Venture Global, Inc. Class A common stock

Morning, and welcome to the Venture Global Inc. Second Quarter 2025 Earnings Call. At this time, I would like to turn the conference call over to Ben Nolan, Senior Vice President, Investor Relations.

Thank you, Operator. Good morning, everyone, and welcome to Venture Global Inc.' 's Second Quarter 2025 Earnings Call. I'm joined this morning by Mike Sable, Venture Global's CEO, Executive Co-Chairman and Calendar Jack Baer, our CFO, and other members of InterGlobal's Dean of 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 Investor section of our website. Additionally, we may include references to certain non-GAAP metrics, such as consolidated adjusted ELISA. Reconciliation of these metrics to the most relevant GAAP 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. will not update or affirm guidance other than through broadly disseminated public disclosure. I'll now turn the call over to Mike Sabel. Thank you, Ben. Good morning, everyone, and thank you for joining us today. We are pleased to share our second quarter 2025 results and update our guidance for 2025, which we believe will be a strong year for Venture Global. I will begin the call with an overview of our second quarter 2025 key accomplishments and results before shifting to our LNG projects individually. I'll then make some remarks on the L&G industry broadly before turning over the call to Jack, who will provide a more detailed review of our financial results and updated guidance for fiscal year 2025. Following all prepared remarks, we will open the call to Q&A. Turning to page five of the presentation, we are pleased to highlight that the past several months have been especially productive for Venture Global. First, we took our final investment decision, or FID, on phase one of our CP2 project, which was the single largest standalone project financing ever. And as we'll discuss more in a moment, our team is fully deployed and working to safely build our third large-scale LNG production facility. Importantly, we took FID without issuing incremental equity and retaining 100% ownership in the project. Secondly, I'm happy to say that the team here delivered on the commitment I made last quarter to sign multiple long-term LNG sales and purchase agreements, or SBAs, in coming quarters. In July, we signed two new 20-year contracts, one with Petronas and one with Eni, and expanded our long-term sales to SEPA in Germany, increasing the total exported volume under that contract to 3.75 MTPA. We expect our long-term contracting activity to continue through the remainder of this year. And finally, on the capital front, in addition to the $15.1 billion of financing we completed as part of the CP2 FID, we also raised $6.5 billion in new bonds to refinance construction term debt at Blockman's. Adding to these notable milestones, Venture Global shipped a record 89 cargoes in the second quarter of 2025, which is at the top of the guidance range, as we continued the production ramp-up at Blockman's. This ramp up in combination with stable output from Crop Sheet Path enabled us to generate $3.1 billion of revenue, $1 billion in income from operations, net income attributable to common shareholders of $368 million, and $1.4 billion of consolidated adjusted EBITDA representing increases of 180%, 186%, 21%, and 217%, respectively, compared to the second quarter of 2024. Once again, this impressive financial performance and the growth in LNG production are attributable to consistent execution and operational excellence by the venture global team. As we noted last quarter, changes in natural gas prices, both domestic and international, could impact our consolidated necessity to provide guidance. While both domestic and international gas prices have fluctuated since our last report, we have continued to lock in future cargo sales and reduce our exposure to pricing variability for the year. As a result, looking ahead to the remainder of 2025, we are maintaining our guidance for $6.4 to $6.8 billion of consolidated adjusted EBITDA for 2025, which reflects a $6 to $7 per MMDTU fixed circle faction fee range for available cargoes, which is consistent with recent contracting in current PTF and JKM forward price expectations. We will continue to update our guidance each quarter to reflect shifts in market forwards, especially during the commissioning phases of our projects. Moving to slide six, following the final investment decision of CPT phase one, we thought it would be interesting to take a look at how far venture global has come in a short time. Six years ago this month, we took FID on our first facility, . Now, based on our three projects in operation, exporting, or under construction, totaling approximately 67 MPPA, we would be the largest LNG producer in North America and the second largest in the world, and with $46.5 billion of assets as of June 30th. We have an average remaining