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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to__________

Commission File Number: 001-38790

New Fortress Energy Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware			83-1482060
(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)

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

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 x 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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.


Large accelerated filer x			Accelerated filer ¨
Non-accelerated filer ¨			Smaller reporting company ☐
			Emerging growth company ☐

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 x

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock

“NFE”

Nasdaq Global Select Market

As of August 4, 2023, the registrant had 205,031,406 shares of Class A common stock outstanding.

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TABLE OF CONTENTS


GLOSSARY OF TERMS		ii

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS		iv

PART I FINANCIAL INFORMATION		1

Item 1.	Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	46

Item 4.	Controls and Procedures.	47

PART II OTHER INFORMATION		48

Item 1.	Legal Proceedings.	48

Item 1A.	Risk Factors.	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	80

Item 3.	Defaults Upon Senior Securities.	80

Item 4.	Mine Safety Disclosures.	80

Item 5.	Other Information.	80

Item 6.	Exhibits.	81

SIGNATURES		87

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GLOSSARY OF TERMS

As commonly used in the liquefied natural gas industry, to the extent applicable and as used in this Quarterly Report on Form 10-Q (“Quarterly Report”), the terms listed below have the following meanings:


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 gallons of LNG

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

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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 gallons of LNG

iii

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CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements regarding, among other things, our plans, strategies, prospects and projections, both business and financial. All statements contained in this Quarterly Report other than historical information are forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance or our projected business results. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “targets,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements are necessarily estimates based upon current information and involve a number of risks and uncertainties. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include:

•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;

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

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

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

•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;

•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;

•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 Quarterly Report.

All forward-looking statements speak only as of the date of this Quarterly Report. When considering forward-looking statements, you should keep in mind the risks set forth under “Item 1A. Risk Factors” and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 (our “Annual Report”), this Quarterly Report and in our other filings with the Securities and Exchange Commission (the “SEC”). The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no duty to update these forward-looking statements, even though our situation may change in the future. Furthermore, we cannot guarantee future results, events, levels of activity, performance, projections or achievements.

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

New Fortress Energy Inc.

Condensed Consolidated Balance Sheets

As of June 30, 2023 and December 31, 2022

(Unaudited, in thousands of U.S. dollars, except share amounts)


	June 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	104,342	$	675,492
Restricted cash	100,513		165,396
Receivables, net of allowances of $805 and $884, respectively	275,292		280,313
Inventory	128,411		39,070
Prepaid expenses and other current assets, net	105,133		226,883
Total current assets	713,691		1,387,154


Construction in progress	4,593,132		2,418,608
Property, plant and equipment, net	2,161,930		2,116,727
Equity method investments	138,569		392,306
Right-of-use assets	504,299		377,877
Intangible assets, net	74,540		85,897

Goodwill	776,760		776,760
Deferred tax assets, net	8,074		8,074
Other non-current assets, net	164,244		141,679
Total assets	$	9,135,239	$	7,705,082

Liabilities
Current liabilities
Current portion of long-term debt and short-term borrowings	$	366,945	$	64,820
Accounts payable	602,759		80,387
Accrued liabilities	821,137		1,162,412
Current lease liabilities	133,431		48,741
Other current liabilities	143,598		52,878
Total current liabilities	2,067,870		1,409,238

Long-term debt	5,064,188		4,476,865
Non-current lease liabilities	349,331		302,121
Deferred tax liabilities, net	27,192		25,989
Other long-term liabilities	75,783		49,010
Total liabilities	7,584,364		6,263,223

Commitments and contingencies (Note 19)

Stockholders’ equity
Class A common stock, $0.01 par value, 750 million shares authorized, 205.0 million issued and outstanding as of June 30, 2023; 208.8 million issued and outstanding as of December 31, 2022	2,050		2,088
Additional paid-in capital	1,039,201		1,170,254
Retained earnings	290,564		62,080
Accumulated other comprehensive income	74,346		55,398
Total stockholders’ equity attributable to NFE	1,406,161		1,289,820
Non-controlling interest	144,714		152,039
Total stockholders’ equity	1,550,875		1,441,859
Total liabilities and stockholders’ equity	$	9,135,239	$	7,705,082

The accompanying notes are an integral part of these condensed consolidated financial statements.

