Venture Global, Inc. Class A common stock

Good morning and welcome to the Venture Global fourth quarter and full year 2024 earnings call. At this time, I would like to turn the conference call over to Michael Pascarello, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Venture Global's fourth quarter and full year 2024 earnings call. I'm joined this morning by Mike Stable, Venture Global's CEO, Executive Co-Chairman, and Founder. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements, and actual results could differ materially from what is described in the statement. I encourage you to refer to the disclaimers in our earnings presentation, which is available on the investment section of our website. Additionally, we may include references to certain non-GAAP metrics, such as consolidated adjusted EBITDA. The reconciliation of these metrics with the most relevant GAAP measures can be found listed on our website. Finally, the guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter and not to update or affirm guidance other than through broadly disseminated public disclosure. I will now turn the call over to Mike Saban.

Thank you, Michael. Good morning, everyone, and thank you for joining us today. This call is an important milestone for Venture Global, as this is our inaugural earnings report as a public company. We are excited to share our fourth quarter and full year 2024 results, along with our guidance for 2025, which we believe will be an exceptional year for the company. I will begin the call with an overview of our fourth quarter and full year 2024 key accomplishments and results before shifting to our LMG projects individually. I will then make some remarks on the LMG industry broadly before turning over the call to Jeff. who will provide a more detailed review of our financial results and guidance for fiscal year 2025. Following all prepared remarks, we will open the call to Q&A. Turning to page six of the presentation, I'm happy to report that Venture Global performed well during the fourth quarter of 2024, generating $1.5 billion of revenue, $871 million of net income attributable to common stockholders, which we will refer to as net income, and $688 million of consolidated adjusted EBITDA, breaking our full year 2024 revenue, net income, and consolidated adjusted EBITDA totals to $5 billion, $1.5 billion, and $2.1 billion, respectively. Additionally, we finished 2024 with over $43 billion of assets on our balance sheet, and realized return on equity of 41.3%. We achieved these results as we continued to commission and perform rectification work on our COPSHE Pass project, commenced commissioning at our Flockmans project, and progressed our subsequent LNG and ancillary projects, including CP2. At COPSHE Pass, we exported 32 commissioning cargoes during the fourth quarter, resulting in 140 commissioning cargoes in total for 2024 And we recently gave notice to our long-term SPA customers that the Commercial Operations Day, or COD, for the project will occur on April 15, 2025. At Plaquemines, we achieved the first production of LNG on December 13, 2024, and exported our first cargo on December 26, 2024, just 13 days later. This remarkable performance showcases the hard work and dedication of our team at Plaquemines and our innovative approach to constructing LNG facilities. I'll provide further details on Plaquemines voluntarily, but I'd like to highlight up front that every liquefaction train we have activated thus far at Plaquemines has consistently demonstrated pro-rata production levels equivalent to approximately 140% of the nameplate capacity of the facility based on the aggregate outflow from our days, 140%. This gives us confidence that following completion of our construction, Blackman's will be able to perform at a recently FERC authorized operated capacity of 27.2 MTPA. Looking ahead to 2025, we expect that our consolidated adjusted EBITDA will be between $6.8 and $7.4 billion. This reflects a $7 per MMBTU to $8 per MMBTU fixed liquefaction fee range for available commissioning cargoes, which is consistent with recently executed transactions. We believe the next four quarters will constitute a period of meaningful growth for our company, and we are focused on delivering a consolidated, adjusted EBITDA in this range for our shareholders. We will also evaluate opportunities to deploy our surplus capital including through potential share repurchases. Turning to page seven of the presentation, I would like to touch on our compelling growth in hard machine assets over the last few years and give a preview of how we aim to continue to expand in 2025. As many of you know, our liquefaction trains are factory built and arrive ready for installation into our facilities by the thousands of men and women we employ across growing list of projects here in the United States. We are proud that the contractors and subcontractors supporting our projects employ people in over 30 states across the country. Through our commissioning programs, we currently have 18 trains producing at Couchy Pass and another 16 trains producing during construction at Flockmans. Additionally, we have installed 16 more trains on their foundations at Flockmans. except the delivery of two more trains this week and have our final two trains currently in transit. We expect that these trains will be incrementally commissioned and will increase the production from our second facility. Through our investment in our third project, CP2, we have executed purchase orders for another 36 trains, of which 12 are already being fabricated and will arrive on a rolling basis at storage sites on the Gulf Coast beginning at the end of the second quarter in 2025. In all, by the end of 2025, we expect to have 54 trains either commissioned at Kaukchi Pass or producing during construction at Falkmans, with another 16 trains fabricated and ready for installation at CP2 subject to FERC authorization, capping off