☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
81-1482060
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
111 W. 19th Street, 8th Floor
New York, NY
|
10011
|
|
(Address of principal executive offices)
|
(Zip code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
Class A shares, representing limited liability company interests
|
“NFE”
|
NASDAQ Global Select Market
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☒
|
Smaller reporting company ☐
|
Emerging growth company ☒
|
ii
|
|||
iii
|
|||
5
|
|||
Item 1.
|
5
|
||
Item 2.
|
25
|
||
Item 3.
|
35
|
||
Item 4.
|
36
|
||
37
|
|||
Item 1.
|
37
|
||
Item 1A.
|
37
|
||
Item 2.
|
70 | ||
Item 3.
|
70 | ||
Item 4.
|
70 | ||
Item 5.
|
70 | ||
Item 6.
|
71 | ||
72 |
Btu
|
the amount of heat required to raise the temperature of one avoirdupois pound of pure water from 59 degrees Fahrenheit to 60 degrees Fahrenheit at an absolute pressure of 14.696 pounds per square inch gage
|
CAA
|
Clean Air Act
|
CERCLA
|
Comprehensive Environmental Response, Compensation and Liability Act
|
CWA
|
Clean Water Act
|
DOE
|
U.S. Department of Energy
|
GAAP
|
generally accepted accounting principles in the United States
|
GHG
|
greenhouse gases
|
GSA
|
natural gas sales agreement
|
Henry Hub
|
a natural gas pipeline hub located in Erath, Louisiana that serves as the official delivery location for futures contracts on the New York Mercantile Exchange
|
ISO container
|
International Organization of Standardization, an intermodal container
|
LNG
|
natural gas in its liquid state at or below its boiling point at or near atmospheric pressure
|
MMBtu
|
one million Btus, which corresponds to approximately 12.1 LNG gallons
|
MW
|
megawatt. We estimate 2,500 LNG gallons would be required to produce one megawatt
|
NGA
|
Natural Gas Act of 1938, as amended
|
non-FTA countries
|
countries without a free trade agreement with the United States providing for national treatment for trade in natural gas and with which trade is permitted
|
OPA
|
Oil Pollution Act
|
OUR
|
Office of Utilities Regulation (Jamaica)
|
PHMSA
|
Pipeline and Hazardous Materials Safety Administration
|
PPA
|
power purchase agreement
|
SSA
|
steam supply agreement
|
TBtu
|
one trillion Btus, which corresponds to approximately 12,100,000 LNG gallons
|
• |
our limited operating history;
|
• |
loss of one or more of our customers;
|
• |
inability to procure LNG on a fixed-price basis, or otherwise to manage LNG price risks, including hedging arrangements;
|
• |
the completion of construction on our LNG terminals, power plants or Liquefaction Facilities (as defined herein) and the terms of our construction contracts for the completion of these assets;
|
• |
cost overruns and delays in the completion of one or more of our LNG terminals, power plants or Liquefaction Facilities, as well as difficulties in obtaining sufficient financing to pay for such costs and delays;
|
• |
our ability to obtain additional financing to effect our strategy;
|
• |
failure to produce or purchase sufficient amounts of LNG or natural gas at favorable prices to meet customer demand;
|
• |
hurricanes or other natural or manmade disasters;
|
• |
failure to obtain and maintain approvals and permits from governmental and regulatory agencies;
|
• |
operational, regulatory, environmental, political, legal and economic risks pertaining to the construction and operation of our facilities;
|
• |
inability to contract with suppliers and tankers to facilitate the delivery of LNG on their chartered LNG tankers;
|
• |
cyclical or other changes in the demand for and price of LNG and natural gas;
|
• |
failure of natural gas to be a competitive source of energy in the markets in which we operate, and seek to operate;
|
• |
competition from third parties in our business;
|
• |
inability to re-finance our outstanding indebtedness or implement our financing plans;
|
• |
changes to environmental and similar laws and governmental regulations that are adverse to our operations;
|
• |
inability to enter into favorable agreements and obtain necessary regulatory approvals;
|
• |
the tax treatment of us or of an investment in our Class A shares;
|
• |
a major health and safety incident relating to our business;
|
• |
increased labor costs, and the unavailability of skilled workers or our failure to attract and retain qualified personnel; and
|
• |
risks related to the jurisdictions in which we do, or seek to do, business, particularly Florida, Puerto Rico, Mexico, Angola, Jamaica, and other jurisdictions in the Caribbean.
