Venture Global, Inc. Class A common stock

Good morning and welcome to the Venture Global Inc. Third Quarter 2025 Earnings Conference Call. At this time, I would like to turn the conference call over to Ben Nolan, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Joanna. Good morning, everyone, and welcome to Venture Global Inc.' 's Third Quarter 2025 Earnings Call. I'm joined this morning by Mike Sable, Venture Global CEO, Executive Co-Chairman and Founder, Jack Thayer, our CFO, and other members of Venture Global management team. Before I 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 digested EBITDA, A 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 and will not update or affirm guidance other than through broadly disseminated public disclosure. I'll now turn the call over to Mike Sable.

Thank you, Ben. Good morning, everyone, and thank you for joining us today. We are pleased to share our third quarter 2025 results and update our guidance for 2025, which we believe is proving to be a year of strong project advancement, financial growth, and operating performance for Venture Global. I'll begin the call with an overview of our considerable third quarter 2025 key accomplishments and results before shifting to our LNG projects individually. I will then make some remarks in the LNG 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, I'm incredibly proud of what we were building at Venture Global. Despite only shipping our first cargo in March of 2022, about three and a half years ago, Venture Global is positioned to be one of the largest LNG producers in the world with expected production capacity of approximately 67 MTPA in operation or under construction today before additional brownfield expansions take us over 100 MTPA. The volume of achievements in our third quarter was nothing short of extraordinary by the team. The coordinated efforts and oversight required at every step of the journey have not been easy. but the team has worked incredibly hard to deliver affordable energy security to our partners throughout the world. We are applying that same level of relentless effort and rigorous execution to grow the business, harness the industry's lowest cost LNG production strategy, and pass that value on to our global customers and trade partners in the market. Executing and operating at this scale and pace requires significant stakeholder engagement and support, regulatory advocacy, capital access, and most importantly, employee grit. Ours is a company with broad geopolitical impact that is playing a material part in the U.S. efforts to promote energy security and achieve better balance of trade globally. In fact, I just returned from Eastern Europe where Venture Global executed a geopolitically important agreement to support energy security in the region, which I'll comment on more in a moment. Moving to page six. The past several months demonstrate operational excellence at Coxy Pass, the swift ramp up of production at Plaquemines, while navigating complex construction and commissioning activities, and the deployment of significant resources at CP2 as we work to execute for our customers. These efforts enabled Venture Global to generate $3.3 billion of revenue, $1.3 billion in income from operations, 429 million of net income attributable to common shareholders, and $1.5 billion of consolidated adjusted EBITDA. These results represent increases of 260% for revenue, 598% for income from operations, and 439% for consolidated adjusted EBITDA compared with the third quarter of 2024. It was an exceptional quarter for our company, and the team. Considering our successful year to date, our market outlook for the fourth quarter, and the inclusion of certain non-cash accounting charges for recent potential arbitration awards, we are marginally reducing and tightening the range of our EBITDA guidance for the year. This update reflects further operating visibility into the number of commissioning cargoes we expect to produce at Plaquemines and the current fixed liquefaction fees we are contracting on those cargos for the remainder of the year. Presently, we are seeing pricing for winter cargos, which reflects static TTF prices and higher Henry Hub forwards, implying a compression of winter liquefaction spreads. As you will recall, last quarter we had set a $1 per MMBTU change in price translated into a $230 million to $240 million change in our anticipated consolidated adjusted EBITDA. As we have contracted additional projected output since the end of our prior quarter, this market sensitivity has declined. However, this compression of margins on future unsold cargoes during the fourth quarter, plus the timing of two DES loadings where we load them and deliver them after the quarter, George Malavasic, results in in us marginally reducing our 2025 guidance range to 6.35 to $6.5 billion of consolidated adjusted EBITDA for 2025. George Malavasic, This range reflects a forecasted $4.50 per MBTU to $5.50 per MBTU fixed liquefaction fee range for available cargoes remaining in the quarter. which is consistent with current TTF and JKM for price expectations. Additionally, our projected results also incorporate reserve adjustments, which account for our best estimate of the financial impact of the Calcasieu Pass arbitration process. We anticipate updating the market with full year 2026 guidance next quarter. Please turn to page seven. In my mind, the extraordinary list of accomplishments achieved in the past few months tells the story of Venture Global's unwavering commitment to streamlined, high-impact execution and its growth to date. We were able to hit several major milestones, including 100 cargos exported in a single quarter, and just a few days ago, we shipped our 500th cargo from Capsule Pass. Those achievements are remarkable, particularly given the relatively short operating history of the company. While these are significant operating achievements, everything starts with safety. I'm thankful to say that despite the speed at which we are constructing and developing our projects, the total reportable incident rate is still 10 times better than the industry average. In addition to these operational successes, we also made incremental strides in sourcing capital to fund our growth. Specifically, the Blackfin Joint Venture raised $1.575 billion of financing, which enabled an almost $900 million return of capital to Venture Global. And last Friday, we finalized a new $2 billion revolving credit facility with a dozen banks, which we expect will enhance our corporate liquidity and capital flexibility. These financings build upon the $15.1 billion FID project financing for CP2 Phase 1, in the $4 billion of Plaquemines senior secured notes we completed early in the quarter. Year to date, we have now raised approximately $30 billion in closed eight separate billion dollar plus transactions to further grow our business and optimize our capital structure. It has been a truly remarkable year of financing activity for us. I'm also pleased to announce the signing of two new 20 year SPA sales and purchase agreements. On Friday, we signed a one MTPA agreement with Naturgy of Spain for phase two of CP2. Venture Global is honored to expand our long-term partnership with Spain through this new agreement with Naturgy, a leading global LNG company. This contract will positively impact the U.S. balance of trade with Spain. Our unmatched speed and execution have made Venture Global a trusted, reliable supplier to the global market The signing of this agreement, along with a strong commercial momentum we've achieved over the past six months, reflects the continued customer confidence in our company and the robust demand for LNG globally. Venture Global remains committed to meeting that demand with flexible, fast, affordable, and dependable long-term supply. Additionally, last Thursday, we signed a 20-year SPA for a minimum of 0.5 NTPA with Atlantic Sea LNG which is a newly formed joint venture between Greek companies, ACTOR and DEPA, making Greece's first ever long-term LNG supply agreement with a US exporter. In combination with our capacity at the Alexandropolis LNG regasification receiving terminal, this agreement should substantially enhance central and Eastern European energy security, bringing affordable and reliable US natural gas to the region. Including the three offtake commitments, We previously announced and signed in July. Venture Global has now added 5.25 MTPA of new 20-year SPAs in the second half of 2025, which I think might be the most in the market globally. And I expect more to follow. We continue to build momentum towards the FID for CP2 phase two. Turning to page nine, we'll take a look at our project starting with CP2. As you know, on June 3rd, our team fully mobilized and started site work at CP2 following final approval and notice to proceed from FERC with FID of Phase 1 announced on July 28th. Additionally, on October 22nd, the final non-FTA export authorization from the U.S. Department of Energy was received. Phase 1 engineering is 99% complete. allowing for over 98% of all phase one permanent plant equipment to now be procured. FERC has reviewed and approved 97% of all underground and foundation scopes, enabling continuous phase one field execution. The speed and productivity of the team's mobilization to site has been nothing short of extraordinary. There are over 3,500 people and more than 1,700 major pieces of construction equipment on site. Construction progress is on schedule at 98% of all civil site prep and soil improvement work completed across 700 acres. This work includes moving 2 million cubic yards of soil and cement, stabilizing over 6 million cubic yards of soil, utilizing over 580,000 tons of cement. Piling work has commenced with over 10,000 piles installed to date. representing already one-third of the 32,000 total piles