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New Fortress Energy Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three and six months ended June 30, 2023 and 2022

(Unaudited, in thousands of U.S. dollars, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues
Operating revenue	$	494,619	$	497,240	$	996,307	$	897,315
Vessel charter revenue	65,840		75,134		142,364		167,554
Other revenue	886		12,481		1,805		25,104
Total revenues	561,345		584,855		1,140,476		1,089,973

Operating expenses
Cost of sales (exclusive of depreciation and amortization shown separately below)	225,768		272,401		410,706		480,699
Vessel operating expenses	11,443		18,628		24,734		41,592
Operations and maintenance	33,697		20,490		60,368		43,658
Selling, general and administrative	55,803		50,310		107,941		98,351
Transaction and integration costs	1,554		4,866		2,048		6,767

Depreciation and amortization	42,115		36,356		76,490		70,646
Asset impairment expense	—		48,109		—		48,109
Total operating expenses	370,380		451,160		682,287		789,822
Operating income	190,965		133,695		458,189		300,151
Interest expense	64,396		47,840		136,069		92,756
Other (income) expense, net	(6,584)		(22,102)		18,421		(41,827)

Income before income from equity method investments and income taxes	133,153		107,957		303,699		249,222
Income (loss) from equity method investments	2,269		(372,927)		12,249		(322,692)
Tax provision (benefit)	15,322		(86,539)		44,282		(136,220)
Net income (loss)	120,100		(178,431)		271,666		62,750
Net (income) loss attributable to non-controlling interest	(852)		8,666		(2,212)		5,754
Net income (loss) attributable to stockholders	$	119,248	$	(169,765)	$	269,454	$	68,504

Net income (loss) per share – basic	$	0.58	$	(0.81)	$	1.30	$	0.33
Net income (loss) per share – diluted	$	0.58	$	(0.81)	$	1.29	$	0.33

Weighted average number of shares outstanding – basic	205,045,121		209,669,188		206,867,828		209,797,133
Weighted average number of shares outstanding – diluted	205,711,467		209,669,188		207,534,174		209,810,647

Other comprehensive income (loss):
Net income (loss)	$	120,100	$	(178,431)	$	271,666	$	62,750
Currency translation adjustment	16,908		(39,703)		19,049		81,127
Comprehensive income (loss)	137,008		(218,134)		290,715		143,877
Comprehensive (income) loss attributable to non-controlling interest	(758)		9,812		(2,313)		4,944
Comprehensive income (loss) attributable to stockholders	$	136,250	$	(208,322)	$	288,402	$	148,821

The accompanying notes are an integral part of these condensed consolidated financial statements.

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New Fortress Energy Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three and six months ended June 30, 2023 and 2022

(Unaudited, in thousands of U.S. dollars, except share amounts)


	Class A common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income		Non- controlling interest		Total stockholders’ equity
		Shares											Amount
Balance as of December 31, 2022		208,770,088	$	2,088	$	1,170,254	$	62,080	$	55,398	$	152,039	$	1,441,859
Net income		—	—		—		150,206		—		1,360		151,566
Other comprehensive income		—	—		—		—		1,946		195		2,141



Cancellation of shares		(4,100,000)	(41)		(122,713)		—		—		—		(122,754)
Dividends		—	—		—		(20,467)		—		(3,019)		(23,486)
Balance as of March 31, 2023		204,670,088	$	2,047	$	1,047,541	$	191,819	$	57,344	$	150,575	$	1,449,326
Net income		—	—		—		119,248		—		852		120,100
Other comprehensive income (loss)		—	—		—		—		17,002		(94)		16,908
Share-based compensation expense		—	—		1,179		—		—		—		1,179
Issuance of shares for vested share-based compensation awards		689,401	3		—		—		—		—		3
Shares withheld from employees related to share-based compensation, at cost		(328,083)	—		(9,519)		—		—		—		(9,519)

Dividends		—	—		—		(20,503)		—		(6,619)		(27,122)
Balance as of June 30, 2023		205,031,406	$	2,050	$	1,039,201	$	290,564	$	74,346	$	144,714	$	1,550,875


	Class A common stock	Additional paid-in capital	Retained earnings (Accumulated deficit)		Accumulated other comprehensive income (loss)		Non- controlling interest		Total stockholders’ equity
											Shares			Amount
Balance as of December 31, 2021		206,863,242	$	2,069	$	1,923,990	$	(132,399)	$	(2,085)		$	202,479		$	1,994,054

Net income		—	—		—		238,269		—			2,912			241,181
Other comprehensive income		—	—		—		—		118,874			1,956			120,830
Share-based compensation expense		—	—		880		—		—			—			880
Issuance of shares for vested RSUs		1,121,255	7		—		—		—			—			7
Shares withheld from employees related to share-based compensation, at cost		(442,146)	—		(15,274)		—		—			—			(15,274)
Dividends		—	—		(20,754)		—		—			(3,019)			(23,773)
Balance as of March 31, 2022		207,542,351	$	2,076	$	1,888,842	$	105,870	$	116,789		$	204,328		$	2,317,905
Net income (loss)		—	—		—		(169,765)		—			(8,666)			(178,431)
Other comprehensive (loss)		—	—		—		—		(38,557)			(1,146)			(39,703)
Share-based compensation expense		—	—		358		—		—			—			358

Issuance of shares for vested RSUs		13,898	—		—		—		—			—			—


Dividends		—	—		(20,582)		—		—			(7,019)			(27,601)
Balance as of June 30, 2022		207,556,249	$	2,076	$	1,868,618	$	(63,895)	$	78,232		$	187,497		$	2,072,528

The accompanying notes are an integral part of these condensed consolidated financial statements.