|
June 30,
2019
|
December 31,
2018
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
200,306
|
$
|
78,301
|
||||
Restricted cash
|
19,252
|
30
|
||||||
Receivables, net of allowances of $0 and $257, respectively
|
43,987
|
28,530
|
||||||
Finance leases, net
|
1,025
|
943
|
||||||
Inventory
|
19,623
|
15,959
|
||||||
Prepaid expenses and other current assets
|
35,231
|
30,017
|
||||||
Total current assets
|
319,424
|
153,780
|
||||||
Investment in equity securities
|
2,854
|
3,656
|
||||||
Restricted cash
|
38,460
|
22,522
|
||||||
Construction in progress
|
324,828
|
254,700
|
||||||
Property, plant and equipment, net
|
191,257
|
94,040
|
||||||
Finance leases, net
|
91,665
|
92,207
|
||||||
Deferred tax asset, net
|
20
|
185
|
||||||
Intangibles, net
|
42,008
|
43,057
|
||||||
Other non-current assets
|
46,361
|
35,255
|
||||||
Total assets
|
$
|
1,056,877
|
$
|
699,402
|
||||
Liabilities
|
||||||||
Current liabilities
|
||||||||
Term loan facility
|
$
|
490,523
|
$
|
272,192
|
||||
Accounts payable
|
16,282
|
43,177
|
||||||
Accrued liabilities
|
42,072
|
67,512
|
||||||
Due to affiliates
|
6,329
|
4,481
|
||||||
Other current liabilities
|
19,196
|
17,393
|
||||||
Total current liabilities
|
574,402
|
404,755
|
||||||
Deferred tax liability, net
|
214
|
—
|
||||||
Other long-term liabilities
|
15,121
|
12,000
|
||||||
Total liabilities
|
589,737
|
416,755
|
||||||
Commitments and contingences (Note 17)
|
||||||||
Stockholders’ equity
|
||||||||
Members’ capital, no par value, 500,000,000 shares authorized, 67,983,095 shares issued and outstanding as of December 31, 2018
|
—
|
426,741
|
||||||
Class A shares, 20,837,272 shares, issued and outstanding as of June 30, 2019; 0 shares issued and outstanding as of December 31, 2018
|
111,236
|
—
|
||||||
Class B shares, 147,058,824 shares, issued and outstanding as of June 30, 2019; 0 shares issued and outstanding as of December 31, 2018
|
—
|
—
|
||||||
Accumulated deficit
|
(31,757
|
)
|
(158,423
|
)
|
||||
Accumulated other comprehensive (loss)
|
—
|
(11
|
)
|
|||||
Total stockholders’ equity attributable to NFE
|
79,479
|
268,307
|
||||||
Non-controlling interest
|
387,661
|
14,340
|
||||||
Total stockholders’ equity
|
467,140
|
282,647
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,056,877
|
$
|
699,402
|
Three Months
Ended June 30,
|
Six Months
Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Revenues
|
||||||||||||||||
Operating revenue
|
$
|
31,738
|
$
|
22,653
|
$
|
57,876
|
$
|
44,916
|
||||||||
Other revenue
|
8,028
|
4,146
|
11,841
|
7,592
|
||||||||||||
Total revenues
|
39,766
|
26,799
|
69,717
|
52,508
|
||||||||||||
Operating expenses
|
||||||||||||||||
Cost of sales
|
44,043
|
25,766
|
77,392
|
46,531
|
||||||||||||
Operations and maintenance
|
5,403
|
1,907
|
9,902
|
3,751
|
||||||||||||
Selling, general and administrative
|
32,169
|
15,535
|
81,918
|
27,404
|
||||||||||||
Depreciation and amortization
|
2,110
|
732
|
3,801
|
1,428
|
||||||||||||
Total operating expenses
|
83,725
|
43,940
|
173,013
|
79,114
|
||||||||||||
Operating loss
|
(43,959
|
)
|
(17,141
|
)
|
(103,296
|
)
|
(26,606
|
)
|
||||||||
Interest expense
|
6,199
|
1,603
|
9,483
|
3,206
|
||||||||||||
Other expense (income), net
|
920
|
(199
|
)
|
(1,655
|
)
|
(167
|
)
|
|||||||||
Loss before taxes
|
(51,078
|
)
|
(18,545
|
)
|
(111,124
|
)
|
(29,645
|
)
|
||||||||
Tax expense
|
155
|
280
|
401
|
93
|
||||||||||||
Net loss
|
(51,233
|
)
|
(18,825
|
)
|
(111,525
|
)
|
(29,738
|
)
|
||||||||
Net loss attributable to non-controlling interest
|
45,047
|
—
|
91,782
|
—
|
||||||||||||
