Excelerate Energy, Inc. Class A

Q4 2022 Earnings Conference Call


spk_0: hello everyone and welcome to the accelerate energy for caught in full year twenty twenty two earnings conference call my name is bruno and i'll be the operator of today during the presentation you can register to ask a question by pressing star followed by one on your telephone keypad i will now hand over your host hicks vice president at of investor relations please go ahead
spk_1: with you and good morning everyone yesterday afternoon we released our fourth quarter and all year twenty twenty two earnings press release along with the presentation that our president and chief executive officer stephen cobos in our chief financial officer dana armstrong will speak to this morning i would like to remind everyone that we will be making forward looking statements on let's 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'd make no obligation to update or revise them during the call logs will discuss several none get financial measures we have provided a reconciliation to the most directly comparable get financial measures at the back the presentation
spk_2: with that
spk_1: it is my pleasure to pass to call over to steven kull those thanks greg and thank you all for joining us this morning excellent energy delivered strong financial results in the fourth quarter is kept us in impressive year as we continue to demonstrate the strength of our business model approving ability to deliver consistent earnings great across market cycles gives us even more confidence in our plan to maximize value for shareholders as his past year has shown having flexible access to cleaner and more reliable energy has never been so critical
spk_3: that accelerate
spk_1: we play a unique role in delivering essential energy solutions for customers while at the same time supporting the decarbonization efforts of countries across the globe
spk_4: today
spk_1: we are well positioned to build on this momentum and capitalize on the increased demand for elementary your things play out with a recently announced twenty year lng sales and purchase agreement with venture global with the commencement of downstream gas sales in europe and with extinction of our agreement with by supply forty material progress we're making on elegy procurement and downstream gas sales the sinks well with the timing of our new build episode of water with under heavy industries
spk_3: we're currently marketing that ship as part of an integrated infrastructure offering the twenty twenty three financial guidance which we announced yesterday danish it's going to cover the some more detail that it reflects the confidence we have the business and our dahlia creation strategy
spk_1: on this morning call want to focus my remarks on our strategic great the outlook and the progress we're making on a commercial opportunities as a global energy company we are focused on enhancing energy security and accelerating the transition to a clean energy future or strategic goals that accelerate include
spk_3: operating it profitable and growing fleet of that it's or use
spk_1: rolling or existing we gasification business
spk_3: expanding or downstream gas sales and our customer base existing markets
spk_1: while leveraging or global presence to entered new markets and managing a diversified portfolio of lng supply we are executing the strategy and we're doing it and markets across or global footprint
spk_3: since twenty twenty two is clearly includes euro
spk_1: from reaching the we expect to influence the lng supply and demand balance through the end of this decade and beyond following russia's invasion of ukraine and in response to the increase focus on energy security and the adversary sorry asset class we quickly pivoted or near term commercial falcons to europe in doing so we expanded or total address will market and we'd rebalanced or customer portfolio to include finland and germany too highly rated encountered parties oh charter agreement with gas good finland commenced on october first and we deployed our efforts are you simpler to the it into on december twenty eight your rival of the vessel was an important milestone for finland as it seeks to enhance its energy security in october twenty twenty two we signed an agreement with the german government to charter our efforts are you excelsior for five years the germany charter hired commenced at the end of february twenty three with our new episode presence in europe
spk_3: we had an opportunity to expand on gas in business in the region
spk_1: for example in conjunction with the deployment of the assets are you exemplary to finland accelerate secure commissioning capacity at the end key terminal he sales and late twenty two and an early twenty three represent an important first step towards securing future das sales opportunities in finland and the baltic sea region throughout finish guess marketing entity to accelerate can help bridge the gap between the lng market and the needs of end users in the region in other parts of europe were continuing to look at additional integrated opportunities that will allow us to sell natural gas downstream of our terminals
spk_3: now let's turn to south america
spk_1: in south america accelerate currently has three about ten adversaries and operation we have to and brazil and one in argentina
spk_3: in brazil so rate has provided regasification services for touch your brows at the on a birthday terminal since twenty twelve our efforts are used to korea has been supporting or gas sales business at the be here regasification terminal since december twenty one turn to argentina exotic has reliably provided gasification services at the nl escobar terminal since twenty eleven we've also provided regasification services at the be here blanca gasp or terminal in argentina during multiple winter seasons