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New Fortress Energy Inc.

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2023 and 2022

(Unaudited, in thousands of U.S. dollars)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities
Net income	$	271,666	$	62,750
Adjustments for:
Depreciation and amortization	76,949		71,172
(Earnings) losses of equity method investees	(12,249)		322,692
Drydocking expenditure	—		(12,439)
Dividends received from equity method investees	5,830		14,859
Change in market value of derivatives	572		(9,798)
Deferred taxes	—		(178,109)
Asset impairment expense	—		48,109
Earnings recognized from vessels chartered to third parties transferred to Energos	(71,536)		—
Loss on the disposal of equity method investment	37,401		—




Other	12,435		6,808
Changes in operating assets and liabilities:
(Increase) in receivables	(14,532)		(123,843)
(Increase) in inventories	(60,710)		(35,167)
Decrease (increase) in other assets	63,576		(58,949)
Decrease in right-of-use assets	40,655		35,265
Increase in accounts payable/accrued liabilities	75,746		71,603

(Decrease) in lease liabilities	(38,885)		(31,352)
Increase (decrease) in other liabilities	116,959		(12,668)
Net cash provided by operating activities	503,877		170,933

Cash flows from investing activities
Capital expenditures	(1,465,642)		(441,708)
Sale of equity method investment	100,000		—
Other investing activities	(1,450)		—


Net cash used in investing activities	(1,367,092)		(441,708)

Cash flows from financing activities
Proceeds from borrowings of debt	919,625		437,917
Payment of deferred financing costs	(6,659)		(4,805)
Repayment of debt	—		(146,030)
Payments related to tax withholdings for share-based compensation	(9,519)		(13,054)
Payment of dividends	(676,918)		(47,374)
Other financing activities	(3,946)		—

Net cash provided by financing activities	222,583		226,654
Impact of changes in foreign exchange rates on cash and cash equivalents	1,608		(2,018)
Net decrease in cash, cash equivalents and restricted cash	(639,024)		(46,139)
Cash, cash equivalents and restricted cash – beginning of period	855,083		264,030
Cash, cash equivalents and restricted cash – end of period	$	216,059	$	217,891


Supplemental disclosure of non-cash investing and financing activities:
Changes in accounts payable and accrued liabilities associated with construction in progress and property, plant and equipment additions	$	732,858	$	5,302
Principal payments on financing obligation to Energos by third party charterers	(32,836)		—
Shares received in Hilli Exchange	(122,754)		—
Repurchase obligation	$	24,320	$	—

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The following table identifies the balance sheet line-items included in Cash and cash equivalents, Current restricted cash, and Non-current restricted cash presented in the Condensed Consolidated Statement of Cash Flows:


	Six Months Ended June 30,
	2023		2022
Cash and cash equivalents	$	104,342	$	138,329
Current restricted cash	100,513		71,602
Non-current restricted cash	—		7,960
Cash and cash equivalents classified as held for sale	11,204		—
Cash, cash equivalents and restricted cash – end of period	$	216,059	$	217,891

Cash and cash equivalents includes $11,204 which has been classified as assets held for sale and included in Other non-current assets on the condensed consolidated balance sheets.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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1. Organization

New Fortress Energy Inc. (“NFE,” together with its subsidiaries, the “Company”), a Delaware corporation, is a global energy infrastructure company founded to help address energy poverty and accelerate the world’s transition to reliable, affordable and clean energy. The Company owns and operates natural gas and liquefied natural gas ("LNG") infrastructure, ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. The Company has liquefaction, regasification and power generation operations in the United States, Jamaica, Brazil and Mexico. The Company has marine operations with vessels operating under time charters and in the spot market globally.

The Company currently conducts its business through two operating segments, Terminals and Infrastructure and Ships. The business and reportable segment information reflect how the Chief Operating Decision Maker (“CODM”) regularly reviews and manages the business.

2. Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements contained herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect all normal and recurring adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position, results of operations and cash flows of the Company for the interim periods presented. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual audited consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2022 (the "Annual Report"). Certain prior year amounts have been reclassified to conform to current year presentation.

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions, impacting the reported amounts of assets and liabilities, net earnings and disclosures of contingent assets and liabilities as of the date of the condensed consolidated financial statements. Actual results could be different from these estimates.

3. Adoption of new and revised standards

The Company has reviewed recently issued accounting pronouncements and concluded that such pronouncements are either not applicable to the Company or no material impact is expected in the condensed consolidated financial statements as a result of future adoption.