a rapid expansion from 18 trains to 70 trains in aggregate over the course of just 29 months. Combined with the extraordinary production performance of our new trains at Blackman's, which I discussed a moment ago, we believe this asset base will serve as ballast for our growth in the coming years, providing cash flow to help fund our future projects and expansions for decades. Shifting gears a bit, I would now like to focus on Capsule Pass, which is covered by page nine of the presentation. As mentioned, during the fourth quarter of 2024, we were able to successfully export 32 commissioning cargoes, including four cargoes utilized in venture-global-owned or chartered ships, bringing our full-year 2024 export total to 140 commissioning cargoes. We realized a weighted average fix-the-compaction fee of $8.79 per MMBTU for cargos in the fourth quarter and $7.28 per MMBTU across the entire year. Although Capsule Pass has yet to produce above its 10 MTPA mainplate capacity on an aggregate basis for an extended period due to ongoing power plant retreatment and other rectification work, the trainings at Capsule Pass have performed well beyond nameplate capacity on an individual, discrete basis. While we continue to produce substantial quantities of LNG at Couchy Pass, we are simultaneously navigating the remaining work related to commissioning, carryover, completions, rectification work, reliability testing, and other unfinished items. We have given notice to our long-term SPA customers that COD will occur on April 15, and our focus on completing final performance tests before this milestone, which we should achieve just 68 months after FID. We look forward to servicing our off-date contracts for the full duration of their largely 20-year tenures. For 2025, based on liquefaction fees achieved via cargo sold on a forward basis to date, we anticipate capturing a fully-weighted average liquefaction fee of $3.85 per NMVTU across all forward sold Capsule Pass deductions. I'll sum up my remarks on Capsule Pass with a brief note on safety, which is our top priority here at Venture Global. Today, approximately 25 million work hours have been completed at Capsule Pass, with only 13 recordable incidents sustained. This performance has produced a total recordable incident rate, TRIR, of 0.10, far up performing the national industry average of 1.9. We are very proud of our outstanding team for achieving and maintaining the safety record, especially while performing significant equipment rectification work and construction. Moving on to Plaquemines and flipping to page 10 in the presentation, I will focus on the remarkable progress we are achieving at our 20 MTPA main plate project south of New Orleans. The incredible focus, diligence, and craftsmanship of our team allowed us to implement a complicated reverse cool-down process, which enabled the production of first LNG on December 13, 2024. By December 26, we had successfully exported our first cargo from the facility only 31 months after our Phase I FID. We have delivered 34 liquefaction trains to the site, and produced LNG from 16 trains during construction to date, maintaining an unparalleled pace of execution for a greenfield project of this scale, underpinned by our commitment to safety. So far, each of our 16 trains has regularly demonstrated pro rata production levels that equate to approximately 140% of the nameplate capacity of the facility, based on aggregate outflow from our judges. This performance is enabled by the engineering and design improvements we implemented at Plaquemines, which were informed by the significant operational data collected and lessons learned from Capsule Pass. These exciting results were only possible through our innovative approach and the relentless execution of our team. At Plaquemines, we have permitted and incorporated, for example, 400 megawatts of temporary power at the facility, which has allowed us to mitigate contractor delays especially from the power island. This approach allows us to progress commissioning efforts and recruit project costs through the sale of commissioning cargoes while we complete the construction of our combined cycle power plants, commission and test our pretreatment systems, booster compressors, and other balance of plant work streams in parallel. Although we are very encouraged by our commissioning success thus far, we recognize the challenging and highly variable process laying ahead. I want to note that achieving this considerable progress in our construction speed has been an active strategy, and it's time at an increased cost. By investing capital and enabling increased construction staffing levels on site, we have pulled forward the production of LNG by months against the original baseline, despite substantial delays in portions of the facility's construction, in particular with the power island. Over the course of construction, we have invested approximately $2.8 billion of incremental equity to fund these expanded work fronts and mitigate delays. We believe this is a differentiated approach from the rest of the industry enabled by our modular design, early investment in module fabrication, and engaged onsite construction management. It is also emblematic of the creative problem solving and tenacity is a bedrock of our unique corporate culture, which, despite setbacks, positions Plaquemines to achieve Phase I COD approximately 54 months post-FID. For 2025, we anticipate exporting 219 to 239 cargoes from Plaquemines and have contracted 78 of these cargoes thus far, capturing a weighted average fixed liquefaction fee of $7.94 Again, I want to highlight our leading safety performance at Plaquemines. Today, over 50 million work hours have been completed at the project, with a TRIR of only 0.20, roughly one-tenth of the national average TIR of 1.9. And I want to turn to our next project, CP2, which is covered on page 11. CP2 is a 20 million ton brand on nameplate capacity