spk_4: dating back to two thousand eight today
spk_1: we are pleased to announce the we've secured a new seasonal agreement to provide regasification services at the be a blocker terminal our efforts are you excelsior which is currently being chartered by the german government will be placed temporarily on a suspension agreement while it is deployed to the he had walker during the argentina winter immediately after the argentine a winner susan excelsior will snap back and resume it's original charter with the german government this is going to curb in the third quarter a twenty twenty three together with germany we're being good corporate citizens by deploying the excelsior to help argentina
spk_3: argentina after all is one of the accelerates valued markets
spk_1: our actions and south america underscore or longstanding commitment to regional energy security and to meeting the changing energy needs of our customers justifiably europe dominates energy security headlines however south america is also facing significant gas supply disruptions
spk_3: the case of south america this is driven primarily by the rapid decline oblivion natural gas sales to bed brazil and argentina
spk_5: in brazil
spk_1: we are committed to partnering with touch with bras over the long term to strengthen security of supply we believe that our continued presence at the be here and go on a bar a big terminals will help ensure reliable and sustainable energy for all resilience
spk_3: meanwhile in argentina
spk_1: the ongoing support we provide the country's energy sector strengthens our leadership position and south america and this provides us with attractive development opportunities and one of the most dynamic energy markets in the world now let's turn to the asia pacific region or a pack a region where it almost every country where the coastline has plans to introduce or expand lng usage and their energy mix long term fundamentals for this region remain robust this is underpinned by rapidly growing economies large scale fuel switching to me that's right targets and in many instances swindling domestic gas reserves lng is forecast to comprise a significant portion of south and southeast asia's energy mix over the long term our preached regional grades will be driven by the development as integrated infrastructure and lng supply solutions in bangladesh lng quite simply remains an integral parts of the country's economy this is evidenced by the government's recent decision to restart spot lng purchases in fact i'm pleased that accelerate was successful and selling a spot lng cargo to catch would banquet just last week with domestic gas applied climbing rapidly lg imports need to increase over time to displace this volumes and maintain natural gas is a critical part of bangladesh's energy mix and twenty twenty three the government also plans to sign new long term lng supply agreements to secure more affordable reliable and predictable lng pricing we are continuing to dance feldman of our plan pyro project tyra has the potential to tactically double bangladesh's lng import capacity
spk_3: in addition to finalizing trump sheets with petra banquet
spk_1: our team is evaluating financing options and is in discussions with potential partners for the project a critical part of our downstream strategies to take a very deliberate and structured approach to sourcing lng supply as we gain access to new downstream gaseous markets we believe that there are benefits from having a diversified lg supply portfolio last month we took our first step towards achieving the strategic goal when we announce the execution of a twenty year elegy sales and purchase agreement where s p a with venture blood
spk_3: a top us lng export
spk_1: under the terms of the sp a accelerate will purchase point seven million tons per annum of lng supply for twenty years starting in early twenty seven this article comes from fun troop levels pacman lng face t expansion
spk_3: blackmon face to reached f id earlier this month
spk_6: this sta
spk_1: is the first long term lng supply agreement and our company's history this transformational agreement supports or plan to vertically integrate or business
spk_3: and become the virtual pipeline for the world
spk_1: i will now turned the call over to dana and she's gonna walk through our fourth quarter and full year twenty twenty two results in our outlook for twenty three
spk_7: thanks see them and good morning we are very pleased with accelerate performance and weren't corner and the four year twenty twenty our fourth quarter adapted evident darwin ninety million an increase the twelve million or up about that you could back every the previous quarter that the crenshaw any creates for getting back the next night and different hundred and it's down of a partial to their name on the cargo in condemning on a for your baiter adjusted either for twenty twenty two like dream ninety one million well about the high end of our guidance rains good for the lng hundred thousand and one and over performance and live down during the fourth quarter and compared to the prior year are definitely began with that forty million an increase of forty percent yeah my date and having a full year of gas down at the here coming on but now which is partially offset by allenby marketing and supply given a than twenty twenty one that the not real car and trying to a kid along with higher as the man did the port actually has been sent a public company structure we are proud of the fact that we had during that first year and the public company which reflects the commitment and dedication at the entire accelerate team added year and twenty twenty pain accelerate had five hundred and seventy nine of cash and consequently on him and no outstanding borrowing and robert wagner i'm roethlisberger laboratory shared with two point he kind that that with a year compared to two point five times a day or quarter and a net get basic a leverage ratio zero point four times now i would like to provide a few comments on a recently announced and then credit facility