required. To create roads and access support allowing for the start of the foundation work, over 1.2 million tons of aggregate base has been installed. Foundation work is now underway in all major process areas of the facility. The most notable accomplishments include pouring, the first LNG tank foundation, the first liquefaction module foundation, and the Power Island switchgear building foundation. Marine terminal work also continues to progress with nearly 2 million cubic yards of dredging completed. Additionally, nearly 5,000 feet of the 22,000 foot perimeter wall has been installed, nearly a mile completed. Offsite, all phase one equipment module erection has commenced both domestically and abroad. Specifically, I'd like to highlight the notable progress on our pretreatment systems pipe rack modules, and electrical buildings, all of which we are building in the U.S. Gulf Coast. I'm also pleased to recognize that Baker Hughes has completed the first eight liquefaction trains, which are currently being stored at its fabrication facility in Italy. The team has incorporated our learnings from the construction of Cauxue Pass and Plaquemines, which is aiding the progress of construction. Some of the modifications include, one, utilizing 10 marine offloading facilities near the CP2 project site versus just three when we built Capsule Pass, which translates into a much greater speed of deployment and less traffic on the roads. Two, further modularization in new scopes of the project, particularly with respect to the power island, a critical path item. And three, internalizing additional construction scope and more targeted use of subcontractors to improve quality, efficiency, and pace of construction. With respect to phase two, I mentioned the two SPAs we signed in the past few days, and we continue to have constructive conversations with off-takers and aim to sign additional SPAs before the end of the year. As I've said before, given the lower cost per ton of brownfield expansion and our significant equity already invested in phase two of the project, which is now over $1 billion. We do not anticipate needing many more 20-year SPAs to reach FID for either phase two or even beyond that, the phase three bolt-on. This contract strategy is supportive of VGE maintaining a balanced portfolio of intermediate, short, and long-term contracts. The targeted FID timeframe for phase two remains the first half of 2026. On page 10 and 11, we thought it would be helpful to walk through the value proposition of CP2 and all our future projects. On page 10, we have listed some of the attributes that we believe support the company's growth outlook. In short, engineering and construction optimization, access to legacy construction and operation data, and an internal team of experienced personnel promote construction speed and production excellence. This in turn generates financial returns faster and allows us to pass this capital efficiency onto our customers through industry-leading pricing. In sum, it's all in support of realizing our corporate mission of innovating to provide low-cost LNG to the world. On page 11, we outline how that speed and efficiency correlate to strong annual returns, even while passing on much of those lower costs to our SPA customers and the market in a variety of LNG pricing environments. The key to success in any commodity business is being the low-cost producer, which for CP2 phases one and two should be just above $1,000 a ton all in, including our inside defense power plants, the pipelines, owner's costs, and all other construction costs. Additionally, we generate considerable cash flow during construction and commissioning, which reviews an offset to project cost. In this case, based on the Forward Henry Hub and TTF curves, for CP2, we estimate these construction and commissioning pre-COD cargo sale EBITDA proceeds would yield an estimated $8 billion of cash flow during construction, reducing CP2's net cost down to approximately $21 billion. Following COD, Cash flows will come from a combination of fixed liquefaction charges under our long-term SPAs and contracted pricing on available capacity in excess of that sold under our 20-year long-term contracts. In the case of CP2 phases 1 and 2, we expect this available excess production to be 9 to 11 million tons, which we anticipate selling on a medium and short-term basis or a non-20-year basis. As you can see on the slide, we are showing two fixed liquefaction fee cases, one at $4 per MMBTU and one at $6 for these non-20-year SPA cargoes. Assuming a $4 fixed liquefaction fee, the combination of fixed long-term contribution and that from the available capacity would translate into an estimated $4 billion contribution to annual consolidated adjusted EBITDA. Whereas assuming $6 per MMBTU for the available cargoes, which I believe will be closer to the case over 20 years, the estimated annual consolidated adjusted EBITDA would rise