facility consisting of 36 of our factory-built liquefaction trains. Based on the performance of these trains at Kakashi Pass, the design improvements implemented at Plaquemines, and the performance of those trains to date, we believe CP2 will produce at least 28 MTPA. Further, we currently estimate approximately 550 cargoes will be exported during the construction of the facility across the commissioning programs of the project's two phases due to the company's innovative phase commissioning and startup approach. We have deployed over $4 billion thus far with our key equipment suppliers and contractors for CP2, supporting thousands of jobs in dozens of states across our country, and are ready to commence onsite construction as soon as we receive all necessary approvals. As widely reported, the Department of Energy's pause on issuing LNG export approvals to countries that do not have a free trade agreement with the United States, commonly known as non-FTA nations, has been reversed by the Trump administration. While there can be no assurance as to the timing of regulatory approvals, we believe we may receive our non-FTA export approval from the DOE in the near term. We are also pleased that the Federal Energy Regulatory Commission supplemental environmental impact statement issued last month reiterated that CP2 would have no significant emissions impacts, and we are awaiting a notice to proceed from FERC. The current regulatory environment is supportive of the US LNG industry, and we have been thrilled with the backing we have received from President Trump and the current administration, members of Congress, governors, including Governor Landry, Louisiana state legislators from both sides of the aisle, and government and industry representatives from allied nations. Taking advantage of these permanent tailwinds, we have commenced the FID process for phase one of the CP2 project with our well-established banking syndicate. Our bold investments in the project to date will position CP2 as potentially the most advanced project in the history of the LNG industry by the time we officially break ground in Canberra Parish. We currently aim to begin receiving major power island equipment and with traction trains number 55 and 56 in the first half of 2025 and our targeting first production of LNG in mid-2027. We believe CP2 has the potential to be a key source of LNG for critical United States allies such as Germany and Japan and others, and we look forward to our role in providing our citizens clean, affordable American LNG, and bolstering their energy security. Continuing with this discussion of an advantageous regulatory environment, we are pleased to announce today our plan to expand the Plaquemines Project, which is detailed on page 12. We have begun the pre-filing process at FERC for a brownfield expansion, phase three expansion, configuration consisting of 24 liquefaction trains and related infrastructure, which we expect to provide 18.6 MTPA of export capacity. We believe this expansion would be highly accretive as the new liquefaction trains would leverage existing infrastructure developed during Flockman phase one and phase two, including but not limited to LNG tanks, marine jetties, pipe racks, and marine offloading facilities. We are targeting FID for this expansion project in mid-27 after achieving first production at CP2. and believe this flexible incremental capacity would position us to respond rapidly to market growth signals. In a capital-intensive commodity industry, capital will always flow to the most competitive projects, and we believe that an expansion of Plaquemines is one of the most economically efficient opportunities available to quickly meet growing LNG demand. Simply stated, we believe our Plaquemines expansion, along with projects we pursue in the future has the potential to displace more expensive development projects with longer construction durations, enabling us to offer lower long-term LNG prices to global markets while also delivering very attractive returns to our shareholders. Turning to page 14, we have noticed a misconception among some investors and analysts that our production outside of our 20-year contracts is fully exposed to spot for merchant prices, and that our contracted revenue profile is insubstantial, neither of which is the case. 100% of the nameplate production capacity of Capsule Pass and Fockermans is contracted, including CP2, 39.25 of 50 MTPA of the nameplate capacity of our first three projects is contracted in average tenor of slightly under 20 years, representing over $100 billion of illustrative total contracted revenue. For our commissioning cargoes, we are continuously seeking to lock in advantageous fix-to-compaction fees and anticipate contracting board sales of strips of cargoes on an ongoing basis. We plan on contracting our currently uncontracted capacity at CP2 as well as our expansion capacity at Plaquemines under a blend three to 20-year contract tenures. In the coming years, long-term contracts representing hundreds of MTPA of demand are set to expire, offering a significant opportunity for Venture Global to secure incremental pricing certainty and build a balanced portfolio of contract tenures. Throughout the history of our company, incumbent industry participants including LNG producers and global super majors, have questioned our disruptive approach. Despite this skepticism, we have continued to execute and prove our critics wrong. Our core business is building and operating machines that produce a valuable commodity, and we are focused on delivering our product faster, more safely, and at a lower cost than the rest of the market. We believe this is a winning formula in our commodity market, and look forward to proving it with our earnings and returns in the years to come. I'll now turn it over to our CFO, Jack Thayer, to offer our fourth quarter full year 2024 financials, as well as our guidance for 2025.