spk_8: last week we announce the curbing and six hundred million amended and restated senior secured credit facility which consist of a week by me three hundred and fifty million regarding credit facility
spk_7: and a new two hundred fifty million chairman the a minute facility has a four year tenure than maturity church and march twenty twenty seven which had been influenced from the original maturity of april twenty twenty five when can we have been met feet and some land to protect the appetizer acquire one of them that capable baffled in and industry for two hundred fifty five million we did well below the current market value last week we get noted that it's quiet owner regarding aren't to exercise a person thompson we implicit a purchasing korea and that second quarter this year after with accelerate will no longer incur went on and or that sequoia bear boat charter i believe that the the transaction adjusted ebitda will increased by about seventy million per quarter starting in the second quarter and the company what the recording adapt to the avatar for twenty twenty three and moving forward with a two hundred fifty million term land or pro forma total that after the hearing twenty point he would have been eight hundred and eighty four million which is a two point seven time pro forma grant leverage ratio after that thing for the sequoia rent impact the to them this image credit facility and hand them a financial flexibility and support or near term growth and development and done the combination of be amended rugaber and aren't have some even will provide ample capital the operate our big them and proceeds to keep it growth opportunity we're committed to maintaining a prudent and disciplined approach to cap it on that them this means power hyping investment opportunity that maximize the return on our have that given name creeped competition globally for efforts are you an lng infrastructure we're currently evaluating additional opportunity to deploy our campaign europe and adams market the process and print incoming on both catholic spin and twenty twenty three beyond that two hundred fifty five million that will be you a person with the korea will be disclosed subsequent to the application and binding agreement maintenance capek for the year if expected to range between fifteen million and thirty five million now let's turn to are either dead guidance for this year and twenty twenty three weeks back to see the full of moment than that were european project and an online as well as the continued solid performance the bank the think contract then the only south america and asia pacific with a full year we expected just that eager to range between three hundred twenty million and three hundred forty nine i definitely been a guy them think that the korea is purchased in april and include rental i went to korea only to rent a room now if you try to hire park germany contract have that our efforts are you read it fully contracted with nine laptop on we for case and contract and the bathroom continuing to terrorists or gas felt business and bring them growth over the prior year will be driven primarily by have made for we're revenue from us and lunch harder along with revenue from our germany china which commenced and the late february and even mentioned earlier we recently secured and charter to provide the blog we got there is is rapidly have blocked the terminal in argentina from me first and in a darkened which is expected to provide economic uplift beyond our base we get martin this fear we expect every girl out margin to be and line or bad or twenty twenty two that regard as a reminder other the revenue will let natural gas filled or in point by lng project and the margins barbara girl gets out or not impacted by lng prices and like the thing contract structures
spk_8: with that will open up the cough with your name
spk_0: ladies and gentlemen if you like to ask a question please press star followed by one on the telephone keypad now if you like to be told the question please press start followed by two you to speak please remember to and your microphones we had our first question comes from devon much mcdiarmid from morgan stanley devon your lunch hour open please go ahead
spk_9: oh the morning a for the applicator my questions to my first one even you mean literally point a to prepared remarks about bangladesh returning to the stock market and and by to lng that we think more broadly get a high prices over the past your closet constrain buying across a lot of or price sensitive a to market it seems like many of those earning come back and participate
spk_1: smart person again and and and gross income level of to earth so my question is can talk a little bit more detail about the asia pacific grossed stop growth opportunity broadly other other markets that you're looking at other opportunities that your seeing or that get a terminal model there