Net loss attributable to stockholders
|
$
|
(6,186
|
)
|
$
|
(18,825
|
)
|
$
|
(19,743
|
)
|
$
|
(29,738
|
)
|
||||
Net loss per share – basic and diluted
|
$
|
(0.28
|
)
|
$
|
(1.09
|
)
|
||||||||||
Weighted average number of shares outstanding – basic and diluted
|
22,114,002
|
18,154,939
|
||||||||||||||
Other comprehensive loss:
|
||||||||||||||||
Net loss
|
$
|
(51,233
|
)
|
$
|
(18,825
|
)
|
$
|
(111,525
|
)
|
$
|
(29,738
|
)
|
||||
Unrealized loss (gain) on available-for-sale investment
|
—
|
196
|
—
|
(733
|
)
|
|||||||||||
Comprehensive loss
|
(51,233
|
)
|
(19,021
|
)
|
(111,525
|
)
|
(29,005
|
)
|
||||||||
Comprehensive loss attributable to non-controlling interest
|
45,047
|
—
|
91,782
|
—
|
||||||||||||
Comprehensive loss attributable to stockholders
|
$
|
(6,186
|
)
|
$
|
(19,021
|
)
|
$
|
(19,743
|
)
|
$
|
(29,005
|
)
|
Members’ Capital
|
Class A shares
|
Class B shares
|
Stock
subscription
receivable
|
Accumulated
deficit
|
Accumulated
other
comprehensive
(loss) income
|
Non-controlling
Interest
|
Total
stockholders’
equity
|
|||||||||||||||||||||||||||||||||||||
Units
|
Amounts
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018
|
67,983,095
|
$
|
426,741
|
—
|
$
|
—
|
—
|
$
|
—
|
$
|
—
|
$
|
(158,423
|
)
|
$
|
(11
|
)
|
$
|
14,340
|
$
|
282,647
|
|||||||||||||||||||||||
Activity prior to the IPO and related organizational transactions:
|
||||||||||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(7,923
|
)
|
11
|
(91
|
)
|
(8,003
|
)
|
||||||||||||||||||||||||||||||
Effects of the IPO and related organizational transactions:
|
||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A shares in the IPO, net of underwriting discount and offering costs
|
—
|
—
|
20,837,272
|
32,136
|
—
|
—
|
—
|
—
|
—
|
235,874
|
268,010
|
|||||||||||||||||||||||||||||||||
Effects of the reorganization transactions
|
(67,983,095
|
)
|
(426,741
|
)
|
—
|
51,092
|
147,058,824
|
—
|
—
|
146,420
|
—
|
229,229
|
—
|
|||||||||||||||||||||||||||||||
Activity subsequent to the IPO and related organizational transactions:
|
||||||||||||||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(5,645
|
)
|
—
|
(46,644
|
)
|
(52,289
|
)
|
||||||||||||||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
—
|
19,037
|
—
|
—
|
—
|
—
|
—
|
—
|
19,037
|
|||||||||||||||||||||||||||||||||
Balance as of March 31, 2019
|
—
|
—
|
20,837,272
|
102,265
|
147,058,824
|
—
|
—
|
(25,571
|
)
|
—
|
432,708
|
509,402
|
||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(6,186
|
)
|
—
|
(45,047
|
)
|
(51,233
|
)
|
||||||||||||||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
—
|
8,971
|
—
|
—
|
—
|
—
|
—
|
—
|
8,971
|
|||||||||||||||||||||||||||||||||
Balance as of June 30, 2019
|
—
|
$
|
—
|
20,837,272
|
$
|
111,236
|
147,058,824
|
$
|
—
|
$
|
—
|
$
|
(31,757
|
)
|
$
|
—
|
$
|
387,661
|
$
|
467,140
|
||||||||||||||||||||||||
Balance as of December 31, 2017
|
65,665,037
|
$
|
406,591
|
—
|
$
|
—
|
—
|
$
|
—
|
$
|
(50,000
|
)
|
$
|
(80,347
|
)
|
$
|
2,666
|
$
|
—
|
$
|
278,910
|
|||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(10,913
|
)
|
—
|
—
|
(10,913
|
)
|
|||||||||||||||||||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
929
|
—
|
929
|
|||||||||||||||||||||||||||||||||
Capital contributions
|
665,843
|
20,150
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
20,150
|
|||||||||||||||||||||||||||||||||
Stock subscription receivable
|
1,652,215
|
—
|
—
|
—
|
—
|
—
|
50,000
|
—
|
—
|
—
|
50,000
|
|||||||||||||||||||||||||||||||||
Balance as of March 31, 2018
|
67,983,095
|
426,741
|
—
|
—
|
—
|
—
|
—
|
(91,260
|
)
|
3,595
|
—