4. Revenue recognition

Operating revenue in the condensed consolidated statements of operations and comprehensive income (loss) includes revenue from sales of LNG and natural gas as well as outputs from the Company’s natural gas-fueled power generation facilities, including power and steam, and the sale of LNG cargos. For the three and six months ended June 30, 2023, the Company recognized LNG cargo sales to customers of $267,777 and $617,138, respectively, which includes $162,500 and $332,000 of contract settlements, respectively. LNG cargo sales for the three and six months ended June 30, 2022 were $309,030 and $594,201, respectively.

Under most customer contracts, invoicing occurs once the Company’s performance obligations have been satisfied, at which point payment is unconditional. As of June 30, 2023 and December 31, 2022, receivables related to revenue from contracts with customers totaled $269,973 and $280,382, respectively, and were included in Receivables, net on the condensed consolidated balance sheets, net of current expected credit losses of $805 and $884, respectively. Other items included in Receivables, net not related to revenue from contracts with customers represent leases, which are accounted for outside the scope of ASC 606, and receivables associated with reimbursable costs.

Contract assets are comprised of the transaction price allocated to completed performance obligations that will be billed to customers in subsequent periods. The Company has recognized contract liabilities, comprised of unconditional payments due or paid under the contracts with customers prior to the Company’s satisfaction of the related performance obligations. The contract liabilities and contract assets balances as of June 30, 2023 and December 31, 2022 are detailed below:

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	June 30, 2023		December 31, 2022
Contract assets, net - current	$	8,414	$	8,083
Contract assets, net - non-current	24,379		28,651
Total contract assets, net	$	32,793	$	36,734

Contract liabilities	$	91,771	$	12,748

Revenue recognized in the year from:
Amounts included in contract liabilities at the beginning of the year	$	12,613	$	2,951

Contract assets are presented net of expected credit losses of $351 and $401 as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, contract assets was comprised of $32,603 and $36,483 of unbilled receivables, respectively, which represent unconditional rights to payment only subject to the passage of time.

Contract liabilities increased during the six months ended June 30, 2023 due to upfront payments received under the Company's contracts in Puerto Rico to provide temporary power and to operate and maintain PREPA's power generation assets. These payments will be recognized as revenue over the expected term of these contracts.

The Company has recognized costs to fulfill contracts with customers, which primarily consist of expenses required to enhance resources to deliver under agreements with these customers. These costs can include set-up and mobilization costs incurred ahead of the service period, and such costs will be recognized on a straight-line basis over the expected terms of the agreements. As of June 30, 2023, the Company has capitalized $26,349 of which $2,104 of these costs is presented within Prepaid expenses and other current assets, net and $24,245 is presented within Other non-current assets, net on the condensed consolidated balance sheets. As of December 31, 2022, the Company had capitalized $10,377, of which $604 of these costs was presented within Prepaid expenses and other current assets, net and $9,773 was presented within Other non-current assets, net on the condensed consolidated balance sheets.

Transaction price allocated to remaining performance obligations

Some of the Company’s contracts are short-term in nature with a contract term of less than a year. The Company applied the optional exemption not to report any unfulfilled performance obligations related to these contracts.

The Company has arrangements in which LNG, natural gas or outputs from the Company’s power generation facilities are sold on a “take-or-pay” basis whereby the customer is obligated to pay for the minimum guaranteed volumes even if it does not take delivery. The price under these agreements is typically based on a market index plus a fixed margin. The fixed transaction price allocated to the remaining performance obligations under these arrangements represents the fixed margin multiplied by the outstanding minimum guaranteed volumes. The Company expects to recognize this revenue over the following time periods. The pattern of recognition reflects the minimum guaranteed volumes in each period:


Period	Revenue
Remainder of 2023	$	846,988
2024	2,043,173
2025	1,355,952
2026	525,753
2027	522,876
Thereafter	7,988,459
Total	$	13,283,201

For all other sales contracts that have a term exceeding one year, the Company has elected the practical expedient in ASC 606 under which the Company does not disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. For these excluded contracts, the sources of variability are (a) the market index prices of natural gas used to price the contracts, and (b) the variation in volumes that may be delivered to the customer. Both sources of variability are expected to be resolved at or shortly before

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delivery of each unit of LNG, natural gas, power or steam. As each unit of LNG, natural gas, power or steam represents a separate performance obligation, future volumes are wholly unsatisfied.

