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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

 

 

For the year ended December 31, 2021

OR

 

 

For the transition period from                to_______

Commission File Number:001-38790

(Exact Name of Registrant as Specified in its Charter)

 

Registrant’s telephone number, including area code: (516) 268-7400

Securities registered pursuant to Section 12(b) of the Act:

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☒ No ☐

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ☐ No ☒

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐ No ☒

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed as of June 30, 2021 (the last business day of the registrant’s most recently completed second fiscal quarter), based on the closing price of the Class A shares on the Nasdaq Global Select Market, was $2,754.1 million.

 

At February 24, 2022, the registrant had 206,863,242 shares of Class A common stock outstanding.

 

Documents Incorporated by Reference:

 

Portions of the registrant’s definitive proxy statement for the registrant’s 2022 annual meeting, to be filed within 120 days after the close of the registrant’s fiscal year, are incorporated by reference into Parts II and III of this Annual Report on Form 10-K.

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ADO	automotive diesel oil
Bcf/yr	billion cubic feet per year
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
DOT	U.S. Department of Transportation
EPA	U.S. Environmental Protection Agency
FTA countries	countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas
GAAP	generally accepted accounting principles in the United States
GHG	greenhouse gases
GSA	gas sales agreement
Henry Hub	a natural gas pipeline 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
mtpa	metric tons per year
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;

•	the results of our subsidiaries, affiliates, joint ventures and special purpose entities in which we invest and their ability to make dividends or distributions to us;

•	construction and operational risks related to our facilities and assets, including cost overruns and delays;

•	complex regulatory and legal environments related to our business, assets and operations, including actions by governmental entities or changes to regulation or legislation, in particular related to our permits, approvals and authorizations for the construction and operation of our facilities;

•	delays or failure to obtain and maintain approvals and permits from governmental and regulatory agencies;

•	failure to maintain sufficient working capital for the development and operation of our business and assets;

•	failure to obtain a return on our investments for the development of our projects and assets and the implementation of our business strategy;

•	failure to convert our customer pipeline into actual sales;

•	lack of asset, geographic or customer diversification, including loss of one or more of our customers;

•	competition from third parties in our business;

•	failure of LNG or natural gas to be a competitive source of energy in the markets in which we operate, and seek to operate;

•	cyclical or other changes in the demand for and price of LNG and natural gas;

•	inability to procure LNG at necessary quantities or at favorable prices to meet customer demand, or otherwise to manage LNG supply and price risks, including hedging arrangements;

•	inability to successfully develop and implement our technological solutions;

•	inability to service our debt and comply with our covenant restrictions;

•	inability to obtain additional financing to effect our strategy;

•	inability to successfully complete mergers, sales, divestments or similar transactions related to our businesses or assets or to integrate such businesses or assets and realize the anticipated benefits, including with respect to the Mergers;

•	economic, political, social and other risks related to the jurisdictions in which we do, or seek to do, business;

•	weather events or other natural or manmade disasters or phenomena;

•	the extent of the global COVID-19 pandemic or any other major health and safety incident;

•	increased labor costs, disputes or strikes, and the unavailability of skilled workers or our failure to attract and retain qualified personnel;

•	the tax treatment of, or changes in tax laws applicable to, us or our business or of an investment in our Class A shares; and

•	other risks described in the “Risk Factors” section of this Annual Report.

Items 1 and 2.

Business and Properties

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our LNG storage and regasification facility at the Port of Montego Bay, Jamaica (the “Montego Bay Facility”),

•

our marine LNG storage and regasification facility in Old Harbour, Jamaica (the “Old Harbour Facility” and, together with the Montego Bay Facility, the “Jamaica Facilities”),

•

our landed micro-fuel handling facility in San Juan, Puerto Rico (the “San Juan Facility”),

•

our marine LNG storage and regasification facility in Sergipe, Brazil (the “Sergipe Facility”),

•

our LNG receiving facility in La Paz, Mexico (the “La Paz” Facility”), and

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at our Miami Facility.

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collecting and analyzing diversity data;

Item 1A.

Risk Factors

•

We may be unable to successfully integrate the businesses and realize the anticipated benefits of the Mergers;

•

We have a limited operating history, which may not be sufficient to evaluate our business and prospects;

•

We are a holding company and our operational and consolidated financial results are dependent on the results of our subsidiaries, affiliates, joint ventures and special purpose entities in which we invest;

•

Our ability to implement our business strategy may be materially and adversely affected by many known and unknown factors;

•

We are subject to various construction risks;

•

Operation of our infrastructure, facilities and vessels involves significant risks;

•

We operate in a highly regulated environment and our operations could be adversely affected by actions by governmental entities or changes to regulations and legislation;

•

Failure to obtain and maintain permits, approvals and authorizations from governmental and regulatory agencies and third parties on favorable terms could impede operations and construction;