|
339,076
|
||||||||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(18,825
|
)
|
—
|
—
|
(18,825
|
)
|
|||||||||||||||||||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(196
|
)
|
—
|
(196
|
)
|
|||||||||||||||||||||||||||||||
Balance as of June 30, 2018
|
67,983,095
|
$
|
426,741
|
—
|
$
|
—
|
—
|
$
|
—
|
$
|
—
|
$
|
(110,085
|
)
|
$
|
3,399
|
$
|
—
|
$
|
320,055
|
Six Months Ended June 30,
|
||||||||
2019
|
2018
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$
|
(111,525
|
)
|
$
|
(29,738
|
)
|
||
Adjustments for:
|
||||||||
Amortization of deferred financing costs
|
2,589
|
339
|
||||||
Depreciation and amortization
|
4,106
|
1,767
|
||||||
Deferred taxes
|
379
|
32
|
||||||
Change in value of Investment in equity securities
|
802
|
—
|
||||||
Share-based compensation
|
28,008
|
—
|
||||||
Other
|
232
|
183
|
||||||
(Increase) in receivables
|
(15,211
|
)
|
(5,268
|
)
|
||||
(Increase) in inventories
|
(3,664
|
)
|
(5,841
|
)
|
||||
(Increase) Decrease in other assets
|
(6,865
|
)
|
6,412
|
|||||
Increase in accounts payable/accrued liabilities
|
2,553
|
4,863
|
||||||
Increase (Decrease) in amounts due to affiliates
|
1,848
|
(1,051
|
)
|
|||||
Increase in other liabilities
|
4,680
|
585
|
||||||
Net cash used in operating activities
|
(92,068
|
)
|
(27,717
|
)
|
||||
Cash flows from investing activities
|
||||||||
Capital expenditures
|
(232,348
|
)
|
(76,446
|
)
|
||||
Principal payments received on finance lease, net
|
471
|
444
|
||||||
Net cash used in investing activities
|
(231,877
|
)
|
(76,002
|
)
|
||||
Cash flows from financing activities
|
|
|
||||||
Proceeds from borrowings of debt
|
220,000
|
|
—
|
|
||||
Payment of deferred financing costs
|
(4,400
|
) |
(388
|
) |
||||
Repayment of debt
|
(2,500
|
) |
(2,914
|
) | ||||
Proceeds from IPO
|
274,948
|
|
—
|
|||||
Payment of offering costs
|
(6,938
|
) |
—
|
|||||
Capital contributed from Members
|
—
|
20,150
|
||||||
Collection of subscription receivable
|
—
|
50,000
|
||||||
Net cash provided by financing activities
|
481,110
|
66,848
|
||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
157,165
|
(36,871
|
)
|
|||||
Cash, cash equivalents and restricted cash – beginning of period
|
100,853
|
118,331
|
||||||
Cash, cash equivalents and restricted cash – end of period
|
$
|
258,018
|
$
|
81,460
|
||||
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||
Changes in accrued construction in progress costs and property, plant and equipment
|
$
|
(54,888
|
)
|
$
|
5,443
|
1. |
Organization
|
2. |
Significant accounting policies
|
(a)
|
Basis of presentation and principles of consolidation
|
(b) |
Use of estimates
|
(c) |
Investment in equity securities
|
(d) |
Legal and contingencies
|
(e) |
Revenue recognition
|
(f) |
Share-based compensation
|
(g) |
Income taxes
|
(h) |
Net loss per share
|
3. |
Adoption of new and revised standards
|
a)
|
New standards, amendments and interpretations issued but not effective for the financial year beginning January 1, 2019:
|
b) |
New and amended standards adopted by the Company:
|
4. |
Revenue from contracts with customers
|
Period
|
Revenue
|
|||
Remainder 2019
|
$
|
58,981
|
||
2020
|
159,053
|
|||
2021
|
164,789
|
|||
2022
|
164,645
|
|||
2023
|
164,724
|
|||
Thereafter
|
2,407,584
|
|||
Total
|
$
|
3,119,776
|
5. |
Fair value
|
• |
Level 1 – observable inputs such as quoted prices in active markets for identical assets or liabilities.
|
• |
Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.
|
• |
Level 3 – unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants price the asset or liability.
