit, if I may. Just thinking about during the quarter, I think it was XRG picked off some of, I think, was it GIP's interest in trains four and five, if I'm not mistaken. I think it was relatively small. But just kind of curious how you are thinking about, you guys are thinking about maybe picking off some of these interests over time. Any color, timing, thoughts around that you could share would be great.

Thank you again.

Yeah, thanks, Wade. I mean, at this point, I don't think we're really interested in selling what we have. I'd probably like to buy more as opposed to selling. So if you're talking about picking off some of the interest to purchase, maybe you can clarify. You're not suggesting we should sell. You're saying maybe we should be buying some of these pieces that we are...

Exactly, exactly where I was going with that. At some point, you guys think about picking off some of these interests.

Yeah, look, we've got... As I've said, we've got tremendous growth opportunities to expand where we own 100% of our expansion capacity. We're going to have opportunities for de-bottlenecking, which we can do with our partners, which should be hopefully very low-cost capacity increases. And then as you point out, we do have partners in these projects that probably are not going to be long-term holds for 100% of the position for 20-plus years. and as those opportunities present themselves, we absolutely would like to look at maybe acquiring more of that capacity back and we feel like we're going to be in a great position to offer hopefully very competitive opportunities to them since we're the operator, we know the asset better than anyone else. But I think it is a good way and a good steer for some of our investors to think about a way that It's not just the train 6, 7, 8, 9, 10 and de-bottlenecking. There will be opportunities for us to acquire additional operating interest from phase one, potentially train four and train five. And it's another opportunity for next decade to continue to grow its cash flow if it makes economic sense to do so. And having someone like John around now to help us analyze that is paramount in making the right decisions for investors going forward. Thanks for the question.

Thank you. Our next question is from Craig Scheer with Toohey Brothers. Please proceed with your question.

Morning. Congratulations on the continued progress with the construction and the financings. Most of my questions have been asked. I did want to just dig in a little more on Sunil's gas supply question. Any thoughts, and this kind of feeds into financing and Train 6 FID, any thoughts about the ability to lock in some long-term feed gas at a set discount to Henry Hubb? To your point, you know, well, we don't want to get the max riding on the spot all the time on the sales. Well, similarly on the other side, if you can lock in some supply at a fixed margin that is bankable, even if that's not as profitable quarter to quarter over a number of years, could that be an opportunity to to definitively show the market, show investors, show those who would be lending for expansion that you do have better margins and you are a good credit.

So let me start with the financing aspect. The lenders don't really look, when they're sizing the debt, They don't really look at the value associated with purchasing gas at a discount to Henry Hub. And I think your point is, if you did, if you could actually lock that component in, could you get credit for that and possibly increase the size of the debt that they're willing to provide? Yes, but there's a caveat. We don't think that the lenders will provide more than 75% of the total capital required for these projects anyway. And we believe that, and we've always strived to get to that, and I hope for train six that we're able to get to 75% project level debt, and that's going to be based upon what those contracts rates are. So from a debt perspective, Greg, I think if we're able to achieve that 75% leverage without it, which is what our goal is that'll be great and therefore if we can lock in it doesn't affect how much debt we can put on at the project level but I think it does obviously lock in value and cash flow which probably could be viewed differently by investors as far as how they value the company. We have looked at this and I think it's one of the opportunities that we have being in South Texas the ability to provide producers both the Permian Basin and the Eagle Perk with the ability to buy at a percentage you know discounted percentage of Henry Hub thereby locking in their basis differential long term to the Henry Hub and also locking in our basis differential. As you'd expect at the end of the day you know it boils down to a bid offer spread and whether or not we want to lock in at whatever that discount is assumed to be because it's obviously going to be a percentage of Henry Hub so and many other producers want to lock in that basis different to long term which tends to be sensitized to royalty issues. They don't have to do this You know, they tend to go at market, especially around royalties, but I definitely think there are some out there that are interested in this, and whether or not we're going to be able to do it will be based upon, like I said, that bid offer spread. Hopefully that was clear.

