speaker
Moderator
Call Moderator

Welcome to the Venture Global Inc. First Quarter 2025 earnings call. I will now hand it to Michael Pasquarello, Senior Vice President and Best Relations, for a brief introduction.

speaker
Michael Pasquarello
Senior Vice President and Best Relations

Thank you, Operator. Good morning, everyone, and welcome to Venture Global Inc.'s First Quarter 2025 earnings call. I'm joined this morning by Mike Stable, Venture Global CEO, Executive Co-Chairman, Founder, Zach Dayer, our CFO, and other members of Venture Global's senior management team. 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 these statements. I encourage you to refer to the disclaimers in our earnings presentation, which is available on the Investors section of our website. Additionally, we may include references to certain non-GAP metrics, such as Consolidated Adjustment Evita. The reconciliation of these metrics to the most relevant GAP measures can be found in the appendix of the earnings presentation posted on our website. Finally, the guidance in this presentation is only effective as of today. In general, we will not update guidance until the following quarter, and we will not update or affirm guidance other than through broadly disseminated public disclosure. I will now send the call over to Mike Stable.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Thank you, Michael. Good morning, everyone, and thank you for joining us today. We are pleased to share our first quarter 2025 results and update our guidance for 2025, which we believe will be a strong year for the company. I will begin the call with an overview of our first quarter 2025 key accomplishments and results before shifting to our LNG projects individually. I will then make some remarks on the LNG industry broadly before turning over the call to Jack, who will provide a more detailed overview of our financial results and updated guidance for fiscal 2025. Following all prepared remarks, we will open the call to Q&A. Turning to page six of the presentation, I am happy to report that Venture Global performed well during the first quarter of 2025, generating $2.9 billion of revenue, $1.1 billion in income from operations, and $1.3 billion of consolidated adjusted evita, representing increases of 105%, 75%, and 94% respectively, compared with the first quarter of 2024. Our projects exported a total of 234 TPTU of LNG, a new record high for the company, which is an increase of 113 TPTU, or 93% from the fourth quarter of 2024. This impressive performance and increase in LNG production are attributable to project execution discipline and operational excellence of the Venture Global team. On page seven, we provide greater detail on our quarterly results, which we achieved as we wrapped up commissioning and replication work on our Calcasieu Pass project, continued construction and commissioning on both phases of our Flockmans project, and progressed our subsequent projects, including CP2. At Calcasieu Pass, we exported 34 commissioning cardos during the first quarter, and we are proud to report that Calcasieu Pass achieved its commercial operation date, or COD, on April 15, 2025. Although this milestone occurred after the end of the first quarter, we wanted to highlight this important achievement for the company and our team, who worked exceptionally hard to execute very challenging replication work without a single recordable safety incident. Flockmans exported 29 commissioning cardos during the first quarter, and we continued to see strong performance from this facility with all 18 liquefaction trains activated during the quarter, demonstrating production levels of approximately 140% of mainplate capacity. This gives us confidence that following completion of our construction and commissioning, Flockmans will be able to perform at the uprated capacity of 27.2 MTPA that FERC recently authorized. At present, Flockmans is producing LNG from 22 liquefaction trains, and we expect to have started up all 24 of the Phase 1 liquefaction trains by the end of May. Turning to CP2, the project received a non-FTA export authorization from the U.S. Department of Energy on March 19, locking in an essential permit ahead of our final investment decision, or FID, for Phase 1 of the project, which is anticipated for the middle of this year. We also recently entered into a $3 billion bank loan facility from a syndicate of 20 global banks, which will help fund capital expenditures associated with the project until FID, at which time we will pivot to a traditional construction loan. In addition, CP2 upsized its 20-year SPA with new fortress energy from 1.0 MTPA to 1.5 MTPA, bringing CP2's 20-year SPA total to 9.75 MTPA. We believe we are making good progress on the contracting front and anticipate further updates on SPAs during the second quarter of 2025, both with other existing SPA counterparties as well as with potential new customers. Furthermore, FERC issued its final Supplemental Environmental Impact Statement for CP2 on May 9, as best products, recommending approval of the project. This is the second instance of FERC finding that CP2 would have no significant air quality impact and positions FERC to approve the project and issue notice to proceed with construction imminently. Our business is scaling rapidly, with 18 local faction trains now commercially operating at Calcutta Pass, another 36 trains delivered at Flockermans, with 22 activated thus far. In another 36 trains purchased for CP2, Venture Global will be capable of providing over 67 MTPA, a peak production across our first three projects once complete, before considering the significant brownfield expansions we have previously announced. As we noted last quarter, changes in natural gas prices, both domestic and international, could impact our consolidated adjusted EBITDA guidance. We have seen the spread between domestic and international prices for gas and LNG compressed since our previous report, which naturally influences how we think about guidance for the remainder of the year. Looking ahead to the remainder of 2025, we are revising our guidance from our previously reported range, but now expect that our consolidated adjusted EBITDA for 2025 will be between $6.4 and $6.8 billion. This reflects a $6 per MMBTU to $7 per MMBTU fixed liquefaction fee range for available cargoes, which is consistent with recently executed transactions in current market forward prices and provides Venture Global with additional margin that we can reinvest into our asset base. We will continue to update our guidance each quarter to reflect shifts in market forwards, especially during the commissioning phases of our projects. As Jack will cover later in the call, our 2025 guidance will become less sensitive to movements in market prices as the year progresses and we continue to contract our available cargoes. Shifting gears a bit, I would now like to focus on Capshaw Pass, which is covered by page 9 of the presentation. As mentioned, during the first quarter of 2025, Capshaw Pass was able to export 34 commissioning cargoes and realized a weighted average fixed the cofaction fee of $8.80 per MMBTU. While producing these cargoes, the facility simultaneously navigated all remaining work related to commissioning, carryover completions, rectification work, reliability testing, and other unfinished items and commenced commercial operations on April 15th, thus 68 months after FID, outpacing other projects that took FID before Capshaw Pass. Our Q1 2025 operating