|
• |
Market approach – uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
|
• |
Income approach – uses valuation techniques, such as discounted cash flow technique, to convert future amounts to a single present amount based on current market expectations about those future amounts.
|
• |
Cost approach – based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
|
June 30, 2019
|
|||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
Valuation technique
|
|||||||||||||
Assets
|
|||||||||||||||||
Cash and cash equivalents
|
$
|
200,306
|
$
|
—
|
$
|
—
|
$
|
200,306
|
Market approach
|
||||||||
Restricted cash
|
57,712
|
—
|
—
|
57,712
|
Market approach
|
||||||||||||
Investment in equity securities
|
2,854
|
—
|
—
|
2,854
|
Market approach
|
||||||||||||
Total
|
$
|
260,872
|
$
|
—
|
$
|
—
|
$
|
260,872
|
|||||||||
Liabilities
|
|||||||||||||||||
Derivative liability(1)
|
$
|
—
|
$
|
—
|
$
|
9,937
|
$
|
9,937
|
Income approach
|
||||||||
Equity agreement(2)
|
—
|
—
|
16,667
|
16,667
|
Income approach
|
||||||||||||
Total
|
$
|
—
|
$
|
—
|
$
|
26,604
|
$
|
26,604
|
(1) |
Consideration due to the sellers of Shannon LNG (as defined in “Note 11. Intangible Assets” below) once first gas is supplied from the terminal to be built.
|
(2) |
To be paid in shares at the earlier of agreed-upon date in 2020 or the commencement of significant construction activities specified in the Shannon LNG Agreement.
|
December 31, 2018
|
|||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
Valuation technique
|
|||||||||||||
Assets
|
|||||||||||||||||
Cash and cash equivalents
|
$
|
78,301
|
$
|
—
|
$
|
—
|
$
|
78,301
|
Market approach
|
||||||||
Restricted cash
|
22,552
|
—
|
—
|
22,552
|
Market approach
|
||||||||||||
Investment in equity securities
|
3,656
|
—
|
—
|
3,656
|
Market approach
|
||||||||||||
Total
|
$
|
104,509
|
$
|
—
|
$
|
—
|
$
|
104,509
|
|||||||||
Liabilities
|
|||||||||||||||||
Derivative liability
|
$
|
—
|
$
|
—
|
$
|
9,835
|
$
|
9,835
|
Income approach
|
||||||||
Equity agreement
|
—
|
—
|
16,924
|
16,924
|
Income approach
|
||||||||||||
Total
|
$
|
—
|
$
|
—
|
$
|
26,759
|
$
|
26,759
|
6. |
Restricted cash
|
June 30,
2019
|
December 31,
2018
|
|||||||
Collateral for performance under customer agreements
|
$
|
15,126
|
$
|
15,095
|
||||
Collateral for LNG purchases
|
35,000
|
927
|
||||||
Collateral for letters of credit
|
7,297
|
6,238
|
||||||
Other restricted cash
|
289
|
292
|
||||||
Total restricted cash
|
$
|
57,712
|
$
|
22,552
|
||||
Current restricted cash
|
$
|
19,252
|
$
|
30
|
||||
Non-current restricted cash
|
38,460
|
22,522
|
7. |
Inventory
|
June 30,
2019
|
December 31,
2018
|
|||||||
LNG and natural gas inventory
|
$
|
19,010
|
$
|
15,611
|
||||
Materials, supplies and other
|
613
|
348
|
||||||
Total
|
$
|
19,623
|
$
|
15,959
|
8. |
Investment in equity securities
|
June 30, 2019
|
||||||||||||
(in thousands of U.S. dollars except shares)
|
Number of Shares
|
Cost
|
Fair value
|
|||||||||
Investment in equity securities(1)
|
295,256
|
$
|
3,667
|
$
|
2,854
|
December 31, 2018
|
||||||||||||
(in thousands of U.S. dollars except shares)
|
Number of Shares
|
Cost
|
Fair value
|
|||||||||
Investment in equity securities
|
1,476,280
|
$
|
3,667
|
$
|
3,656
|
(1) |
During the six months ended June 30, 2019, the investee effected a 5-for-1 reverse stock split.