Yeah, very clear. I appreciate it.

Thank you. Our last question comes from Alexander Bidwell with Weber Research. Please proceed with your question.

Good morning. I appreciate the time. So we're seeing increasing labor competition in the U.S. Gulf, driven by the current slate of projects under construction, and with the recent USFIDs likely to further stretch craft resources in the back half of the decade. For both Rio Grande's as well as other U.S. projects, what sort of knock-on impacts do you anticipate from this growing competition in terms of EPC costs, potential craft labor shortages, construction progress, etc.?

Thanks for the question. We've talked about this in the past, and I'm happy to say it hasn't changed for us. We are situated in the Rio Grande Valley, and the Rio Grande Valley has not been an area where there's been a tremendous amount of infrastructure development, where craft labor jobs were readily available. So the people that lived in that region had to travel to Corpus Christi or the Louisiana Gulf Coast or Permian Basin to find work. Bechtel has... is a direct hire model, so these are all Bechtel employees. We have not seen any issues today ramping up our activities on site. As you know, we've gone from 5,000 employees to over 6,000 employees today. We got approval to increase that and go 24-7 with FERP. We have not seen any issue. We've sent our comments for over 6,000 right now. We haven't seen, I don't think Bechtel's seen An issue ramping that up, and I think there's a reason for that. There's a lot of people in the Valley that are skilled at these jobs, and they like the idea that they can work where they live. That's the unique opportunity that Rio Grande LNG presents many of these construction workers, especially now that we have train 4 and 5 under construction, and that the company is rapidly growing. developing train 6, 7, and 8, which we expect FID second half of next year and hopefully a year after for 7 and 8. But this is an opportunity to have a construction job, be able to make a phenomenal living for the next 10 years, potentially, if we keep going out to 9 and 10 and live at home and watch your kids grow up, go home to your significant other at night. This is fairly unique. Even for our own team, our own construction team, these people have worked many, they have a lot of experience, they work on projects, they tend to be on those projects for three to four years, and then you have to let them go because you're not building anything anymore and they've got to go work on a different project. So we've pulled people from Chenier and Cameron and other LNG projects around the world. So I think this is a fairly unique situation for us. So even when there's another project that may Many FID close to us, they don't offer the same sort of construction work that a next decade's project does, where it's like, well, you can go work there for two or three years, or you can work here and get paid as much, maybe more, and do this for the next seven or eight years. Which one would you like to choose? That's not the case necessarily in Louisiana, where there's a lot of activity going on, and and there's a lot of competition and maybe the contractors aren't direct hire models either so there's a lot of folks that they subcontract out and it's very difficult for them to control the labor force. I think we're in good shape right now. That doesn't mean it won't change. It could change but from what we've seen over the past year as those activities have increased that you mentioned with other projects around the Texas-Louisiana Gulf Coast we haven't seen any issues getting what we need and keeping it.

All right. Thank you for the color there. And real quick, just wanted to take a look at the subchartering of those LMG carriers. With the current freight rates modestly elevated compared to the last couple of years, have you been able to capture any upside in the carrier market from subchartering out those assets?

Yeah, look, that's really not our focus. We're not trading these vessels. We only subchart them when we don't need them. The interesting thing about the shipping market, especially these new builds, and I've said this before, and I think it's been true for the past 20 years, is especially in Korea, these shipyards are unbelievable at how fast they can build these ships. There was always going to be a slight... A slight gap between when we receive our shifts and when we're going to need them. Obviously that gap, we believe, is closing because we're going to be earlier than what we originally expected. At least that's the current trend, as we've said. But we're not really focused on trading. What we're actually focused on is if we subcharge and making sure that whatever we do, that we get those shifts back in time to load our early cargoes and to start our long-term contracts.

Thank you. That concludes our call today. Thank you for joining and for your interest in next decade.