Thank you, Mike, and good morning to those on the line. I'll be referring to the Venture Global Incorporated Form 10-K as of and for the year end of December 31st, 2024. The 10-K is available on our website and some of the key results are summarized on page 16 of the presentation. During this call, I will highlight results that leave or salient to this audience, and I encourage you to review the entirety of our financial statements in detail.

Beginning with revenue, our top line revenue was $1.5 billion for the fourth quarter of 2024 and $5 billion for the full year, a $108 million and a $2.9 billion decrease for a 7% and 37% from $1.6 billion and $7.9 billion during the equivalent periods in 2023. This decrease in revenue year over year was driven by one lower weighted average fixed liquefaction fees of $7.28 per MMBTU versus $12.23 per MMBTU and lower natural gas commodity fees of $2.61 per MMBTU versus $3.20 per MMBTU. $2.8 billion, and two lower LNG sales volumes of 501 TBTUs versus 510 TBTUs, resulting in an additional decrease of $139 million.

Our net income attributable to common stockholders was $871 million for the fourth quarter of 2024 and $1.5 billion for the full year, a $921 million increase and a $1.2 billion decrease

from a loss of $50 million and net income of $2.7 billion during the fourth quarter and full year of 2023, respectively. These shifts were driven by the stabilization of international LNG prices, resulting in lower total margin for LNG sold and higher cost Available changes in the fair value of our interest rates loss and lower income tax expense.

Shifting to consolidated adjusted EBITDA, we realized $688 million during the fourth quarter of 2024 and $2.1 billion for the full year, a $125 million and $3.1 billion decrease or a 15% and 59% decline respectively. from $813 million to $5.2 billion during the equivalent period 2023.

This decrease in consolidated adjusted EBITDA year-over-year was driven chiefly by the stabilization of international LNG prices, resulting in lower total margin for LNG among other development projects. As Mike discussed, we exported a total of 33 commissioning cargoes in Q4 and 141 commissioning cargoes over the entire year, which declined from 40 and 143 respectively, compared with the same periods in 2023. Of these cargoes, 128 TBTU of volumes are reflected in our results for Q4 and 501 TBTU of volumes are reflected in the full year 2024 figures. Advancing to page 17, we are guiding to a consolidated adjusted EBITDA range of $6.8 billion to $7.4 billion for 2025, incorporating in a forecasted 140 to 148 cargoes from Calcasieu Pass and 219 to 239 cargoes from Platins. $500 million of expense development spending relating primarily to CP2 and regulatory and engineering design spent on our other developmental projects, as well as the conclusion

and $675 million. I will now turn the call back over to Mike.

Thank you, Jack. At this point, we would like to open the call for Q&A.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 4 by the 1 on your telephone keypad. Should you wish to cancel the request, please press star 4 by the 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of John McKay from Goldman Sachs. Please go ahead.

Hey, good morning, all. Thank you for the time. I just wanted to start a lot of moving pieces, but I want to start on the 25 guide. Maybe you could just walk us through again a little bit some of the moving pieces on kind of your assumptions on the margin, and then also, you know, how much of this continued quick ramp of plaque means is baked in there. I think it's, you know, relative to the range you guys have given for the, you know, plus or minus $1 and spread, it's ultimately a narrow EBITDA range for the year. So maybe just unpacking a few more of the moving pieces would be helpful. Thank you.