and maintenance costs at Capshaw Pass reflect the incremental expenses of completing this significant work. Importantly, having completed this work, Capshaw Pass is performing with materially improved reliability and availability levels. Since COD, the facility has delivered cargoes on schedule to all foundational customers and we look forward to operating the facility safely and reliably for the full duration of our customers' largely 20-year SBA tenors. For the second, third, and fourth quarters of 2025, based on liquefaction fees achieved from cargoes sold on a forward basis to date, which includes some commissioning cargoes from the beginning of April, we anticipate capturing a weighted average liquefaction fee of $2.21 per MMBTU across all forward sold Capshaw Pass production. Including the 34 cargoes exported from the facility in this quarter, we now anticipate exporting between 145 and 150 cargoes by the end of the year, an increase of two cargoes to the top of our previously reported range and an increase of six cargoes to the lower end of our range, reflecting our confidence in the production capacity of the rectified equipment. I will sum up my remarks on Capshaw Pass with a brief note on safety, which is our top priority. To date, our team has achieved a total recordable incident rate, TRIR, of .10, far outperforming the national industry average of 1.9. We are very proud of our team for maintaining the safety record, especially while pushing towards DOD. Moving on to Plaquemines and flipping to page 10 in the presentation, I will focus on the construction and commissioning progress achieved at phases one and two of our 20 MTPA main plate project south of New Orleans. During the first quarter of 2025, the Venture Global team achieved an extraordinary safe startup of the first 18 liquefaction trains at the facility. This enabled Plaquemines to export 29 commissioning cargoes, meeting the top of our previously projected range, and realized a weighted average fixed liquefaction fee of $7.26 per MWTU. All major equipment and materials, including all 36 liquefaction trains, have been delivered to the site, and to date, LNG has been produced from 22 trains, while the remainder of the facility is simultaneously constructed. As detailed in our prior report, Plaquemines is engineered, permitted, procured, and installed approximately 400 MW of temporary power at the facility. This proactive measure has allowed Plaquemines to mitigate contracted delays, especially with respect to the power island, and continue progressing commissioning and startup activities. Although we are very encouraged by the progress at Plaquemines thus far, we recognize the challenging and highly variable construction and commissioning process laying ahead. For 2025, including the 29 cargoes exported from Plaquemines in this quarter, we now anticipate the facility exporting between 222 and 239 cargoes by the end of the year, which represents a slight increase to the lower end of our previously reported range. Plaquemines has contracted 89 of these remaining cargoes thus far, capturing a weighted average fixed liquefaction fee of $7.46 per MWTU. Again, I want to highlight the leading safety performance at Plaquemines. Today, our team has achieved a TRIR of only .21, roughly one-tenth of the national average TRIR of 1.9. And collectively, across Kokushew Pass and Plaquemines, we contracted 45 more cargoes for export in 2025 since our prior report, and have contracted 198 of a potential 326 cargoes for roughly 60% of our total Q2 through Q4 2025 production. We believe this strategy allows us to de-risk our LNG production and reduce sensitivity to movement and market prices. I now want to turn to our next project, CP2, which is covered on page 11. CP2 is a 20-million ton per annum mainplate facility consisting of 36 of our factory-built liquefaction trains. Based on the performance of similar trains at Kokushew Pass, the design improvements implemented at Plaquemines and the performance of those trains today, we believe CP2 will be capable of peak production of 28 MTPA once completed and commissioned. Further, we currently estimate more than 550 cargoes will be exported during the construction and commissioning of the project's two phases. CP2 received conditional approval to export LNG to non-FTA nations from the U.S. Department of Energy on March 19, 2025, including a lengthy process with the DOE standing multiple administrations. We appreciated the support of the Trump administration in lifting the Department of Energy's pause on issuing new LNG export approvals and swiftly resuming the LNG export authorization process. On May 9, FERC issued the final environmental impact statement for the project, reconfirming their positive analysis on the project and setting it up for final approval by the commission, which should result in the issuance of notices to proceed with on-site construction this summer. Subject to obtaining FERC approval, we anticipate mobilization to site and beginning site works and dredging by the middle of this year. As I mentioned at the beginning of the call, we recently entered into a $3 billion bank loan facility from a syndicate of 20 banks to fund CP2 manufacturing, procurement, and engineering ahead of an FID construction financing to be closed after receiving notice to proceed from FERC. These asset-level, non-recourse financings will fund capex associated with CP2 going forward, which represents a considerable majority of our planned capital expenditures. Our investments in the project to date have advanced CP2 considerably. We have deployed approximately $5 billion thus far with our key equipment suppliers and contractors, and we believe this preparation will enable CP2 to reach first LNG production on pace or even faster than our two projects. Turning to page 13, an LNG industry broadly. I would like to address some of the recently announced tariffs and highlight several factors that mitigate risk to our business. Our exposure to tariffs can be broadly bifurcated in two categories. One, exposure related to tariffs imposed by the United States, which could potentially increase the cost of raw materials fabricated modules we use to construct our facility. And two, retaliatory tariffs imposed by foreign nations on LNG imports, which could put downward pressure on demand for U.S. produced LNG. Beginning with tariffs imposed by the United States, our Talcachute Pass and Plaquemines projects are not exposed to any material import tariffs. Talcachute Pass is declared commercial operations, and Plaquemines has taken delivery of all major equipment. With respect to CP2, our investments to date have allowed us to procure, deliver, and stockpile a significant amount of raw materials, components, and in some cases, fully fabricated modules. Having that the tariff landscape is evolving and there is no assurance as to the ultimate impact on our business, we believe our total exposure amounts to roughly only 1% of our total budget for the CP2 project before considering any potential exemptions for materials relating to LNG facility construction. Shifting to tariffs imposed by foreign nations, while we cannot estimate the ultimate impact of these levies given the rapidly evolving geopolitical situation, we remain in close contact with our customers and stakeholders as the tariff conversation evolves. I will now turn it over to our CFO Jack Thayer to walk through our first quarter 2025 financials, as well as our guidance for the remainder of the year.