contract duration of 19 years now, relative to make that capacity, And we expect to have 17 MTPA of excess production capacity from our first three facilities before including brownfield expansions. And we believe we are on track to meet our goal of 100 million tons or more of production online or under construction by 2030. As I mentioned, but I think it's worth reiterating, we have not needed to sell any equity interest in either Placomans or CP2 to support our financing and retain 100% ownership with our shareholders in both projects. Our facilities will significantly improve U.S. balance of trade with potentially more than $1 trillion of export value to the United States over the coming decades. I'm also extremely proud to continue our industry-leading safety record as Venture Global's top priority is making sure that our hardworking people make it home safely each day. Lastly, Venture Global is continuing to support thousands of jobs in Louisiana and across the country. making a positive impact on the communities in which we operate. Turn to page eight, and we'll dive a little deeper into the projects. As you know, we announced the FID for CPT phase one on July 28th. Phase one is a mainplate capacity of 14.4 MPPA, but following the improvements we have made as a result of our ongoing optimization efforts, we believe the peak run rate production level of phase one should be closer to 20 MPPA. Including Phase 2, which we expect to FID in 2026, the 36 factory-built liquefaction trains from both phases should be capable of production of 28 NTPA once completed and commissioned. We expect first LNG before the end of 2027 and continue to estimate more than 550 cargoes will be exported during the construction and commissioning of the project's two phases. On June 3rd, our team fully mobilized and started site work at CP2, following final approval and notices to proceed from FERC, as well as our receipt of the conditional non-FDA export authorization from the U.S. Department of Energy. There are now over 1,200 people and more than 500 major pieces of construction equipment on site. Key on-site activities include early site preparation, logistics, establishing roads, installing silt fencing, dewatering, and drainage, cut and fill soil stabilization, and establishing pile test beds. Key accomplishments include the placement of over 13,000 loads of soil in aggregate, the placement and consumption of over 26,000 tons of cement, the dredging of over 650,000 cubic yards, and the clearing of over 700 acres including 100% silt fencing. Lastly, we have begun full mobilization including crane delivery and erection for the storm surge wall construction, and the tank construction. Tank one, plural stabilization, final grade, and test pile program is now complete and transferred over for construction. Of course, all of this work is being executed in parallel with our off-site procurement and fabrication activities. In particular, I'd highlight that Baker Hughes has completed the first two liquefaction trains, which are currently being stored at its fabrication facility in Italy. Incidentally, we have included a number of pictures in the appendix showing site progress, equipment under construction, and a number of long lead time items like gas, turbines, and pipes that have already been delivered and are in storage awaiting construction. The final investment decision of Phase 1 was made possible by the support of 29 banks lending $15.1 billion, including the refinancing of the $3 billion free FID bridge loan we discussed on the last call. We appreciate the support of our lending partners, and I'm happy to report the project financing was nearly three times oversubscribed, despite already being the largest standalone project financing in history. With financing in place, a solid start to both onsite work and on the construction of our numerous project components. The project is progressing smoothly, and we believe our early preparation will enable CP2 to potentially reach first LNG production on pace with or even faster than our first two projects. Commercially, we signed two new 20-year off-take agreements last month with Petronas and Eni, respectively, and expanded our sales commitments under an existing SPA with Cephe, increasing their total LNG volumes to 3.75 MCPA of LNG. Importantly, Eni's two MCPA contracts with CP2 was its first ever long-term off-take agreement with a U.S. LNG producer. Collectively, these three new commitments bring the total contracted volume for CT2 up to 13.5 MTPA. At this point, we are contracting for Phase 2, which has 5.6 MTPA of main site capacity with expected peak production capacity of about 8 MTPA. Following several additional offtake agreements, we anticipate Phase 2 FID at some point next year. funded by internally generated cash flow and project financing similar to what we executed for phase one. Next, I'd like to focus on TaxuPass, which is