Good morning, John. Thank you. Thanks for the question. We the obviously the largest moving piece is just the forward curve for the remaining of the year. And so, you know, since since the since the IPO, the the the We also sell to Asia, too. But the European markets come in approximately 20%, and every hub has come up a little bit. Instead, we factored in a conservative view on what we're anticipating for the rest of the year, blended in with, of course, what we've already – what we've already contracted. Great, thanks Mike. So I think it might be instructive to walk you through how we're forecasting the EBITDA for the year, and maybe an illustrative example would be helpful. A number of investors have looked at net spreads, and here we provide guidance in the form of a fixed liquefaction fee. So I think it might be helpful if we kind of Starting with the net spread, this is an entirely market-based measure, so it's visible to all participants using the available market data. And for simplicity, I'll provide some example numbers that reflect the current market. So to calculate a net spread, you start with TTF. In this example, I'll use a $14 per MBTU net spread, which is roughly where the market is right now. And then from this we subtract shipping at approximately 70 cents per MVTU and then regasification costs 50 cents per MVTU. Those two values can vary, but generally there's some correlation between them. And then we subtract 115% for Regas minus the $4.60 for Henry Hub grossed up, and that yields a net spread of $8.20 for a new BTU. Now, let me compare this measure to how we calculate the fixed liquefaction fees. So when we're contracting with off-takers, we negotiate, and our contracts reflect a fixed liquefaction fee plus 115% Contracts for apartments are negotiated between the buyer and seller and generally capture the net spread, as well as provide a margin for the buyer. For context, recently TTF has generally been trading at an approximately $1.20 per MMBT premium to Gulf Coast Market Forwards. So in the same example, $14 for MMBT and for TTF. minus the $1.20 discount for Gulf Coast Marker, which I'm not surprised that it generally reflects the shipping and regas, minus the 115% of Henry Hub, so $4.60 in the $4 Henry Hub example I provided, that yields a fixed liquefaction fee of $8.20 for MMBTU, less buyer margin, which varies depending on the market. So, you know, in the guidance, we provided a range of effectively $7 to $8 of fixed refraction fee in our EBITDA forecast. And then you need to think about our contribution margin from that. So from that, the 115% of Henry Hub generally covers the LNG feedstock, transportation of pipeline gas to the facility, and our internal gas burn at our power islands. So the fixed liquefaction fee in this example of $8.20 minus the $0.50 to $0.70 for MMBTU of O&M costs yields a contribution margin between $7 to $0.50, $7 to $0.70. And that's ultimately what is factored into our EBITDA guidance. Hopefully that walk was helpful. John, to back up your question about the incorporation of the ramp up on apartments. We are incredibly pleased as as I described in our in earlier comments with with the rapid ramp up that the teams been able to or a regional project of this scale. And we are excited about what we think we're going to be able to achieve for the balance of this year and for both Lockman and CP2 as well. The biggest news that we're excited about related to the trains is the performance and something that hasn't been seen before relative to mainplate capacity. And since we're in the business of manufacturing, installing sequentially our liquefaction frames to be able is incredibly exciting for us. And we have, in addition to, you know, this year, we're really looking at the medium to long-term to be able to install as many of these trains as possible and produce, you know, ultimately for 50 years from our local faction trains. There's a ramp up. for Plaquemines trains for the balance of this year that incorporates our views of the performance of the trains and the sequence of the trains coming on. And it's incorporated into the cargo count that we described before.

That's really clear. Appreciate all that color. Second question. Maybe just on the Plaquemines expansion, between signing longer-term contracts there, you mentioned also potentially adding some more contracts for CP3. Can you maybe just talk about where you're seeing your appetite, sorry, where you're seeing appetite in the market for signing these long-term contracts right now? Kind of when could we expect those in general and maybe just broadly the competitive market versus other Gulf Coast facilities?

Sure. No. So of the, if you include CP2, we have 50 million tons of main plate capacity, 39 and a quarter of that 50 are contracted on largely a 20-year basis. And so of CP2, we're nine and a quarter of the 20. And we are going to contract the balance of roughly half of the nameplate capacity of CP2 on a blended basis. Let's say three to 20 years is probably going to be the range of tenors that we're going to target for the balance of the nameplate capacity of CP2. And then for the expected capacity production above mainplate capacity, we also are going to layer on blended contract terms that will be, you know, multi-year tenures on those contracts. For the bolt-on and to prefer the 24 trains that we're developing as a phase three at Plackermans. That is larger than what we were expecting to be able to layer on. But upon more extensive engineering, we were able to really leverage existing infrastructure like tanks and pipe rocks and jetties and other systems. And that enabled us to land around more potential trains there than we originally participated. But what that means then is we have more capacity there that we're able to contract on a long-term basis. And so our plan is to contract on a 10 and 20 year basis more And that levels that we view are material discounts relative to the rest of the market because of what we view are very sustainable cost advantages. relative to the rest of the market. And so our plan there, and we're going to endeavor to demonstrate here, is to do more long-term contracts for this capacity. We think there's very, very good demand in the market for long-term contracts and at prices that are very attractive to us. And again, as I described it, at points that we think are substantial discounts to where other projects are economic. And so we think that we're in a position to displace other companies' plans for their break because of our advantages. Our plan is to use these substantial expansions to do just that, to grab the additional market share to grow earnings, but also to do it with more long-term contracts to continue to build a balanced portfolio. So over time, as we incrementally add our confection trains, we will be blending in layers of more multi-year contracts that we think is an attractive way to capture more of the upside earnings of these large facilities than you would realize if you did it with all 20-year contracts. But by blending in shorter terms into that, we'll be able to, in a balanced way, achieve substantially more earnings is the goal.

All right. That's clear. Appreciate it, Mike. Appreciate the time.

Thank you. And your next question comes from the line of Jeremy Tonnet from JPMorgan Securities. Please go ahead.

Hi.

Good morning, Jeremy. Good morning.