speaker
Jack Thayer
Chief Financial Officer

Thank you, Mike, and good morning to those on the line. I will be referring to the Venture Global Inc. Form 10Q for the quarterly period ended March 31, 2025. The 10Q 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 I believe are salient to this audience, and I encourage you to review the entirety of our financial statements in detail. Beginning with revenue, our top line was $2.9 billion for the first quarter of 2025, a $1.5 billion increase from $1.4 billion during the equivalent period in 2024. This increase in revenue was driven by one $1.1 billion from higher sales volume, 228 TBTU in the first quarter of 2025 compared with 141 TBTU in the first quarter of 2024, and two $380 million from higher prices. Weighted average fixed facility fees of $8.55 per MMBTU in the first quarter of 2025 versus $7.40 per MMBTU in the first quarter of 2024, and realized gas feedstock prices of $4.23 per MMBTU in the first quarter of 2025 versus $2.59 per MMBTU in the first quarter of 2024. Our income from operations was $1.1 billion in the first quarter of 2025, a $463 million increase from $617 million in the first quarter of 2024. This shift was primarily driven by the higher sales volume and higher LNG prices I mentioned previously, which resulted in a greater total margin for LNG sold. These increases were partially offset by $146 million higher depreciation and $143 million higher operating costs in support of the ramp up of LNG production at the Plackmans project and operating our LNG tankers, as well as remediation and rectification costs associated with the preparation of the Calcachew project for COD. Our net income attributable to common stockholders, which we refer to as net income, was $396 million for the first quarter of 2025, a $252 million decrease from $648 million in Q1 2024. This decrease in net income was largely driven by non-cash factors such as unfavorable changes in the fair value of our interest rate swaps, which constituted a quarter over quarter decline of $566 million. Shifting to consolidated adjusted EBITDA, we realized $1.3 billion during the first quarter of 2025, a $653 million or 94% increase from $693 million in Q1 2024. This increase in consolidated adjusted EBITDA was driven chiefly by higher sales volumes and higher LNG prices, resulting in greater total margin for LNG sold and was offset partially by $143 million from higher O&M. As Mike discussed, our projects exported a total of 63 commissioning cargoes in Q1, which increased from 40 cargoes compared with the same period in 2024. Of these cargoes, 228 TBTU volumes are reflected in our results for Q1 2025 compared with 141 TBTU in Q1 2024. Advancing to page 17, we are now guiding to a consolidated adjusted EBITDA range of $6.4 billion to $6.8 billion for 2025, incorporating a forecasted 145 to 150 cargoes from Calc Issue Pass and 222 to 239 cargoes from Placman's, inclusive of the 63 cargoes we exported in the first quarter across both facilities. This consolidated adjusted EBITDA range was determined assuming fixed liquefaction fees of between $6 and $7 per MMTU for cargoes remaining to be sold over 2025, consistent with current TTF and JKM forward price expectations. This consolidated adjusted EBITDA forecast also assumes approximately $300 million of Q2 through Q4 expense development spending, related primarily to regulatory and engineering design spend on our development projects. On average, if fixed liquefaction fees over the remainder of 2025 increase or decrease by $1 per MMTU, we expect our consolidated adjusted EBITDA range to adjust accordingly by $460 to $480 million down from the $625 million to $675 million range provided in our previous guidance. This reduced sensitivity to market prices reflects the contracting we executed during the first quarter. Our current guidance was adjusted less than our prior sensitivity range of $625 to $675 million would have suggested due to this pace of contracting. I will now turn the call back over to Mike.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