Lessor arrangements

Property, plant and equipment subject to vessel charters accounted for as operating leases is included within Vessels within "Note 12 Property, plant and equipment, net." Vessels included in the Energos Formation Transaction (defined below in "Note 10 Equity method investments"), including those vessels chartered to third parties, continue to be recognized on the condensed consolidated balance sheet. The carrying amount of these vessels that are leased to third parties under operating leases is as follows:


	June 30, 2023		December 31, 2022
Property, plant and equipment	$	902,839	$	1,292,957
Accumulated depreciation	(74,615)		(80,233)
Property, plant and equipment, net	$	828,224	$	1,212,724

The components of lease income from vessel operating leases for the three and six months ended June 30, 2023 and 2022 are shown below. As the Company has not recognized the sale of all of the vessels included in the Energos Formation Transaction, the operating lease income shown below for the three and six months ended June 30, 2023 is comprised of revenue from third-party charters of vessels included in the Energos Formation Transaction.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease income	$	65,840	$	71,682	$	142,364	$	151,904
Variable lease income	—		668		—		11,232
Total operating lease income	$	65,840	$	72,350	$	142,364	$	163,136

Prior to the completion of the Energos Formation Transaction, the Company's charter of the Nanook was accounted for as a finance lease, and the Company recognized interest income of $11,545 and $23,126 for the three and six months ended June 30, 2022, respectively, related to this finance lease, which was presented within other revenue in the condensed consolidated statements of operations and comprehensive income (loss). The Company also recognized revenue of $2,784 and $4,418 for the three and six months ended June 30, 2022, respectively, related to the operation and services agreement and variable charter revenue within Vessel charter revenue in the condensed consolidated statements of operations and comprehensive income (loss). The Company recognized the sale of the net investment in the finance lease of the Nanook as part of the Energos Formation Transaction.

Subsequent to the Energos Formation Transaction, all cash receipts on vessel charters, including the finance lease of the Nanook, will be received by Energos. As such, there are no future cash receipts from operating leases, and the future cash receipts from other finance leases are not significant as of June 30, 2023.

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5. Leases, as lessee

The Company has operating leases primarily for the use of LNG vessels, marine port space, office space, land and equipment under non-cancellable lease agreements. The Company’s leases may include multiple optional renewal periods that are exercisable solely at the Company’s discretion. Renewal periods are included in the lease term when the Company is reasonably certain that the renewal options would be exercised, and the associated lease payments for such periods are reflected in the right-of-use ("ROU") asset and lease liability.

The Company’s leases include fixed lease payments which may include escalation terms based on a fixed percentage or may vary based on an inflation index or other market adjustments. Escalations based on changes in inflation indices and market adjustments and other lease costs that vary based on the use of the underlying asset are not included as lease payments in the calculation of the lease liability or ROU asset; such payments are included in variable lease cost when the obligation that triggers the variable payment becomes probable. Variable lease cost includes contingent rent payments for office space based on the percentage occupied by the Company in addition to common area charges and other charges that are variable in nature. The Company also has a component of lease payments that are variable related to the LNG vessels, in which the Company may receive credits based on the performance of the LNG vessels during the period.

As of June 30, 2023 and December 31, 2022, ROU assets, current lease liabilities and non-current lease liabilities consisted of the following:


	June 30, 2023		December 31, 2022
Operating right-of-use-assets	$	442,192	$	355,883
Finance right-of-use-assets (1)	62,107		21,994
Total right-of-use assets	$	504,299	$	377,877

Current lease liabilities:
Operating lease liabilities	$	105,739	$	44,371
Finance lease liabilities	27,692		4,370
Total current lease liabilities	$	133,431	$	48,741
Non-current lease liabilities:
Operating lease liabilities	$	319,240	$	290,899
Finance lease liabilities	30,091		11,222
Total non-current lease liabilities	$	349,331	$	302,121

(1) Finance lease ROU assets are recorded net of accumulated amortization of $9,693 and $2,134 as of June 30, 2023 and December 31, 2022, respectively.

For the three and six months ended June 30, 2023 and 2022, the Company’s operating lease cost recorded within the condensed consolidated statements of operations and comprehensive income (loss) was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Fixed lease cost	$	22,858	$	20,413	$	39,226	$	38,913
Variable lease cost	1,004		466		1,601		936
Short-term lease cost	2,370		1,897		5,919		6,122

Lease cost - Cost of sales	$	15,137	$	20,112	$	30,891	$	41,015
Lease cost - Operations and maintenance	9,207		844		12,048		1,609
Lease cost - Selling, general and administrative	1,888		1,820		3,807		3,347

For the three months ended June 30, 2023 and 2022, the Company has capitalized $14,449 and $2,973 of lease costs, respectively. For the six months ended June 30, 2023 and 2022, the Company has capitalized $18,705 and $11,215 of lease costs, respectively. Capitalized costs include vessels and port space used during the commissioning of development

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projects. Short-term lease costs for vessels chartered by the Company to transport inventory from a supplier’s facilities to the Company’s storage locations are capitalized to inventory.