|
June 30, 2019
|
||||
Beginning of period
|
$
|
3,656
|
||
Unrealized gain/(loss)
|
(802
|
)
|
||
End of period
|
$
|
2,854
|
9. |
Construction in progress
|
June 30, 2019
|
||||
Balance at beginning of period
|
$
|
254,700
|
||
Additions
|
168,101
|
|||
Transferred to property, plant and equipment, net (Note 10)
|
(97,973
|
)
|
||
Balance at end of period
|
$
|
324,828
|
10. |
Property, plant and equipment, net
|
June 30,
2019
|
December 31,
2018
|
|||||||
LNG liquefaction facilities
|
$
|
66,526
|
$
|
65,631
|
||||
Gas terminals
|
59,453
|
—
|
||||||
Gas pipelines
|
30,658
|
—
|
||||||
ISO containers and other equipment
|
20,773
|
15,873
|
||||||
Land
|
16,588
|
12,779
|
||||||
Leasehold improvements
|
8,054
|
7,229
|
||||||
Vehicles
|
1,329
|
1,178
|
||||||
Computer equipment
|
846
|
741
|
||||||
Accumulated depreciation
|
(12,970
|
)
|
(9,391
|
)
|
||||
Total property, plant and equipment, net
|
$
|
191,257
|
$
|
94,040
|
11. |
Intangible assets
|
June 30, 2019
|
|||||||||||||
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net Carrying
Amount
|
Useful Life
|
||||||||||
Shannon LNG leases and permits
|
$
|
42,685
|
$
|
677
|
$
|
42,008
|
40 to 91
|
||||||
Total intangible assets
|
$
|
42,685
|
$
|
677
|
$
|
42,008
|
December 31, 2018
|
|||||||||||||
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net Carrying
Amount
|
Useful Life
|
||||||||||
Shannon LNG leases and permits
|
$
|
43,191
|
$
|
134
|
$
|
43,057
|
40 to 91
|
||||||
Total intangible assets
|
$
|
43,191
|
$
|
134
|
$
|
43,057
|
12. |
Finance leases, net
|
June 30,
2019
|
December 31,
2018
|
|||||||
Finance leases
|
$
|
298,904
|
$
|
306,832
|
||||
Unearned income
|
(206,214
|
)
|
(213,682
|
)
|
||||
Total finance leases, net
|
$
|
92,690
|
$
|
93,150
|
||||
Current portion
|
$
|
1,025
|
$
|
943
|
||||
Non-current
|
91,665
|
92,207
|
13. |
Other non-current assets
|
June 30,
2019
|
December 31,
2018
|
|||||||
Easements
|
$
|
1,446
|
$
|
1,159
|
||||
Port access rights
|
12,206
|
12,671
|
||||||
Initial lease costs
|
8,702
|
9,200
|
||||||
Nonrefundable deposit
|
10,970
|
10,810
|
||||||
Upfront payments to customers
|
6,329
|
—
|
||||||
Other
|
6,708
|
1,415
|
||||||
Total other non-current assets
|
$
|
46,361
|
$
|
35,255
|
14.
|
Accrued liabilities
|
June 30,
2019
|
December 31,
2018
|
|||||||
Accrued construction costs
|
$
|
16,870
|
$
|
41,343
|
||||
Accrued IPO costs
|
—
|
5,296
|
||||||
Accrued vessel charter costs
|
2,160
|
—
|
||||||
Accrued bonuses
|
10,600
|
12,582
|
||||||
Other accrued expenses
|
12,442
|
8,291
|
||||||
Total
|
$
|
42,072
|
$
|
67,512
|
15. |
Debt
|
16. |
Income taxes
|
17. |
Commitments and contingencies
|
18. |
Earnings per share
|
Three Months Ended
June 30, 2019
|
Six Months Ended
June 30, 2019
|
|||||||
Numerator:
|
||||||||
Net loss
|
$
|
(51,233
|
)
|
$
|
(111,525
|
)
|
||
Less: net loss attributable to non-controlling interests
|
45,047
|
91,782
|
||||||
Net loss attributable to Class A shares
|
$
|
(6,186
|
)
|
$
|
(19,743
|
)
|
||
Denominator:
|
||||||||
Weighted-average shares - basic and diluted
|
22,114,002
|
18,154,939
|
||||||
Net loss per share - basic and diluted
|
$
|
(0.28
|
)
|
$
|
(1.09
|
)
|
June 30, 2019
|
||||
Unvested RSUs(1)
|
3,959,725
|
|||
Class B shares(2)
|
147,058,824
|
|||
Shannon Equity Agreement shares(3)
|
1,432,208
|
|||
Total
|
152,450,757
|
(1) |
Represents the number of instruments outstanding at the end of the period.
|
(2) |
Class B shares at the end of the period are considered potentially dilutive Class A shares under application of the if-converted method.