•

When we invest significant capital to develop a project, we are subject to the risk that the project is not successfully developed and that our customers do not fulfill their payment obligations to us following our capital investment in a project;

•

Failure to maintain sufficient working capital could limit our growth and harm our business, financial condition and results of operations;

•

Our ability to generate revenues is substantially dependent on our current and future long-term agreements and the performance by customers under such agreements;

•

Our current lack of asset and geographic diversification could have an adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects;

•

Because we are currently dependent upon a limited number of customers, the loss of a significant customer could adversely affect our operating results;

•

Competition in the LNG industry is intense, and some of our competitors have greater financial, technological and other resources than we currently possess;

•

Failure of LNG to be a competitive source of energy in the markets in which we operate, and seek to operate, could adversely affect our expansion strategy;

•

Cyclical or other changes in the demand for and price of LNG and natural gas may adversely affect our business and the performance of our customers;

•

We may not be able to purchase or receive physical delivery of LNG or natural gas in sufficient quantities and/or at economically attractive prices to satisfy our delivery obligations under the GSAs, PPAs and SSAs;

•

We seek to develop innovative and new technologies as part of our strategy that are not yet proven and may not realize the time and cost savings we expect to achieve;

•

We have incurred, and may in the future incur, a significant amount of debt;

•

Our business is dependent upon obtaining substantial additional funding from various sources, which may not be available or may only be available on unfavorable terms;

•

We may engage in mergers, sales and acquisitions, reorganizations or similar transactions related to our businesses or assets in the future and we may fail to successfully complete such transaction or to realize the expected value;

•

Weather events or other natural or manmade disasters or phenomena, some of which may be adversely impacted by global climate change, could have a material adverse effect on our operations and projects, as well as on the economies in the markets in which we operate or plan to operate;

•

We are unable to predict the extent to which the global COVID-19 pandemic will negatively affect our operations, financial performance, nor our ability to achieve our strategic objectives. We are also unable to predict how this global pandemic may affect our customers and suppliers;

•

We may experience increased labor costs and regulation, and the unavailability of skilled workers or our failure to attract and retain qualified personnel, as well as our ability to comply with such labor laws, could adversely affect;

•

We are subject to the economic, political, social and other conditions in the jurisdictions in which we operate;

•

Our financial condition and operating results may be adversely affected by foreign exchange fluctuations;

•

A change in tax laws in any country in which we operate could adversely affect us;

•

A small number of our original investors have the ability to direct the voting of a majority of our stock, and their interests may conflict with those of our other stockholders; and

•

The declaration and payment of dividends to holders of our Class A common stock is at the discretion of our board of directors and there can be no assurance that we will continue to pay dividends in amounts or on a basis consistent with prior distributions to our investors, if at all.

•

managing a larger company;

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attracting, motivating and retaining management personnel and other key employees;

•

the possibility of faulty assumptions underlying expectations regarding the integration process;

•

retaining existing business and operational relationships and attracting new business and operational relationships;

•

consolidating corporate and administrative infrastructure and eliminating duplicative operations;

•

coordinating geographically separate organizations;

•

unanticipated issues in integrating information technology, communications and other systems; and

•

unanticipated changes in federal or state laws or regulations.

•

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 strategic relationships;

•

failure to develop cost-effective logistics solutions;

•

failure to manage expanding operations in the projected timeframe;

•

inability to develop infrastructure in a timely and cost-effective manner;

•

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;

•

increases in operating costs, including the need for capital improvements, insurance premiums, general taxes, real estate taxes and utilities, affecting our profit margins;

•

failure to win new bids or contracts on the terms, size and within the time frame we need to execute our business strategy;

•

failure to obtain required governmental and regulatory approvals for the construction and operation of these projects and other relevant approvals;

•

unfavorable laws and regulations, changes in laws or unfavorable interpretation or application of laws and regulations; and

•

uncertainty regarding the timing, pace and extent of an economic recovery in the United States, the other jurisdictions in which we operate and elsewhere, which in turn will likely affect demand for crude oil and natural gas.

•

engineering, environmental or geological problems;

•

shortages or delays in the delivery of equipment and supplies;

•

government or regulatory approvals, permits or other authorizations;

•

failure to meet technical specifications or adjustments being required based on testing or commissioning;

•

construction accidents that could result in personal injury or loss of life;

•

lack of adequate and qualified personnel to execute the project;

•

weather interference; and

•

potential labor shortages, work stoppages or labor union disputes.