The Company has leases of turbines, ISO tanks and a parcel of land that transfer the ownership in underlying assets to the Company at the end of the lease, and these leases are treated as finance leases. For the three and six months ended June 30, 2023 and 2022, the Company’s finance interest expense and amortization recorded in Interest expense and Depreciation and amortization, respectively, within the condensed consolidated statements of operations and comprehensive income (loss) were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Interest expense related to finance leases	$	1,218	$	218	$	1,686	$	447
Amortization of right-of-use asset related to finance leases	5,771		380		7,560		759

Cash paid for operating leases is reported in operating activities in the condensed consolidated statements of cash flows. Supplemental cash flow information related to leases was as follows for the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,
	2023		2022
Cash outflows for operating lease liabilities	$	61,506	$	52,254
Cash outflows for finance lease liabilities	5,589		2,554
Right-of-use assets obtained in exchange for new operating lease liabilities	126,863		134,075
Right-of-use assets obtained in exchange for new finance lease liabilities	47,672		—

The future payments due under operating and finance leases as of June 30, 2023 are as follows:


	Operating Leases		Financing Leases
Due remainder of 2023	$	67,316	$	16,095
2024	136,911		29,997
2025	74,914		12,427
2026	52,013		3,041
2027	51,547		436
Thereafter	185,473		943
Total lease payments	$	568,174	$	62,939
Less: effects of discounting	143,195		5,156
Present value of lease liabilities	$	424,979	$	57,783

Current lease liability	$	105,739	$	27,692
Non-current lease liability	319,240		30,091

As of June 30, 2023, the weighted average remaining lease term for operating leases was 6.4 years and finance leases was 2.4 years. Because the Company generally does not have access to the rate implicit in the lease, the incremental borrowing rate is utilized as the discount rate. The weighted average discount rate associated with operating leases as of June 30, 2023 was 8.8% and as of December 31, 2022 was 8.5%. The weighted average discount rate associated with finance leases as of June 30, 2023 was 8.3% and as of December 31, 2022 was 5.1%.

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6. Financial instruments

Commodity risk management

The Company has utilized commodity swap transactions to manage exposure to changes in market pricing of natural gas or LNG. Realized and unrealized gains and losses on these transactions have been recognized in Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss).

During the fourth quarter of 2022, the Company entered into a commodity swap transaction to swap market pricing exposure for approximately 6.8 TBtus for a fixed price of $40.55 per MMBtu. The swap settled during the first quarter of 2023 resulting in a gain of $41,315 recognized as a reduction to Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss). The gain was comprised of a realized gain of $146,112 and the reversal of the unrealized gain of $104,797 recognized in the fourth quarter of 2022.

In January 2023, the Company entered into a commodity swap transaction. Mark-to-market unrealized gains of $2,816 for the three months ended June 30, 2023 and losses of $2,914 for the six months ended June 30, 2023 on this instrument have been recognized in Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss).

Interest rate and currency risk management

The Company was party to an interest rate swap, and in the first quarter of 2023, the interest rate swap was terminated.

The Company does not hold or issue instruments for speculative purposes, and the counterparties to such contracts are major banking and financial institutions. Credit risk exists to the extent that the counterparties are unable to perform under the contracts; however, the Company does not anticipate non-performance by any counterparties.

The mark-to-market gain or loss on the interest rate swap and other derivative instruments that are not intended to mitigate commodity risk are reported in Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss).

Fair value

Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows:

•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.

The valuation techniques that may be used to measure fair value are as follows:

•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 the 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).

The Company uses the market approach when valuing investment in equity securities which is recorded in Other non-current assets on the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022.

The Company uses the income approach when valuing the following financial instruments:

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◦Interest rate swap - The Company did not have any interest rate swaps outstanding as of June 30, 2023. As of December 31, 2022, the Company had an interest rate swap that was recorded within Other non-current assets on the condensed consolidated balance sheets.

◦The liability and asset associated with commodity swaps are recorded within Other current liabilities and Prepaid expenses and other current assets on the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022, respectively.

◦Contingent consideration derivative liability represents consideration due to the sellers in asset acquisitions when certain contingent events occur. The liabilities associated with these derivative liabilities are recorded within Other current liabilities and Other long-term liabilities on the condensed consolidated balance sheets based on the timing of expected settlement.

The fair value of derivative instruments, including commodity swaps is estimated considering current interest rates, foreign exchange rates, closing quoted market prices and the creditworthiness of counterparties. The Company estimates fair value of the contingent consideration derivative liabilities using a discounted cash flows method with discount rates based on the average yield curve for bonds with similar credit ratings and matching terms to the discount periods as well as a probability of the contingent events occurring.

The following table presents the Company’s financial assets and financial liabilities, including those that are measured at fair value, as of June 30, 2023 and December 31, 2022:


	Level 1		Level 2		Level 3		Total
June 30, 2023
Assets
Investment in equity securities	$	12,789	$	—	$	7,678	$	20,467




Liabilities
Commodity swap	$	—	$	2,816	$	—	$	2,816
Contingent consideration derivative liabilities	—		—		44,552		44,552

December 31, 2022
Assets
Investment in equity securities	$	10,128	$	—	$	7,678	$	17,806
Interest rate swap	—		11,650		—		11,650
Commodity swap	—		104,797		—		104,797

Liabilities
Contingent consideration derivative liabilities	$	—	$	—	$	46,619	$	46,619

The Company believes the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximated their fair value as of June 30, 2023 and December 31, 2022 and are classified as Level 1 within the fair value hierarchy.