|
(3) |
Class A shares that would be issued in relation to the Shannon LNG Equity agreement.
|
19. |
Share-based compensation
|
Restricted Stock
Units
|
Weighted-
average grant
date fair value
per share
|
|||||||
Non-vested RSUs as of December 31, 2018
|
—
|
$
|
—
|
|||||
Granted
|
5,404,823
|
13.48
|
||||||
Vested and shares issued
|
(1,284,383
|
)
|
13.53
|
|||||
Forfeited
|
(160,715
|
)
|
13.51
|
|||||
Non-vested RSUs as of June 30, 2019
|
3,959,725
|
$
|
13.46
|
20. |
Leases, as lessee
|
Lease
|
Term
|
Rent Escalation
|
Land site lease¹
|
5 year initial term; 5 year renewal option
|
2.5% per annum
|
Marine port berth lease
|
10 year initial term; annual renewal option for up to 10 years
|
15% after year 5
|
Marine port berth lease
|
20 year initial term; no renewal option
|
No escalation
|
LNG vessel time charter
|
24 month initial term; 3 month renewal option
|
No escalation
|
LNG vessel time charter
|
7 year initial term; no renewal option
|
2% per annum after year 3
|
LNG vessel time charter
|
15 year initial term; non-cancellable for the first 3 years; 5 year renewal option
|
No escalation
|
Office space lease
|
7 year initial term; two 5-year renewal options
|
3% per annum
|
Office space lease
|
1 year renewal option
|
5% per annum
|
1 |
Refer to “Note 21. Related party transactions” for additional detail.
|
21. |
Related party transactions
|
June 30,
2019
|
December 31,
2018
|
|||||||
Amounts due to affiliates
|
$
|
6,329
|
$
|
4,481
|
||||
Amounts due from affiliates
|
1,022
|
890
|
22. |
Subsequent events
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
|||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
Operating revenue
|
$
|
31,738
|
$
|
22,653
|
$
|
9,085
|
$
|
57,876
|
$
|
44,916
|
$
|
12,960
|
||||||||||||
Other revenue
|
8,028
|
4,146
|
3,882
|
11,841
|
7,592
|
4,249
|
||||||||||||||||||
Total revenues
|
39,766
|
26,799
|
12,967
|
69,717
|
52,508
|
17,209
|
||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Cost of sales
|
44,043
|
25,766
|
18,277
|
77,392
|
46,531
|
30,861
|
||||||||||||||||||
Operations and maintenance
|
5,403
|
1,907
|
3,496
|
9,902
|
3,751
|
6,151
|
||||||||||||||||||
Selling, general and administrative
|
32,169
|
15,535
|
16,634
|
81,918
|
27,404
|
54,514
|
||||||||||||||||||
Depreciation and amortization
|
2,110
|
732
|
1,378
|
3,801
|
1,428
|
2,373
|
||||||||||||||||||
Total operating expenses
|
83,725
|
43,940
|
39,785
|
173,013
|
79,114
|
93,899
|
||||||||||||||||||
Operating loss
|
(43,959
|
)
|
(17,141
|
)
|
(26,818
|
)
|
(103,296
|
)
|
(26,606
|
)
|
(76,690
|
)
|
||||||||||||
Interest expense
|
6,199
|
1,603
|
4,596
|
9,483
|
3,206
|
6,277
|
||||||||||||||||||
Other expense (income), net
|
920
|
(199
|
)
|
1,119
|
(1,655
|
)
|
(167
|
)
|
(1,488
|
)
|
||||||||||||||
Loss before taxes
|
(51,078
|
)
|
(18,545
|
)
|
(32,533
|
)
|
(111,124
|
)
|
(29,645
|
)
|
(81,479
|
)
|
||||||||||||
Tax expense (benefit)
|
155
|
280
|
(125
|
)
|
401
|
93
|
308
|
|||||||||||||||||
Net loss
|
$
|
(51,233
|
)
|
$
|
(18,825
|
)
|
$
|
(32,408
|
)
|
$
|
(111,525
|
)
|
$
|
(29,738
|
)
|
$
|
(81,787
|
)
|
• |
Our historical financial results only include our Miami Facility, our Montego Bay Terminal and certain small-scale customers. Our historical financial statements only
include our Miami Facility, our Montego Bay Terminal and certain small-scale customers and do not include the impact of projects that commenced commercial operations during 2019, such as the Old Harbour Terminal and the increase in
sales to small-scale customers. None of the periods presented include future revenue that should result from long-term, take-or-pay contracts with downstream customers expected from projects under development, including the dual-fired
combined heat and power facility in Clarendon, Jamaica (the “CHP Plant”), the multi-fuel handling facility located in the Port of San Juan, Puerto Rico (the “San Juan Facility”), the LNG regasification terminal in La Paz, Baja
California Sur, Mexico (the “La Paz Terminal”), the LNG terminal on the Shannon Estuary near Ballylongford, Ireland (the “Ireland Terminal” and, together with the Old Harbour Terminal, the Montego Bay Terminal, the San Juan Facility
and the La Paz Terminal, our “Terminals”) and the Pennsylvania Facility. The Old Harbour Terminal began commercial operations during the second quarter 2019, and we expect the Old Harbour Power Plant, a significant buyer of gas from
the Old Harbour Terminal, to be fully operational during the fourth quarter 2019.