spk_3: thanks for the question oven we remain excited about a pack obviously twenty twenty two was all about the war and the to the to europe but we haven't taken i have a pack and we are pleased that to see these markets re enter as buyers so it's not to say these are a deal for i says for these markets but they are prices at which it makes sense to enter the market and by spot cargoes and that's that's great for a number of reasons first a couple of them reflect the fact that there really has yet to be demand destruction you're seeing the appetite to get as much lng as they can at once once prices of moderated and we do think the lessons learned from twenty twenty two in the region in general or that they need to enter into longer term pricing acquire them small molecules yeah we are active in the region we do have one of our i guess in fact or largest office outside of houston is in singapore and we are scouring the region because people are starting to think about what comes next and i sure everyone that ellen she's still vital wheat part of the mix in a pack
spk_9: great but that how point year my or love it on bangladesh and a it sounds like we're getting closer that it fly on a pirate idea for a walk us through the are many miles down and expected timeline their let off down where do we stand on a potential expansion at analogy
spk_3: truth and the pirate project i would say
spk_1: no one wants to hear it it's at that point where there are lots of lawyers involved
spk_3: and we're trying to get to the term sheet space as of it's never never get thanks but we're trying to get to the phase where we have the term sheet in the hands that lays out the deal as we continue to invest on the project to do the necessary engineering work in the background we've spent roughly about five million dollars today we remain bullish on that so and i do think the next thing
spk_1: you're likely to hear would be as soon as we can actually conclude a term sheet with the government in terms of most collier ml angie or existing project their it's really about how much lng the government is securing we remain we remain in negotiations with them for additional volumes
spk_3: my comment and the prepared remarks was simply to say that we expect bangladesh government to enter into long term contracts in twenty twenty three by don't want to speak necessarily as to when they will include those those long term contracts obviously would likely commence into twenty six twenty seven but they are thinking about it and they understand that to be part of that mix and to secure those volumes that are you know that are predictable and affordable that they need to act and they need to act this year
spk_1: great idea
spk_5: and stubborn
spk_0: our next question comes from crack here from to high crack your not open please go ahead
spk_9: i think and you're taking the question on first to could you walk us through the german charger suspension in support of the latest urgent time but he obliged to deployment them so the on just provide you a
spk_10: temporary higher total return on on that the avatar you are or ah or in the german shard of basically pushed out so if that the it had suspended for three months or so for on that then don't be five years get extended or you are just in that short period you're just you're just serving our customer ah when the germans don't necessarily need a and maybe make an extra dollar to
spk_11: thanks craig
spk_3: all it dana's speak to the extra dollar to but but we do see this as a win win win win for the german government in terms it the moderates their expense at the summer or this southern winter depending upon where he live a win for us and further uplift for the excelsior and obviously when were present tina
spk_12: as further energy security and balanced either system during their southern hemisphere winter so it is an uplift that were receiving as part of what we're doing
spk_3: the summer
spk_1: rather than an extension to the charter but there's definite up live
spk_3: what i tell everybody out there though is this is nothing new we have in an effort to optimize fleet over the years we have routinely i guess you could call it or owed lessons and customers and put it where there was maximum uplift for accelerate so you should see you should see that optimizing of the fleet as being part of it's just or corp approach the business
spk_7: am a way we're we're very pleased about it because that involved accelerate cooperating with to sovereigns and we're the company the can do that and i guess to speak to the economic theory you're correct me or concerned that it as providing up with it's and lot of that were sent it will be as expensive her couple ninth and only turn keep earning revenue in late you three and if we look at what we would have earned in germany versus what will earn for twenty twenty three with that fifteen can agree man in one cartagena project it's gonna be wrapped we're at the six million applicant kill our he began by having the feet up there with the party trick a the start
spk_10: when an approach was stacked revenue to gaming like keeping with emily
spk_7: great that thank you for that and interview you elaborate maybe i missed the boat to do provide a little more color on the over performance in brazil and the core there are take up yeah can take that one cried so we renegotiated that contact with petrova it and that in november and twenty twenty he added and your any contact with as it similar to the and a contact where you know probably they can and i fixed rate for an mvp year capacity be regardless and have rallied we're gonna interact never going to write a book credible martin under the new structure the any on track and depending on the by and they take that right for in her in be you may fluctuate as sometimes we may see higher margin when we supply around me