I just wanted to come back to the guide, if I could. And, you know, we've seen assets running above nameplate here, pretty encouraging numbers. We just wanted to see, I guess, for Calc, you know, maybe there wasn't as much potential excess cargoes that's the outline there. Just wondering for the potential, you know, could this number be higher? Could volume surprise the upside for the year? I mean, we're looking, you know, potential for EBITDA numbers, you know, $10 billion or more, and just wanted to see if, you know, we get higher volumes here. Could we start moving upside to the guide, as you described?

So there is a ramp up of the production capacity at Quackermans as we layer on more trains. And we say we're incredibly excited about the performance of the trains after years of incorporating our data and our process engineering and data science. We are trying to be reasonable and conservative and balanced about our EBITDA projections and give ourselves appropriate kind of advance to achieve the EBITDA projections. the $10 billion number that you're referencing is obviously sensitive to the what the forward curve is that's realized over the course of this year. And so as we continue to contract forward strips of the relative sensitivity of our earnings goes down as we do that. You know, and if the TTF price or the JPN price, you know, relative to the Henry Hunt price, it generates that spread that Jack went around described earlier. And, you know, all of it's going to be sensitive to the demand side And, you know, we watch what the demand looks like coming out of the rest of the market, not to say including Asia. I will remind, we will remind, you know, everybody though that we are, you know, manufacturing, installing, turning on, operating liquefaction frames for decades. Ultimately, we think we'll be operating these machines for 50 years or more. And we have a very bullish view that five years, 10 years, 15 years, 20 years from now, the world will be using more and more electricity, and a large portion of that's going to be supplied by gas. And being a low-cost producer of this capacity is enormously valuable. we're layering in. So as we layer in these trains, and I spent some time in my comments, a couple of paragraphs really trying to describe the scale of the trains that we're layering in that will compound the earnings that we're able to achieve in the market in the future. and you know to go from 18 trains to 70 trains that are either you know producing sitting on pads on ships arriving being manufactured uh to go from 18 trains to 70 trains in 29 months and then to have those trains outperform uh expectations uh the way we're demonstrating right now is something incredibly exciting to us and we're we're um we're we're very focused on thinking through that as safely as possible and uh methodically as possible so i answered more than you asked jeremy but that's helpful thank you for that and just wondering you know with uh future lng development just wondering

If you could provide some backdrop how you see the regulatory environment now. It's a bit choppy under the prior administration. Just wondering how you see things currently, and did that kind of feed into your thought, I guess, with potential, with plaque here in this timeframe that's, you know, very quick to get something new going here?

No, we think, our view is that the permitting environment that we're in and going into now is likely the best in decades. And it makes us very bullish on the ability to permit our expansion plans. It puts us in a position to be responsive to market demand. And we think as, in our view, the low-cost liquefier and the fastest to ramp up in the market, that it positions us to be able to be responsive to demand. And as we were describing And because of that, with those two factors, to offer prices to customers that are extremely attractive on a long-term and medium-term, you know, contract tender, that is going to be extremely difficult for other boards to compete with or justify. for global competitors.

That's helpful. And just to be clear, lines of communication to Trump at this point and moving forward, just wondering if you could talk a bit more, I guess, on the contrast today versus before.

Well, the, there is, obviously there is an LNG on it, and we're waiting, we're waiting for our non-FTA export authorization for CP2. And we can't, as I said in my comments, we can't predict any exact date, but we feel pretty good based on what's been said publicly and privately that people are going to get their non-FTA permits from the Department of Energy. The FERC chairman, new chairman has been designated by Trump as half. with a change in administration. And we feel that the direction is to move projects forward as they satisfy the requirements. And then ultimately what's left is businesses follow the rules, get their permits, and then they have to compete commercially to sell their product into the market. And in the commodity market that we're in, you know, price and timing are going to determine market share. And so we argue is that the permits will go faster than they have in the past. The permitting process and that people will get their permits. So that that's something that has really been our primary constraint from a timing standpoint, because we are in a position where we're repeating from really, really repetitively, systematically, successfully, as we described in what's already going on in our supply chain. We've dramatically grown our team that has executed the exact same trains that we've installed now at Capsule Pass and are installing at Plaquemines and about to very positive environment.

Got it. Thank you for that. I'll leave it there.

Thanks, Jeremy.

Thank you once again. That is our end one to ask a question. And your next question comes from the line of Jane Anna Salisbury from Bank of America. Please go ahead.

Hi, good morning. Good morning. Hi, good morning. I just had a question about page 10 and the weighted average fixed liquefaction fee, the 794 at Plaquemine that you've had already. And thank you so much for walking us through the math of how you define that. That is kind of where it is at now, I suppose, for the rest of the year, but it seems a little bit lower than what I would have thought it had been year to date. Can you kind of just kind of talk about, I guess, the buyer margin and if that's a bit more material maybe than I had calculated.