to $5.2 billion. Collectively under these scenarios, relative to the $21 billion of net project costs, after assuming 50% leverage or we carry extra equity, these illustrative results imply a return at the project level on equity of greater than 30%, while still providing the lowest price SPAs in the market to our customers, which you're now seeing reflected in the high number of 20-year contracts we continue to execute. Moving to page 12, Plackeman's construction and commissioning continues to progress on schedule for phases one and two. While still relying on temporary power, as we are not in our combined five-on-two configuration for the power plant for phase one yet, construction continues at our power line units, and the Venture Global team has now safely started up 34 of the 36 liquefaction trains. Despite these challenges, our continued construction and commissioning progress enabled Plaquemines to export 64 commissioning cargoes during Q3. hitting the high end of our previously projected range. This represents a 25% increase in exported cargoes relative to the previous quarter, reflecting the remarkable pace at which we are integrating and commissioning liquefaction trains. The facility realized a weighted average fixed liquefaction fee of $6.79 per MMBTU on these commissioning cargoes during the quarter. As we recently communicated to our Phase I off-takers, we maintain our expected COD schedule of Q4 2026. Important work remains, but we are making great progress at Plaquemines. For example, the project's required combined cycle power generation equipment for Phase I is expected to commence commissioning in its 5-on-2 configuration in Q1 2026. This Power Island schedule and other work allows us to have sufficient time to complete commissioning, reach substantial completion under our EPC contract, complete lender reliability testing, and declare COD on schedule. Importantly, over the past several years, we've made incremental project investments in areas like temporary power, which we continue to use today, and a number of other scopes, including Power Island to address EPC delays, for which we have injected approximately $3.3 billion of additional equity capital in order to hold our COD schedule. That's not new. That's previously reported. These are incremental costs relative to our FID budgets that we've incurred and absorbed as project sponsor to deliver low-cost LNG to our customers years faster than our peers. I'm pleased to affirm that because of this spend, we are on track for COD and Q4 2026 for phase one and mid-27 for phase two, reflecting a 54-month construction timeline, which is among the industry's best and will be ever achieved. Including the 144 cargoes exported from Plaquemines in the first three quarters of the year, we now anticipate the facility exporting between 234 and 238 cargoes by year-end. This puts us in the high-end of our previous estimates and represents a seven cargo increase to the low end and a two cargo decrease from the high end of our previously reported range. For Q4, Blackman's has contracted 79 cargoes or 84% of potential cargoes for the quarter, capturing a weighted average fix the confection fee of $6.41 for MMBTU on those contracted cargoes. On page 13, You see the monthly ramp of Plaquemines cargoes exported since the beginning of 2025. Plaquemines accounts for 82% of the incremental LNG production capacity added to the global LNG supply this year, lifting worldwide LNG production by more than 4%. That growth almost single-handedly helped to mitigate the impact of a more than 33% rise in European LNG demand to the first 10 months of the year as the continent seeks to move away from the consumption of Russian gas. I'm grateful for the hard work, ingenuity, and tenacity of our VG construction team, which enabled the ramping of Plaquemines production, despite power and other construction challenges. With production excellence, such as this at Plaquemines, we are playing an industry-leading role in keeping LNG prices affordable throughout the world. Next, I'd like to focus on Calcasieu Pass, which is covered on page 14 of the presentation. During the third quarter of 2025, COPSU Pass exported 36 cargoes, which is in line with our previous expectations, but down slightly from the second quarter. The reduction compared to Q2 is due to a longer than scheduled routine power island maintenance on the facility. This does give us an opportunity to highlight one of the competitive advantages of our mid-scale modular approach. Specifically, because of the performance capacity of our trains and equipment redundancy, across our process system and our configuration. We can undertake significant maintenance at our facilities with only very modest impacts on production. This translates into smoother production profiles and lowers operating costs per MMBTU production. At Coxview Pass, we realized a weighted average fixed liquefaction fee of $1.76 