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

speaker
Moderator
Call Moderator

Thank you. This concludes Venture Global Link's first quarter 2025 earnings presentation. We will now open the line for questions from the public. Please press star 1 to ask a question. First question comes from John McKay at Goldman Sachs. Please go ahead.

speaker
John McKay
Analyst, Goldman Sachs

Hey, everyone. Good morning. Thanks for the time. I wanted to pick up on Hey, morning. I want to pick up on some of your ability to sell more cargoes looking forward in the near term. So you had about 40 ish since the last presentation. You just remind us like, is that the right pace going forward? What's been your ability to kind of fully capture the margin we see on our screen with those sales? And how does that change as we kind of look forward into into 26?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

And now we're, we're really pleased with, with the, the market demand and appetite for our cargoes. You know, we're, as you know, we're going from 18 trains at the end of 2024, producing LNG, and by the end of this year, it'll be 54 trains. And so we don't look to make bets or predictions on what future prices are. And we layer in, you know, strips of, of sales of future cargoes. And so we're, we're pleased with it. And the market demand this year and next year as we are marketing those cargoes looks very, very strong.

speaker
John McKay
Analyst, Goldman Sachs

Maybe just a little more specifically, is this effectively formulaic at this point where you're looking to have, you know, X percent of four cargo four quarters forward sold out, you know, lower percent, etc.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

It's not quite formulaic, but we we we are on a fairly steady basis weekly, working on transactions of sales of cargoes for the balance of this year and into into next year. You know, the, the customer appetite on the other side is, is fairly, fairly steady as customers are looking to fill out portfolios. And in the case of Europe, executing their plans to put the capacity, the import capacity volumes that they want in place or to fill up storage in Europe, which still is a little, a little below historical levels at this point. And so we feel really good about about demand. And, and, and, you know, we watch, we watch the conversations in the tariff negotiations with China, which, which also could result in increased demand this year.

speaker
John McKay
Analyst, Goldman Sachs

And maybe I'll just add one more question just on that. Yeah. What are those longer term contract conversations looking at? Like right now you, you know, increased the New Fortress contract. You talked a little bit about this, but just talk to us a little bit more about your ability to sign more 20 year SBAs at this point.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

We are, we're very active in a, in a significant number of negotiations for long-term contracts at this point, mostly, mostly all 20 year terms. And so we, we, we expect to be, we expect to be executing and reporting, reporting on, on multiple 20 year contracts in the, in the, in the, you know, the incoming quarters. And we're, we're really pleased with the, with the demand and, and where we stand in those negotiations. So we, we, we, the market, the investors in our company should expect to see announcements for more 20 year deals. Appreciate that.

speaker
John McKay
Analyst, Goldman Sachs

Thanks for

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

your time.

speaker
Moderator
Call Moderator

Yep. Thank you. The next question comes from Jeremy Tonette at JP Morgan. Please go ahead.

speaker
Jeremy Tonette
Analyst, JP Morgan

Good morning. Hi. Just wanted to pick up with the contracting conversation, if I could. I wondered if you could provide any updated thoughts on how you think about levels you look for, for CP2 as you look to expand here, what levels of percent contract long-term you'd like. And then at the same time, I guess, as you're looking to sign these new contracts, just wondering if you could expand a bit more how you see, how you stand versus competitors here in winning new contracts and are your targets more existing customers or new customers? Just wondering how you think about given how competitive things are out there.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

So in, in the last, well, really in the last three, four months since, since we started ramping up block amends and have seen how the facility is producing really significantly above what our upper range of expectations were on production capacity, you know, the 140% that we've been talking about. And as we, as we said in my opening remarks, we, we expect to see, to see that are even a little bit better for CP2. So we're, we're, we're, we're at built and are building more production capacity than, than, than we expected and plan for, you know, even just a few months ago. And so our appetite to signing more long-term contracts is greater than it was until recently. So we are, we are intending to do more 20 year contracts than we had been planning and, and which we're excited about. Appetite is very strong in the market right now. I would say it's better than it has been for the last several years. And we're, our ability to win contracts with our cost and price advantage in the market is very strong. And so we are expecting to increase our 20 year contract portfolio with existing, but also with, with new customers as well. And like I said, in my, my, my previous comments with, with John, you know, I think people should stand by for, you know, more announcements of 20 year contracts and incoming quarters.