The table below summarizes the fair value adjustment to instruments measured at Level 3 in the fair value hierarchy, including the contingent consideration derivative liabilities. These adjustments have been recorded within Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022:

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	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Contingent consideration derivative liabilities - Fair value adjustment - gain	$	(22)	$	1,385	$	(3,035)	$	984
Foreign currency forward purchase - (gain)	$	—	$	(17,471)	$	—	$	(17,471)

During the six months ended June 30, 2023 and 2022, the Company had no settlements of other financial instruments or any transfers in or out of Level 3 in the fair value hierarchy.

7. Restricted cash

As of June 30, 2023 and December 31, 2022, restricted cash consisted of the following:


	June 30, 2023		December 31, 2022
Cash restricted under the terms of loan agreements	$	40,678	$	124,085
Collateral for letters of credit and performance bonds	59,835		41,392
Collateral for interest rate swaps	—		2,500

Total restricted cash	$	100,513	$	167,977

Current restricted cash	$	100,513	$	165,396
Non-current restricted cash	—		2,581

As of June 30, 2023, the balance presented as collateral for letters of credit and performance bonds includes $21,300 to support a letter of credit to facilitate the purchase of turbines that was completed in the third quarter of 2023. A portion of these turbines will be utilized to support the Company's contract to generate temporary power in Puerto Rico.

Use of cash proceeds under the Barcarena Term Loan are restricted to certain payments to construct the Barcarena Power Plant (each as defined in our Annual Report). Non-current restricted cash is presented in Other non-current assets, net on the condensed consolidated balance sheets.

8. Inventory

As of June 30, 2023 and December 31, 2022, inventory consisted of the following:


	June 30, 2023		December 31, 2022
LNG and natural gas inventory	$	100,373	$	15,398
Automotive diesel oil inventory	9,195		8,164
Bunker fuel, materials, supplies and other	18,843		15,508
Total inventory	$	128,411	$	39,070

Inventory is adjusted to the lower of cost or net realizable value each quarter. Changes in the value of inventory are recorded within Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss). During the six months ended June 30, 2023, the Company recognized an adjustment to inventory of $6,232. In the second quarter of 2023, the Company acquired a spot cargo at a higher cost to obtain a new customer contract, and the net realizable value of this cargo was below the cost as of June 30, 2023. No adjustments were recorded during the six months ended June 30, 2022.

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9. Prepaid expenses and other current assets

As of June 30, 2023 and December 31, 2022, prepaid expenses and other current assets consisted of the following:


	June 30, 2023		December 31, 2022
Prepaid expenses	$	18,618	$	56,380
Recoverable taxes	60,956		37,504
Commodity swap	—		104,797
Due from affiliates	1,174		698
Other current assets	24,385		27,504
Total prepaid expenses and other current assets, net	$	105,133	$	226,883

Prepaid expenses as December 31, 2022 included $34,882 of prepaid LNG inventory. The Company does not have any significant prepaid LNG as of June 30, 2023. Other current assets as of June 30, 2023 and December 31, 2022 primarily consists of deposits and the current portion of contract assets (Note 4).

10. Equity method investments

Changes in the balance of the Company’s equity method investments is as follows:


	June 30, 2023
Equity method investments as of December 31, 2022	$	392,306

Dividends	(5,830)
Equity in earnings of investees	12,249

Sale of equity method investments	(260,156)

Equity method investments as of June 30, 2023	$	138,569

The carrying amounts of the Company's equity method investments as of June 30, 2023 and December 31, 2022 are:


	June 30, 2023		December 31, 2022
Hilli LLC	$	—	$	260,000
Energos	138,569		132,306
Total	$	138,569	$	392,306

As of June 30, 2023, the carrying value of the Company’s equity method investment was less than its proportionate share of the underlying net assets of its investee by $1,548. At December 31, 2022, the carrying value of the Company’s equity method investments exceeded its proportionate share of the underlying net assets of its investees by $16,976, and the basis difference attributable to amortizable net assets was amortized to Income (loss) from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss) over the remaining estimated useful lives of the underlying assets.

Hilli LLC

On March 15, 2023, the Company completed a transaction with Golar LNG Limited ("GLNG") for the sale of the Company's investment in the common units of Hilli LLC in exchange for approximately 4.1 million NFE shares and $100,000 in cash (the "Hilli Exchange"). In the fourth quarter of 2022, the Company recognized an other-than-temporary impairment on the investment in Hilli LLC of $118,558; this impairment was recognized in Income (loss) from equity method investments in the consolidated statements of operations and comprehensive income (loss). Upon completion of the Hilli Exchange, a loss on disposal of $37,401 was recognized in Other (income) expense, net in the condensed consolidated

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statements of operations and comprehensive income (loss). As a result of the Hilli Exchange, the Company no longer has an ownership interest in the Hilli. NFE shares received from GLNG were cancelled upon closing of the Hilli Exchange.