per MMBTU in the third quarter. This is lower than the $1.97 per MMBTU we had published in our October 6th 8K as we have incorporated a non-cash $27 million arbitration-related reserve relative to the five and a half months of production since COD in our Q3 results that COPSU passed. For the fourth quarter of 2025, based on liquefaction fees achieved from SPA and excess cargo sold on a four basis to date, we anticipate capturing a weighted average liquefaction fee of $2.14 per MMBTU across all forward sold Cochise Pass production, which reflects contracted sales under a long-term SPAs plus an excess cargo that has been sold. That figure includes a Q4 adjustment for arbitration reserves, incorporating the 108 cargoes exported from this facility in the first half. We now anticipate exporting 148 cargoes by the end of the year. Collectively across Cochise Pass and Plaquemines, we have contracted 59 more cargoes for export in Q4 2025 since our prior report and have contracted 119 of a potential 134 cargoes or roughly 89% of our total Q4 2025 production. I want to spend a few minutes updating you all on the COCSCHU PASS arbitration proceedings. confidentiality agreements do restrict our ability to provide all the details we would like. To the extent we were able, we thought we would provide answers to a number of the common questions we have received. You can see the most frequent of these on page 15. Let me address several. First, there have now been full or partial resolutions in three of the proceedings. As you know, the shell arbitration was decided in our favor We settled the second for an amount which we did not have a material impact on Venture Gold's results. And the arbitration panel reached a partial final decision against Doxie Pass and the BP arbitration. There are four separate outstanding proceedings now, which we expect should be determined over the course of the next few years in the absence of settlements. Secondly, no damages have been determined or awarded in the BP arbitration. and the date for the hearing on damages has not been set as of the date of this presentation. Financially, including BP, the remedies sought by our customers against venture global coxswain pass, including BP, have been materially reduced to 4.8 to $5.5 billion from 6.7 to $7.4 billion. Venture global coxswain pass is aggregate liability cap under the post COD SPAs for the four remaining arbitration proceedings Excluding BP is now $765 million. Importantly, while we ardently disagree with the BP award, the result does not impact our strategy for growth in providing low-cost LNG to our customers throughout the world. Jack will address the accounting treatment for estimating the financial impact in the form of non-cash reserves of BP and these remaining arbitrations shortly. Turning to page 17. While there has been modest softening of winter 2026 LNG spreads, demand remains healthy and the margins are robust. Even as new LNG supply enters the market over the next several years, we expect prices to remain supportive as energy demand responds to affordable prices. As you can see on the left, the forward curve reflects the market's expectation for LNG prices in both Asia and Europe to remain at considerable spreads above Henry Hub for the next 12 months. Beyond this timeframe, we continue to see upward revisions to demand that reinforce our belief that margins will reflect insufficient LNG supply through 2028 and beyond. Flipping to page 18, for years, industry pundits have been predicting a plateau in LNG demand. And time and time again, those predictions have not materialized and demand has continued to grow at record levels. Historically, LNG consumption has grown about 5% to 6% per year. Even assuming a more conservative 3% growth rate, the current slate of new projects would not be sufficient to meet global demand by the middle of the next decade. And in the 5% compound growth rate, which is the historical number, global LNG infrastructure would need to nearly triple to meet global demand. There certainly may be fluctuations in LNG prices over time, but we remain confident in underlying fundamental demand growth because of the increasing consumption of electricity around the world. Lately, powering AI and data centers globally has been at the front of everyone's minds. While we certainly view that as a major source of global power demand, factors like a rising middle class, which uses air conditioning among lots of other demand, Growing industrialization, the continued migration from coal and moderating growth expectations for renewables and even more coal are even more core to what we perceive will drive strong LNG demand growth for decades to come. This demand growth also reinforces the importance of our mission to deliver increased volumes of affordable LNG to support this global growth. Now I'll turn it over to our CFO, Jack Thayer, who will review the financials and our updated guidance.