|
• |
Our organizational structure has changed as a result of reorganization transactions completed at the time of our IPO. We completed our IPO on February 4, 2019, and the net
proceeds from the IPO were contributed to New Fortress Intermediate LLC (“NFI”), an entity formed in conjunction with the IPO, in exchange for limited liability company units in NFI (“NFI LLC Units”). In addition, New Fortress Energy
Holdings contributed all of its interests in consolidated subsidiaries that comprised substantially all of its historical operations to NFI in exchange for NFI LLC Units. NFE is a holding company whose sole material asset is a
controlling equity interest in NFI. As the sole managing member of NFI, NFE operates and controls all of the business and affairs of NFI, and through NFI and its subsidiaries, conducts the Company’s historical business.
|
• |
We have incurred and will continue to incur incremental selling, general and administrative expenses related to our transition to a publicly traded company. We completed
our IPO on February 4, 2019, and we expect to incur direct, incremental general and administrative expenses as a result of being a publicly traded company, including costs associated with the employment of additional personnel,
compliance under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), annual and quarterly reports to our common shareholders, registrar and transfer agent fees, national stock exchange fees, the costs associated with
the initial implementation of our Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) Section 404 internal controls and testing, audit fees, incremental director and officer liability insurance costs and director and officer
compensation. These direct, incremental general and administrative expenses are not included in our historical results of operations for the three and six months ended June 30, 2018.
|
Six Months Ended June 30,
|
||||||||||||
(in thousands)
|
2019
|
2018
|
Change
|
|||||||||
Cash flows from:
|
||||||||||||
Operating activities
|
$
|
(92,068
|
)
|
$
|
(27,717
|
)
|
$
|
(64,351
|
)
|
|||
Investing activities
|
(231,877
|
)
|
(76,002
|
)
|
(155,875
|
)
|
||||||
Financing activities
|
481,110
|
66,848
|
414,262
|
|||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
$
|
157,165
|
$
|
(36,871
|
)
|
$
|
194,036
|
(in thousands)
|
Total
|
Less than 1
year
|
Years 2 to 3
|
Years 4 to 5
|
More than 5
years
|
|||||||||||||||
Long-term debt obligations
|
$
|
298,187
|
$
|
298,187
|
$
|
―
|
$
|
―
|
$
|
―
|
||||||||||
Purchase obligations
|
631,599
|
175,496
|
456,103
|
―
|
―
|
|||||||||||||||
Operating Lease obligations
|
60,877
|
13,361
|
14,035
|
13,001
|
20,480
|
|||||||||||||||
Total
|
$
|
990,663
|
$
|
487,044
|
$
|
470,138
|
$
|
13,001
|
$
|
20,480
|
• |
inability to achieve our target costs for the purchase, liquefaction and export of natural gas and/or LNG and our target pricing for long-term contracts;
|
• |
failure to develop cost-effective logistics solutions;
|
• |
failure to manage expanding operations in the projected time frame;
|
• |
inability to structure innovative and profitable energy-related transactions as part of our sales and trading operations and to optimally price and manage position, performance and counterparty risks;
|
• |
inability to develop infrastructure, including our Terminals and Liquefaction Facilities, as well as other future projects, in a timely and cost-effective manner;
|
• |
inability to attract and retain personnel in a timely and cost-effective manner;
|
• |
failure of investments in technology and machinery, such as liquefaction technology or LNG tank truck technology, to perform as expected;
|
• |
increases in competition which could increase our costs and undermine our profits;
|
• |
inability to source LNG and/or natural gas in sufficient quantities and/or at economically attractive prices;
|
• |
failure to anticipate and adapt to new trends in the energy sector in the U.S., Jamaica, the Caribbean, Mexico, Ireland, Angola and elsewhere;
|