speaker
Jeremy Tonette
Analyst, JP Morgan

Got it. Thank you for that. And maybe pivoting towards CP1 just as far as the operations there, just wondering if you could, you know, talk a bit more, I guess, how you see the expected ramp there, you know, how you think about achieving the targeted access capacity, the numbers that you put out in, in the past, do you think that is something you hit by the end of this year or 26, or just any color in general would be very helpful? Thanks.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Sure. Since we finished the rectification work earlier, really at the end of the first, the first quarter and early in the second quarter that allowed us to take COD in, in April 15th, which we're super excited about the culmination of many years of work, particularly as it's our project. We're very pleased since that work has been completed on the performance of Capshaw Pass, and we performed really well through the lender reliability test. And, and so we, we feel that the guidance that we've given on the production for the year from Capshaw Pass is, is conservative and reasonable. And we continue to consume the mass and create a massive amount of data during the, the production at Capshaw Pass that allows us to look for opportunities for enhancements to, to our production levels. We also, since we made some significant design improvements between Capshaw Pass and Plaquemines have learned a lot at Plaquemines already that we'll be able to go back over time and apply to Capshaw Pass to increase our production levels. And we have a pretty, we have, because of that, we have a pretty clear idea and plan about what we're, about what we're going to be able to achieve at Capshaw Pass. For the, for the moment, we're gonna maintain the guidance where we stand and we'll let a quarter or two pass. And as we layer in, in some incremental improvements there, we, you know, we, we know there are opportunities on the upside at Capshaw Pass. Our Plaquemines and CP2 facilities, including the significant brownfield opportunities at both those facilities are so much larger, just on an absolute basis, than Capshaw Pass. That, that the upside opportunities of those facilities really kind of from a math standpoint overwhelm that incremental upside at Capshaw Pass. We'll still do it, but, but, but the upside in the math is just going to be bigger at the bigger facilities.

speaker
Jeremy Tonette
Analyst, JP Morgan

Got it. That's helpful. Thank you.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Thanks, Jeremy.

speaker
Moderator
Call Moderator

Thank you. The next question comes from Jean Ann Salisbury at Bank of America. Please go ahead.

speaker
Jean Ann Salisbury
Analyst, Bank of America

Hi, good morning. As just noted, your volume ramp for Plaquemines has been really impressive. So just to kind of drill down a bit on the comments that you just had, but what is, going forward, what is the sort of limiter or limiting factor that drives your Plaquemines ramp? Is it getting approvals to start the modules or the constraints driven by the temporary power or something else that drives the volume ramp there?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

That's a great question and it has, has a big impact on our, on our, on our year, just because of the significant number of trains that we're adding. The ramp is, at this point, is really constrained by the ramp of power as we increase the power required for the trains. And FERC is doing a good job keeping pace with our incremental commissioning activity at Plaquemines. And so really it's, it's the power. We plan for years to layer in the temporary power between the additional turbines that we integrated into the site and how we added some simple cycle capacity that's temporary out of our phase one power plant that's allowed us to achieve this, this, this significant ramp, which I, I think I have the math in front of us, but it might be that, you know, the fastest ramp up to, to our cargo count that's been done at any facility. We'll have, we'll have more of that, more, more on that in the future, but it really is about the, about the power ramp. But we, we plan to and expect to have all 36 trains at Plaquemines producing LNG this year, which will take our total to 54 trains, which we're, which we're really proud of the team on. And, and, and, you know, as you know, we purchased 36 trains at CP2 already. So we, we, you know, we're, we're producing, commissioning, manufacturing, developing, you know, 90, 90 trains right now as a company.

speaker
Jean Ann Salisbury
Analyst, Bank of America

Great. That's, that's very helpful. And then do you anticipate that getting the FERC permit at CP2 will help you get contracts? Was that important to potential customers?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

I think in this permitting environment, people expect, people fully expect and have expected CP2 to get all its final approvals. And so I don't think that was a constraint or is a constraint on the customer side. We don't feel constrained. We're in active discussions with all the contracts that we want for CP2. And, and so we don't, we don't feel constrained at all on it. And we feel like they're going, they're going, they're going well.

speaker
Jean Ann Salisbury
Analyst, Bank of America

Great. Thanks a lot. It was a

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

major milestone to get the permit. We're in the process of changing in with the, the approval just this past Friday, the confirmation from FERC on our supplemental air, vermal impact statement on schedule from FERC. And, you know, the second time they've reaffirmed that we have no significant impacts on, on air. And of course we have the full FERC authorization from FERC already on the overall EIS and are waiting for just the final commission confirmation of that.