•

performing below expected levels of efficiency or capacity or required changes to specifications for continued operations;

•

breakdowns or failures of equipment or shortages or delays in the delivery of supplies;

•

operational errors by trucks, including trucking accidents while transporting natural gas, LNG or any other chemical or hazardous substance;

•

tankers or tug operators;

•

operational errors by us or any contracted facility, port or other operator of related infrastructure;

•

failure to maintain the required government or regulatory approvals, permits or other authorizations;

•

accidents that could result in personal injury or loss of life;

•

lack of adequate and qualified personnel;

•

potential labor shortages, work stoppages or labor union disputes;

•

weather-related or natural disaster interruptions of operations;

•

pollution or environmental contamination affecting operation;

•

inability, or failure, of any counterparty to any facility-related agreements to perform their contractual obligations;

•

decreased demand by our customers, including as a result of the COVID-19 pandemic; and

•

planned and unplanned power outages or failures to supply due to scheduled or unscheduled maintenance.

•

upon the occurrence of certain events of force majeure;

•

if we fail to make available specified scheduled cargo quantities;

•

the occurrence of certain uncured payment defaults;

•

the occurrence of an insolvency event;

•

the occurrence of certain uncured, material breaches; and

•

if we fail to commence commercial operations or achieve financial close within the agreed timeframes.

•

increases in worldwide LNG production capacity and availability of LNG for market supply;

•

increases in demand for natural gas but at levels below those required to maintain current price equilibrium with respect to supply;

•

increases in the cost to supply natural gas feedstock to our liquefaction projects;

•

increases in the cost to supply LNG feedstock to our Facilities;

•

decreases in the cost of competing sources of natural gas, LNG or alternate fuels such as coal, heavy fuel oil and ADO;

•

decreases in the price of LNG; and

•

displacement of LNG or fossil fuels more broadly by alternate fuels or energy sources or technologies (including but not limited to nuclear, wind, solar, biofuels and batteries) in locations where access to these energy sources is not currently available or prevalent.

•

additions to competitive regasification capacity in North America, Brazil, Europe, Asia and other markets, which could divert LNG or natural gas from our business;

•

imposition of tariffs by China or any other jurisdiction on imports of LNG from the United States;

•

insufficient or oversupply of natural gas liquefaction or export capacity worldwide;

•

insufficient LNG tanker capacity;

•

weather conditions and natural disasters;

•

reduced demand and lower prices for natural gas;

•

increased natural gas production deliverable by pipelines, which could suppress demand for LNG;

•

decreased oil and natural gas exploration activities, including shut-ins and possible proration, which may decrease the production of natural gas;

•

cost improvements that allow competitors to offer LNG regasification services at reduced prices;

•

changes in supplies of, and prices for, alternative energy sources, such as coal, oil, nuclear, hydroelectric, wind and solar energy, which may reduce the demand for natural gas;

•

changes in regulatory, tax or other governmental policies regarding imported or exported LNG, natural gas or alternative energy sources, which may reduce the demand for imported or exported LNG and/or natural gas;

•

political conditions in natural gas producing regions;

•

adverse relative demand for LNG compared to other markets, which may decrease LNG imports into or exports from North America; and

•

cyclical trends in general business and economic conditions that cause changes in the demand for natural gas.

•

prevailing economic conditions in the natural gas and energy markets;

•

a substantial or extended decline in demand for LNG;

•

increases in the supply of vessel capacity without a commensurate increase in demand;

•

the size and age of a vessel; and

•

the cost of retrofitting, steel or modifying existing vessels, as a result of technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, customer requirements or otherwise.

•

a shift in our investor base;

•

our quarterly or annual earnings, or those of other comparable companies;

•

actual or anticipated fluctuations in our operating results;

•

changes in accounting standards, policies, guidance, interpretations or principles;

•

announcements by us or our competitors of significant investments, acquisitions or dispositions;

•

the failure of securities analysts to cover our Class A common stock;

•

changes in earnings estimates by securities analysts or our ability to meet those estimates;

•

the operating and share price performance of other comparable companies;

•

overall market fluctuations;

•

general economic conditions; and

•

developments in the markets and market sectors in which we participate.

•

a majority of the board of directors consist of independent directors as defined under the rules of Nasdaq;

•

the nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

•

the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

•

dividing our board of directors into three classes of directors, with each class serving staggered three-year terms;

•

providing that any vacancies may, except as otherwise required by law, or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum (provided that vacancies that results from newly created directors requires a quorum);

•

permitting special meetings of our stockholders to be called only by (i) the chairman of our board of directors, (ii) a majority of our board of directors, or (iii) a committee of our board of directors that has been duly designated by the board of directors and whose powers include the authority to call such meetings;

•

prohibiting cumulative voting in the election of directors;

•

establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of the stockholders; and

•

providing that the board of directors is expressly authorized to adopt, or to alter or repeal our certain provisions of our organizational documents to the extent permitted by law.

Item 1B.

Unresolved Staff Comments.

Item 3.

Legal Proceedings.

Item 4.

Mine Safety Disclosures.

Item 5.

Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.

Item 6.

Reserved.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.