covered by page nine of the presentation. During the second quarter of 2025, TaxuPass was able to export 38 cargoes and realize the weighted average fixed refraction fee of $2.66 per MMBQ in the second quarter. The cargoes were a blend of commissioning cargoes sold prior to April 15, 2025, COD rate, and cargoes sold under a long-term SBA. The lender's reliability process completed in May, and production levels were stabilized. For the third and fourth quarters of 2025, based on liquefaction fees achieved from cargoes sold on a four-basis to date, we anticipate capturing a weighted average liquefaction fee of $1.95 per MMBQ across all forward-sold drop-to-pass production, which reflects contracted sales under our long-term SPOs plus a small number of excess cargoes, including the 72 cargoes exported from the facility in the first half. We now anticipate exporting between 144 and 149 cargoes by the end of the year, a single cargo decrease in cargoes from our previously reported range due to minor maintenance scheduled for Q3. On August 4th, HACHI Pass received approval from the Department of Energy to export an additional 0.4 MTPA to non-FTA countries, bringing total DOE export approval for the project to 12.4 MTPA. Moving on to Plaquemines and flipping to page 10 in the presentation, construction and commissioning continues to progress nicely for phases one and two. Since the start of the second quarter of 2025, the Venture Global team added six safe startups of liquefaction trains, bringing the total to 28 trains now in operation, with eight more scheduled over the next month. The continued progress enabled Plaquemines to export 51 commissioning cargoes during the second quarter, surpassing the high end of our previously projected range by one cargo. The facility realized a weighted average fixed liquefaction fee of $7.09 for an MBTU on these cargoes. As we have discussed in prior reports, Plaquemines is engineered, permitted, procured, and installed approximately 400 megawatts of temporary power at the facility. This proactive measure has enabled Plaquemines to mitigate contractor delays, especially with respect to Power Island, and continue progressing commissioning of cargo activities. We expect to be able to transition from these temporary power units to our permanent power outage capacity in the fourth quarter of 2025. Including the 80 cargoes exported from Plaquemines in the first half of the year, we now anticipate the facility exporting between 227 and 240 cargoes by the end of the year, which represents a fixed cargo increase to the lower end and a one cargo increase to the high end of our previously reported range. For the second half of the year, Plaquemines has contracted 102, or 64%, of the remaining cargoes, capturing a weighted average fixed with refraction fee to $7.04 for NMVTU on those contracted cargoes. Collectively across Capsule Pass and Plaquemines, we contracted 59 more cargoes for export in the second half of 2025 since our prior report, and it contracted 198 of a potential 326 cargoes, or roughly 74% of our total Q3 to Q4 2025 production. We believe this strategy allows us to de-risk our energy production and reduce sensitivity to movement in market prices. Additionally, we have added to the number of cargoes sold for 2026 with a total of 57 commissioning cargoes booked. For the first two quarters of next year, we have 34 cargoes or 19% of the potential cargoes not contracted with a weighted average fixed equal fashion fee of $5.41 per MMDTU. Turning to page 12 in LNG industry broadly, we remain optimistic on the outlook for both growth of the global LNG market and continued stability of LNG prices. As you see on the left, the forward curve reflects the market's expectation for largely stable pricing of LNG in both Asia and Europe, driving healthy spreads above the Henry Hutton. Flipping to page 13, we also have confidence that LNG markets will continue to grow and prices should remain relatively stable. The chart on the left shows 20 years of OMG production growth, which is averaged 5.5% per year. Based only on projects which have made FID final investment decisions, the supply growth rate to the end of the decade would be 7.4%, but that assumes no delays in project timing, which historically has been the case in most new facilities. Yet, as you can see on the right side of the page, Meaningful LNG growth has already occurred in the first half of 2025, with Europe in particular stepping up buying actively. As a result, price levels remain unchanged. We continue to monitor the ongoing trade discussions EU plans eliminate Russian LNG and potential secondary sanctions on Russia from the Trump administration. Due to our flexible large-scale LNG capacity, we are uniquely positioned to scale up our support to European partners should the market demand it. We expect that number is only growing as new countries like Vietnam and the Philippines and others