speaker
Jean Ann Salisbury
Analyst, Bank of America

Great. Super helpful. Thank you.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Right. Thank you.

speaker
Moderator
Call Moderator

Thank you. The next question comes from Elvar Vascado at RBC Capital Markets. Please go ahead.

speaker
Michael Bloom
Analyst, Wells Fargo

Good morning Elvar.

speaker
Elvar Vascado
Analyst, RBC Capital Markets

Good morning everyone. Thanks for all the tariff commentary and cost impact to CP2. Can you talk about some of the other costs specifically? I'm thinking labor costs, especially as we see, you know, more of these projects potentially move forward. You know, so any other costs or your views on, on, on, you know, if there's a potential that CP2 goes above that 27 to 28 billion cost estimate.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

So we think from a cost perspective, you know, the last couple of years and we, we think it will continue to be the case in the near term is, is probably the toughest environment to build our projects in since the, you know, the 1970s. Just given the intense inflation that's occurred and the higher interest rates on top of it that's in the last few years. So it's a, it's an incredibly challenging environment. And, and, and, and so it's something that we work, we work and live every day because of the scale of construction that we're doing every month at Plaquemines and, and, and CP2 through all the procurement and fabrication activity that we're already doing it at CP2. Having said that, we think we're in the strongest position of any project in the world to manage it. Our unique configuration where so much of our facility is, is manufactured and fabricated in, in factories and fabrication facilities around the world gives us a huge advantage on that. We have scripted that out for the third time with our team for CP2 after CP1 and Plaquemines. So we think we're in a very strong position from what we've projected on costs for CP2. We are very far along. In fact, the farthest we've ever been on a project on both engineering and procurement and have received, for example, most of our power plant for phase one is already in our possession. Our first liquefaction trains arrive in just the next few months. I think we're planning on 12 roughly for this year, 12 trains for this year that are already in manufacture. And so we feel, we feel really strong about that. On the labor side, again, because so much of our facility is built off site, we have the lowest labor footprint of, I think, any LNG project of our scale and on a, you know, on a relative or pro forma basis on size of a facility. But so we think we're in a very strong position and because of our cost, our net cost advantage as a project, it gives us pricing power. So, you know, any challenges on costs and schedule that exists in the macro environment for us are really opportunities for us to gain more advantage over competitors.

speaker
Elvar Vascado
Analyst, RBC Capital Markets

Okay, great. Thank you for that. And then just going back to the competitive environment, given, you know, the competition and the potential FIDs here, what are you seeing in terms of kind of offtake rates or fees? Are you seeing downward pressure on rates or is the appetite strong enough that rates are holding steady?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

There are a lot of projects out there that are competing and offering contracts. They're not all equal though because the delivery schedules for projects are very different and in the case of CP2, given how we are able to execute on schedule for Plaquemines creates an advantage for us, including how far along we are in our investments in engineering at CP2 as well. And so, you know, those advantages show up in price as well, either in potentially higher prices that can be achieved or in the ability to capture market share because of the attractiveness of and when we can deliver those. I would say overall that the ability to raise prices in this market is a little bit limited for the moment, but the ability to execute at prices that are very profitable for us is super attractive right now.

speaker
Elvar Vascado
Analyst, RBC Capital Markets

Great. Thank you very

speaker
Moderator
Call Moderator

much. Thank you. The next question comes from Brandon Bam at Scotiabank. Please go ahead.

speaker
Brandon Bam
Analyst, Scotiabank

Morning, Brandon. Hi, good morning. Thanks for morning. Thanks for taking the question here. Wanted to ask, and I know this is a smaller piece of the pie right now, but just if you could discuss some of the lower 48 production developments that we're currently seeing and that are sort of expected to persist over the next 12 to 18 months, what if any potential bottlenecks or maybe opportunities do you see with some of the projects, the pipeline projects specifically that you kind of have going and in the backlog or maybe even to a lesser extent on the sourcing of feed gas side of things?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

So, you know, from a middle and longer term perspective, we expect there to be a faster permitting environment that's going to be very positive in just providing more connectivity between the basins and support investments in more production to support rising demand. For us, in the case of CP2, we are super happy with the plan really that we laid out a couple years ago and we've been executing on, which is a longer lateral, which is called CPX for CP2, which goes to the west and interconnects with lots of pipes, including a large pipe, black fin, that is moving along well with our partners at Whitewater that connects further to the west with Matterhorn, which is a pipe that goes all the way to Permian, where we have a 20-year, a very large 20-year transportation agreement with, and so we feel in great position on gas supply for our next project, CP2. For existing projects, there's additional pipes that are going in in Haynesville, additional in Texas, and multiple pipes also cutting across going from west to east that give us bringing over more supply that will support Plaquemines as well. I will add, just going back to the huge amount of gas that with our pipes and other pipes will be coming across from the Permian, that nitrogen content, which is higher in Permian, creates a challenge for liquefaction and in shipping, and we anticipated this several years ago and engineered and procured and are now fabricating huge NRI systems, which I think right now are the largest on the Gulf Coast that will enable us to process large volumes of Permian gas, which other facilities are going to be more challenged with, and so we look in the, we feel, like I said, we feel really good about our gas position for all our projects, but CP2, our next one as well.