Sure, I'll say a couple of comments and then I'll let Jack provide some additional detail. We had sold contracts historically forward for some of that Flackerman's contract, which is, you know, what we strive to do is to run, you know, forward sales. And so some of those targets were sold into this year, you know, historically, and they were just lower prices than what the, you know, the four occurred was during the winter. And so that's just blended into higher price contracts from the current four occurred. This is Jack. I'd also maybe just suppose what we experienced the past where we were able to capture higher market prices and higher margins because of the maturity of that facility. For 2025, thus far there, we've achieved $8.97 per MMBTU margins. With Blackman's, with the initiation of first LNG and then the ramp up, that is always the most, challenging period of a plant's evolution when you're getting those trains up and running and you're going through all your teething issues and identifying the challenges that are complicit in or a part of the whole construction and commissioning process. And so there we were I would say, contracting on a much more real-time basis, extensively using our own shipping fleet as well to load the LNG that was being produced that allowed us the flexibility to ramp but also go through those teething issues. And that's why you're seeing a pretty marked differential, almost more than a dollar between the contracting thus far for Blackman's and the contracting by year-to-date accountancy pass.

Okay, got it. So basically longer term, the sort of accountancy pass versus where prices are is a better indicator to use of where buyer margin would be?

I would say our range currently, as provided in the guidance, is highly reflective of where we've been contracting many of our cargoes and certainly is consistent with the cargoes we've sold in the last number of days. given the pace of production that we have and our marketing team is constantly in the market managing the production that we have and finding buyers for that. And we're very comfortable with the range we provided as reflective of where the market is currently transacting. We've been going through this inflection point just in our growth where we're transitioning from just just having one facility with 18 trains and we're turning on another facility that will take us from 18 trains to 54 trains. And so as we just turned that project on, we're now layering in more strips of four contracts. And so if we had been adding less trains are growing slower obviously our teacher earnings will be lower but the the uh the the percentage of of uh of uh trains that we're turning on that have been contracted and will be here for periods will be lower and so then when we layer on cp2 we'll be layering on those 36 And so the impact will be different. And we don't try and make guesses on what the LNG prices are going to be. We just systematically, you know, our cost average. layering on our contracts incrementally over time. And so we're layering on more tenor as time passes and we grow.

That makes sense. Thank you. And then as a kind of higher level follow-up, there's obviously a lot of concern that potential Russia-Ukraine peace could lead to Russian pipeline flows returning to Europe in the near and medium term, which could sort of materially bring down global LNG prices. How would your future development plans for CP2 and Plaquemines change if that environment came to be, if at all?

Well, we obviously watch that and think about that a lot. You know, we think that the the short-term impact that might or will happen as more gas comes online will be temporary, and so it's a question of duration. You know, a long-term contract price today delivered from the U.S. to Europe, you know, at the power plant is a very, very low kilowatt-hour electricity price that we think that there's a lot of demand for. you know, five, six, seven cent kilowatt hour equivalent electricity at the power plant. And so we think that really low price power electricity gets hoovered up pretty quickly and with demand expanding to utilize it. And we think that's the case. And, you know, the medium long term for sure, but also we think in the relatively short term, The prices before the Ukraine-Russia war are also instructive. When you had all the gas flows going, that pricing was also higher than I think people remember, and very attractive prices. You know, for us, we continued to build and get very attractive returns, you know, $3 net spread prices over the long term still give us very attractive IRRs for building our projects in the high teens and low 20s if that happened forever. So we can build extremely competitively. We think that's way below the placement cost. for projects, and we also think that there is tremendous global demand for electricity that can that can be produced at that at that price point over time. So we will are in a position to modulate if we have to our our growth. But the bulls on that block and then the phase three there, we're beginning the process And so during that time, we'll be watching how the market pricing is behaving, and we'll be responsive to that, of course.

Great. Thank you. That's all for me.

Thank you. And your next question comes from the line of Chris Robertson from Deutsche Bank. Please go ahead.

Hey, good morning, everybody. Thank you for taking my questions. Hi, Mike. Good morning, Chris. This is just a broader market question. I guess as you're going out into the market seeking additional contracting for CP2, can you talk about what types of customers you're currently engaged with if they're in the more traditional markets like Northeast Asia and Northwest Europe? Or are you seeing increasing engagement from places like South or Southeast Asia and emerging markets? And of these customers, which ones are leaning more towards shorter-term duration, like three to five years, versus leaning more towards the 20-year tenor?