become importers, and as countries like China continue to grow their import infrastructure footprint. China specifically is growing their regasification capacity from 152 MTPA currently to 260 MTPA by 2030, with some forecasting that number could be more than 300 MTPA by 2030, an enormous percentage of the market. And finally, on the arbitration, we are pleased with the tribunal's determination which reaffirms what venture goal was maintained from the outset. The plain language in our contracts mutually agreed upon with all of our customers is clear. We have consistently honored these agreements without exception. Our industry and the investors and lenders who underpin it all rely on respect for both the sanctity of negotiated contracts and the experienced, subjective regulatory and legal bodies that govern it. These principles will ensure our industry remains dynamic, fair, and competitive, enabling the innovation and breakthroughs that benefit all market participants and the customers we serve. Venture Global's unique ability to incrementally export conditioning cargos during the construction of our facilities has brought LMG to the market years faster than ever before and strengthened global energy security. The world needs more abundant, low-cost energy, and our company looks forward to playing a leading role in meeting that demand for years to come. I'll hand it over to Jack there as CFO. Thank you, Mike, and good morning to those on the line. I'll be referring to the Venture Global, Inc. Forum 10Q for the quarterly period ended June 30th, 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 on slide 16 with revenue, our top line was $3.1 billion for the second quarter of 2025, a $2 billion increase from $1.1 billion during the equivalent period in 2024. This increase in revenue was driven by $2.2 billion from higher sales volumes, 329 TBTU in the first quarter of 2025 compared with 132 TBTU in the first quarter of 2024, which was partially offset by $241 million from lower prices. Weighted average fixed facility fees were $5.58 per MMBTU in the second quarter of 2025 versus $6.14 per MMBTU in the second quarter of 2024. And weighted average commodity fees were $3.97 for MMBTU in the second quarter of 2025 versus $2.20 for MMBTU in the second quarter of 2024. Our income from operations was $1.0 billion in the second quarter of 2025, a $675 million increase from $363 million in the second quarter of 2024. The shift was primarily driven by the higher sales volumes I mentioned previously, which resulted in a greater total margin for LNG sold. These increases were partially offset by $197 million higher depreciation and $91 million higher operating costs in support of the ramp-up of LNG production at the Platkins project and operating our LNG tankers. As I mentioned last quarter, we did see a reduction in our development expenses of $117 million, as many of the costs associated with CP2 were able to be capitalized. Our net income attributable to common stockholders, which we will refer to as net income, was $368 million for the second quarter of 2025, a $65 million increase from $303 million in Q2 2024. This increase in net income would have been more substantial but was offset 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 $288 million. Shifting to consolidated adjusted EBITDA, we realized $1.4 billion during the second quarter of 2025, a $953 million or 217% increase from $440 million in Q2 2024. This increase in consolidated adjusted EBITDA was driven chiefly by higher sales volumes. As Mike discussed, our project exported a total of 89 cargoes in Q2, which increased from 36 cargoes compared with the same period in 2024. Of these cargoes, 329 TBCU of volumes are reflected in our results for Q2 2025, compared with 132 TBCU in Q2 2024. Advancing to page 17, consistent with our previous outlook, we are guiding to a consolidated adjusted EBITDA range of $6.4 to $6.8 billion for 2025, incorporating a forecasted 144 to 149 cargoes from Takashi Pass and 227 to 240 cargoes from Platinum, inclusive of the 152 cargoes we exported in the first half across both facilities. This consolidated adjusted EBITDA range was determined assuming fixed liquid fraction fees of between $6 and $7 per MMBTU for cargoes remaining to be sold over 2025, and is consistent with current CCF and JKM forward price expectations. On average, if fixed liquid fraction fees over the remainder of 2025 increase or decrease by $1 per MMBTU, We expect our consolidated adjusted EBITDA range to adjust accordingly by between $230 and $240 million, down from the $460 to $480 million range provided in our previous guidance. This reduced sensitivity to market prices reflects the contracting we executed during the second quarter and thus far in the third quarter. I'm now turning the call back over to Mike.

Thank you, Jack, and now we'll open it up to Q&A. Thank you, ladies and gentlemen. Sorry. Thank you.