speaker
Brandon Bam
Analyst, Scotiabank

Great, great. That's great to hear. And then maybe just a quick one. Like Plaquemines' first LNG timing was pretty accelerated. To what extent can we maybe extrapolate that into CP2 timing just kind of given the manufacturing style or modular style of the business and the assets?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

We think quite a bit. So the first trains at CP2 will be trains number 55 and 56, and that applies to our other systems since our facilities are largely identical, and our team, which is 1600 and growing, have now executed multiple identical systems. So that's a big difference in the way we've done our systems across power and liquefaction and pretreatment and balance of plant, marine systems, et cetera, and those lessons learned have carried over into CP2, and we're really excited about it, where things that have worked well or things that didn't work well are incorporated into our execution. We are also the furthest along on engineering and procurement by far of our three projects. Pre-FID for Plaquemines for both Phase 1 and Phase 2 were a little over $1.6 billion, and for CP2 were around $5 billion, and so that combined with how far along on engineering and how we're repeating execution of the same configuration systems, equipment, supply chain, make us really excited about execution for CP2. And so we think, subject to weather delays at CP2, that our target is to do better than we did at Plaquemines. And the weather delays are really accumulated lightning stand downs more than hurricanes. Over the course of construction of several years, it's afternoon lightning activity that causes you, for safety reasons, to stand down at construction sites. Generally aggregates the more days off than hurricanes coming through. But other than that, we feel very excited about where we are planning on schedules for CP2.

speaker
Brandon Bam
Analyst, Scotiabank

Awesome. Very helpful. Thank you.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Thank

speaker
Brandon Bam
Analyst, Scotiabank

you.

speaker
Moderator
Call Moderator

Thank you. The next question comes from Chris Robertson at Deutsche Bank. Please go ahead.

speaker
Chris Robertson
Analyst, Deutsche Bank

Hey, good morning. Thank you for taking my questions. Hey, Mike. Just as it relates to the conversations with potential new contract customers, are those conversations taking place with the traditional kind of Northwest European and Northeast Asian market participants? Are you having conversations with potential customers in other regions, Southeast Asia, South Asia, and other emerging markets?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

We are talking with the traditional buyers that you described in addition to some that are in other regions as well. I would say the bulk of it are the known buyers in the market. And as I'm answering this question and thinking about just the distribution of buyers, it's still tilted a little bit towards European buyers. But the Asian buyers, and that includes multiple countries in Asia, are still very active. And I would say the level of interest I would still describe as increasing from an already very active level.

speaker
Chris Robertson
Analyst, Deutsche Bank

Okay, great. It's pretty

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

broad. Go ahead.

speaker
Chris Robertson
Analyst, Deutsche Bank

Go ahead, Mike.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

We're incredibly bullish on the short, middle, and long-term demand for gas. We continue to see that at the market activity and the appetite. And so the middle, short, and long-term contracting activity is strong, and we expect to get stronger. And we think that gas is going to play an increasingly important role as the data center demand continues and the investment in data center demand continues to increase in a market that we still view as very, very tight on electricity generation capacity in both Europe and Asia. And so it's a great market to be in and venture global between CP2 and our brownfield expansions is probably the largest stop for available capacity in the next three, four, five years.

speaker
Chris Robertson
Analyst, Deutsche Bank

Thanks for that, Tyler. Mike, it just has my follow-up question. As it relates to Plaquemines, you said you plan to exit May at 24 trains, will exit the year with all 36. Can you just comment around how many trains are producing at the end of March? And how should we think about either on a quarterly cadence or monthly cadence, will it be kind of steady ramp up from here or will there be certain quarters or months where there's a step change in production as a power unit is installed or optimized or something like that? Just commentary about cadence of a production ramp for the remaining of the year.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Right. Thank you, Jack. Jack Thayer is going to pick up that question.

speaker
Jack Thayer
Chief Financial Officer

Sure. So we had nine blocks or 18 trains operating at the end of Q1. We'll bring a further three on this quarter in Q2, which will complete the phase one liquefaction build out of the project. So the next step is completing the power island for phase one and getting that into combined cycle, which allows us to shift the temporary power to focus on bringing on the remaining blocks and trains in phase two. And you should see that pretty steadily ramped, but it will pick up in more of Q3 when we complete the power island in phase one and we're able to turn that temp power to bringing on the remaining blocks in phase two and Q4. Got

speaker
Chris Robertson
Analyst, Deutsche Bank

it. Yeah, that's really helpful. I'll turn it over. Thank you.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Yeah, I would add to that that when you look at first quarter to fourth quarter for Plaquemines, we're going to triple the production at the end of this year that we are today. And so when you think about going into the end of the year and next year, we're going to be moving from 18 trains at the end of this year to 54 trains producing all of next year. And so it's an enormous step change for us. And then of course, we're adding the 36 trains from CP2. There's a tremendous amount of building growth that's coming that we've already made our investments in that are still ramping up production and earnings on.