That's a great question. Our marketing is very broad, so we're speaking to all interested buyers. And what's new for us, though, is that our balance sheet is grown and our business has matured. We're in a position now where we don't have to... primarily just to offer 20-year contracts. So we're able to offer a blend of shorter-term contracts, 12 years, 10 years, 8 years, 3 years, 5 years. Then we can blend into our portfolios, taking advantage of not just our means like capacity growth, but the excess capacity growth in our commissioning cargoes. And so we see... Very strong demand still on the 20-year contracts because those long-term fuel prices are extremely attractive. But I would say it's pretty – the interest in Tenor is pretty broad because the demand side are filling various buckets of their fuel portfolios. And, you know, if you're a utility and you run a blended portfolio term, you know, half of it traditionally can be longer term. A quarter, another quarter can be, you know, shorter, five to ten years. And then your final quarter can be less than five years. And so there's always contract roll off of all those terms from customers that creates demand.

Okay, yeah, thanks for the detail on that. As it relates to the FID process for CP2, do you need to secure any additional long-term contracts there or renegotiate any previous contracts in order to satisfy any lender requirements to move forward with FID, or is it all just regulatory and procedural at this point as it relates to that facility?

We're in a good position with our nine-and-a-quarter million tons that we've contracted for CP2 already, and we're in a strong position from an update perspective. Remaining pieces are just finishing off the regulatory receiving. The big one is receiving the non FTA from the Department of Energy for as as as in giving their comments a week and a week or two ago reiterated as it relates to the supplemental environmental impact statement that they are. For that we have. They reiterated the overall FERC authorization, and so FERC is running through its remaining process as it relates to that supplemental EIS. According to their schedule, it will run its course in the next few months, and we're running our FIP process for CP2 in parallel to that.

Got it. That's very helpful. I'll turn it over. Thank you very much for the time. Thank you.

Thank you. And your next question comes from the line of , from Guggenheim Partners. Please go ahead.

Hi. Good morning, team. Good morning. here for . Congrats on the inaugural call, and thanks for taking the questions. Thank you. Thank you. A lot of questions have been answered. I think maybe taking it to a little bit more to the broader kind of LNG market environment, especially as we look to Europe, maintaining their gas storage quotas, coming off of historically low storage levels in 25 and more broadly looking at long term LNG supply agreements. Have you participated in any incremental discussions on that front?

You know, we're we're between between block events and CP2. We have substantial new supply that's coming into the market that is We do follow closely. We do answer questions when we're asked about our views on it and also kind of our views on the timing of being able to execute and provide additional capacity. In our view, the markets are much tighter from a supply-demand standpoint globally than I know a lot of consultants are. And we think that the demand in the market is in the need even beyond just the need to resupply storage is more significant and we think it's growing. And so we're going to watch that really carefully as we go through our permitting process. capacities beyond CP2 to be in a position to rapidly respond to those stress signals.

Okay. Thanks for that. And maybe just a quick follow-up on CP2 and the expansion project. Just with where you're seeing – and I think I heard this on the last question, too. where you're seeing the 26-27 forwards and the contracted market signals, are those fully supportive of going to FID on those projects? And just as we're thinking about the volatility, does it change anything on timing, hurdle rates, or the need for longer-term subscription for those projects to support the project financing?

No, we're in a good spot on CP2 from a return standpoint, even at much lower prices than we have in the floor curve. So the returns that we have there are still very attractive, but it's at a strong competitive position relative to, if demand is flatter than we think it's going to be.

Excellent. Appreciate it. Thanks so much. I think that's the... Go ahead.

Thank you. That ends your question and answer session. I would now hand the call back to Mr. Mike Sable for any closing remarks.

Thank you very much. Thank you. Thank you, everybody. We appreciate all the time. and the questions and look forward to answering more questions in the coming days. And we encourage you to please watch the gas flows going into our facilities. It's a great way to track on a continuous basis our performance. The teams are working safely, as always, but very hard. to layer in incremental trains and production capacity. We are very, very happy, as I've mentioned a few times about the performance of our trains. And as we as we continue to build our facilities, we think about the earnings that will be possible to produce from those facilities over many years to come and how, as you layer on incremental trains, how that increases. And we will be very prudent in taking a view on short-term changes in market prices and volatility as it relates to the timing of our growth. But we will also be looking to be opportunistic in earning or achieving market share because we, even at low market prices, still achieve very attractive, very attractive returns. Obviously, as prices go higher, we do better, but we still do, we still do well in these lower markets as well, lower price markets as well. So thank you very much. We appreciate it and look forward to speaking to you in the near term and in years to come. Thank you, everybody.

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.

Thank you.