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.