speaker
Moderator
Call Moderator

Thank you. The next question comes from Robert Mosca at Mizuho. Please go ahead.

speaker
Robert Mosca
Analyst, Mizuho

Morning, Robert. Hi, morning. Hey, morning, Mike. Just wondering if you guys could provide an update to the expansion potential at CP1 and maybe even CP2. The Plaquemines expansion you signaled last quarter was a bit larger than expected. So could we see similar expansion upsizing at those projects? And how would that affect the batting order alongside CP3 and Delta, just given a more costly construction environment?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

The brownfield expansion at Plaquemines and at CP2 are larger than we have been able, we have expected to be able to layer on top of our facilities. The throughput capacity of the we advanced our engineering studies proved to be much more positive than we initially thought. So those brownfield opportunities are much larger and which we're very excited about because we can build those faster and with the cost advantages of being brownfield. So given the scale of those, our plan is to shift those brownfield expansions in front of CP3. We're still going to permit all of it. But as far as timing goes, the large brownfields will shift in front of the CP3 and Delta. And we're also on top of it excited about, and this is part of the scale, the magnitude of the excess capacity production that we're going to be able to achieve on those brownfield expansions. We expect to look just like what we're achieving or better on Plaquemines. And also I'd layer on that because those brownfield opportunities are much larger, we have a lot more volume that we can contract on a long-term basis at very attractive competitive prices. And so we're going to do, I would say, a significant more amount of long-term contracting as a result of how much larger these opportunities are than we had planned even just a few months ago.

speaker
Robert Mosca
Analyst, Mizuho

Got it. That's helpful, Coller. And follow up for me, just revisiting the cost outlook at CP2, wondering what your timeline's looking like for entering into an EPC contract for phase two?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Keep in mind, the EPC for us has a different role than it does for the rest of the industry that outsources their custom construction for the whole facilities. Because we build so much of our facilities starting back with our first project, CP1, through manufacturers and fabricators. We, again, starting with CP1 managed and as owners a huge portion of our facilities and so the EPC scopes are smaller. We also have built our own internal EPC team that's hundreds and hundreds of very specialized, we think high performers, for all our scopes. And so we manage execution, we're doing it at Plaquemines and we'll do more of it at CP2. And so the role of EPC is much smaller for our projects. We've been working in engineering, procuring with Whirly at CP2 and they've been an active partner for us. And so we expect to layer on additional EPC contracts here in coming months. But we're working closely now with EPCs and very large subcontractors performing massive scale work. As we described, $5 billion into CP2 as well already. So there's a huge amount of activity with a large number of contractors that's been ongoing for a couple years now.

speaker
Robert Mosca
Analyst, Mizuho

Got it. Appreciate the time everyone.

speaker
Moderator
Call Moderator

Thank you. The next question comes from Michael Bloom at Wells Fargo. Please go ahead.

speaker
Michael Bloom
Analyst, Wells Fargo

Thanks, Ted. Good morning, everyone. Good morning. So I see the spending plans at CP2 in the slides. So thank you for that. So my question is, does this represent all or most of the CAPEX spending you're planning in 2025? And if not, how do we just think about total CAPEX in 2025?

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

CP2 is the vast majority of the CAPEX expense. The Brownfield projects that we talked about earlier on this call are in permitting right now. And so the bulk of the expense will be CP2. We will have some other expenses related to growth, but the bulk of it is going to be CP2. And Jack, did you have additional that you wanted to add as well?

speaker
Jack Thayer
Chief Financial Officer

Only, Mike, that as you mentioned in your remarks, we're undergoing the FID process for CP2. The critical cost of the process is $1.5 billion. The critical first step of that was the $3 billion bank loan that is funding the growth as we finalize contracting and get ready to proceed to full FID and launch once we receive notice received from the FERC. So we feel good about our funding levels and our access to capital. And the focus, Mike, as you mentioned, is almost exclusively CP2 and then permitting and engineering development of future expansion projects.

speaker
Michael Bloom
Analyst, Wells Fargo

Great. Thanks for that. That's all I have today.

speaker
Mike Stable
CEO, Executive Co-Chairman and Founder

Yeah, I would add our CP2 expenses are project level asset-based project financing, which we've done previously and the market is used to seeing.

speaker
Moderator
Call Moderator

Thank you. This concludes Venture Global Inc's first quarter 2025 earnings presentation. The presentation can be found on the company's website. Thank you for joining. Goodbye.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

Q1VG 2025

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