spk_13: you that need on tax structure and san basically have some and with see and pay on the under the need snacks and that allowed to get more favorable march and even with and well by him because that's what we saw in that fourth quarter
spk_0: and through the explanation tim
spk_14: as a reminder ladies and gentlemen is used to like to ask a question please press star followed by one on the telephone keypad now that start out by one on your cell phone keypad or next question is from david heavens from snp see nickel david your lines are open please go ahead
spk_9: pack morning everyone
spk_1: what start on tax and first question on that thing it would have you invested day in the pirate project as was laura and i noticed a little bit on taxing earlier your comments for to elsa twenty three the can kind of good that will that more teachers sense of what twenty three backs organic have x could look like and what the assumption that pirate does begin to move forward and eat you get from those contracts across the goal line the thanks david and then i'll be coming to a on this when we get into the specifics but
spk_3: david and your i think i guess on an earlier question i mentions been today at the that's historical spends not earn not necessarily at this year last year any other year or out of pocket
spk_1: on the pirates takes about five million as i said and frankly
spk_7: we will be limiting to spend on that are we do have wanting and that's enough to really allow us to price and the happened in school commercial give stations we need to on an informed aces so that's just kind of scanner and the game and i think they know what we related to you and the prepared remarks were our views on maintenance cap eggs for the years are right and i don't know that we are guiding the apps on on on pirate scuse me or or anything else can tell a definitive agreement sorry yeah that that's correct david fail and maintenance cap acts quick peek at thirty five nine that we got it on that dry dock and a spare parts that for clinton and things like that it doesn't include any grant cap acts were not yet diving angry cat back at something we want i don't know i have a little bit more certainty about the for we got on that
spk_15: so as stephen said for pirate what we stand here today to little bit under five million back not cat classified callbacks that's his project development and and then are been a fitting similar situation with a black project now that we did second cat that's great attacks last year under powered guarded and that on the big a rumble or project this lack of their comcast accept something will continue to guide on once we have more visibility more information the we're not we're not gonna start capitalizing on either pirate war era
spk_14: any of our great project until we we got more certainty around the project
spk_3: so you'll see that the the grounders them to right now
spk_9: i'm sure thanks and my follow up is that you know as you go to church major source lng has we think about a so long term next kids that might find and you have a geographic presence to the origin of the lj
spk_3: i'm sorry was last part of the question david to have a geographic what do
spk_4: that preference for the origin where the be the united states cutter wherever
spk_3: your look we are excited about the opportunity with the to global and lachman face to and the fact that earth you global took f id on blackmon face to with them gosh it was within a couple or three weeks of our announcement of the s p a oh we're excited about that we thought it was a good opportunity we saw low risk to those volumes they've already executed with the same team
spk_11: before and and we thought it was a good add to our portfolio the first to add to it that said you know very well we have a global footprint we have global ambitions
spk_3: and why we may very well wish to source additional
spk_16: us volumes
spk_3: we we want a diversified lng supply portfolio and that's why we remain in a continue discussions with suppliers around the world we we're determine that if we build this diversified ellen she's quite portfolio with strong partners does america where the strong partners are with strong partners like bg it's it's going to allow us to offered more flexible i'm more cost effective products to existing a new customers and based upon the locations were somewhat agnostic in geography i will tell you and twenty twenty one
spk_0: we sold for spot target is in bangladesh which were all sourced physically from the united states so there really is no limit to where we can deliver these recently contracted volumes but we're going to keep our ah
spk_3: eyes open for opportunities that makes sense and our creative around the world at it we currently have no further questions i'd like to hang back to our ceo stephen covers fun remarks please go ahead
spk_1: hey thank you again to everyone who joined on today's call
spk_3: i'm proud of the progress we've made to date and i want to thank the in tire accelerate team for making our first years of public company a great success as you've heard today we're continuing to execute the strategic plan that we presented to dusters last year although we've achieved several strategic objectives
spk_4: we know there are still much work to be done
spk_0: i'm going to look forward to providing you with additional progress updates in the coming months but and tell them if you have any questions

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