The Company had guaranteed 50% of the outstanding principal and interest amounts payable by Hilli Corp., a direct subsidiary of Hilli LLC. The Company had also guaranteed letters of credit issued by a financial institution in the event of Hilli Corp.’s underperformance or non-performance under the liquefaction tolling agreement with its customer. In conjunction with the Hilli Exchange, the Company is no longer a guarantor under these arrangements, and the remaining guarantee liability of $2,286 was derecognized as a reduction to Selling, general and administrative in the condensed consolidated statements of operations in the first quarter of 2023.

Energos

In August 2022, the Company completed a transaction (the “Energos Formation Transaction”) with an affiliate of Apollo Global Management, Inc., pursuant to which the Company transferred ownership of 11 vessel to Energos Infrastructure ("Energos") in exchange for approximately $1.85 billion in cash and a 20% equity interest in Energos. The Company's equity investment provides certain rights, including representation on the board of directors, which give the Company significant influence over the operations of Energos, and as such, the investment has been accounted for under the equity method; this investment is included within the Ships segment. Energos is also an affiliate, and all transactions with Energos are transactions with an affiliate.

Due to the timing and availability of financial information of Energos, the Company recognizes its proportional share of the income or loss from the equity method investment on a financial reporting lag of one fiscal quarter. For the three and six months ended June 30, 2023, the Company has recognized earnings from Energos of $2,269 and $6,263.

11. Construction in progress

The Company’s construction in progress activity during the six months ended June 30, 2023 is detailed below:


	June 30, 2023
Construction in progress as of December 31, 2022	$	2,418,608

Additions	2,248,628

Impact of currency translation adjustment	28,620
Assets placed in service	(102,724)
Construction in progress as of June 30, 2023	$	4,593,132

Interest expense of $118,573 and $29,495, inclusive of amortized debt issuance costs, was capitalized for the six months ended June 30, 2023 and 2022, respectively.

The Company has significant development activities in Latin America as well as the development of the Company's Fast LNG liquefaction solution, and the completion of such developments are subject to risks of successful completion, including those related to government approvals, site identification, financing, construction permitting and contract compliance. The Company's development activities for the six months ended June 30, 2023 were primarily focused on Fast LNG and to construct temporary power generation assets to support the Puerto Rican grid stabilization project; additions to construction in progress in the first six months of 2023 of $2,031,681 were to develop Fast LNG projects and Puerto Rican temporary power.

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12. Property, plant and equipment, net

As of June 30, 2023 and December 31, 2022, the Company’s property, plant and equipment, net consisted of the following:


	June 30, 2023		December 31, 2022
Vessels	$	1,524,959	$	1,518,839
Terminal and power plant equipment	248,192		218,296
CHP facilities	125,015		123,897
Gas terminals	177,780		177,780
ISO containers and other equipment	136,632		134,324
LNG liquefaction facilities	63,316		63,316
Gas pipelines	66,319		65,985
Land	53,665		52,995
Leasehold improvements	66,520		9,377
Accumulated depreciation	(300,468)		(248,082)
Total property, plant and equipment, net	$	2,161,930	$	2,116,727

The book value of the vessels that was recognized due to the failed sale leaseback in the Energos Formation Transaction as of June 30, 2023 and December 31, 2022 was $1,308,746 and $1,328,553, respectively.

Depreciation expense for the three months ended June 30, 2023 and 2022 totaled $30,275 and $25,958, respectively, of which $232 and $228, respectively, is included within Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss). Depreciation expense for the six months ended June 30, 2023 and 2022 totaled $56,275 and $52,067, respectively, of which $463 and $527, respectively, is included within Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss).

13. Goodwill and intangible assets

Goodwill

The carrying amount of goodwill was $776,760 as of both June 30, 2023 and December 31, 2022.

Intangible assets

The following tables summarize the composition of intangible assets as of June 30, 2023 and December 31, 2022:


	June 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Currency Translation Adjustment		Net Carrying Amount		Weighted Average Life
Definite-lived intangible assets
Favorable vessel charter contracts	$	106,500	$	(76,704)	$	—	$	29,796	3
Permits and development rights	48,217		(4,827)		(1,013)		42,377		38

Easements	1,556		(317)		—		1,239		30

Indefinite-lived intangible assets
Easements	1,191		—		(63)		1,128		n/a
Total intangible assets	$	157,464	$	(81,848)	$	(1,076)	$	74,540

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	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Currency Translation Adjustment		Net Carrying Amount		Weighted Average Life
Definite-lived intangible assets
Favorable vessel charter contracts	$	106,500	$	(64,836)	$	—	$	41,664	3
Permits and development rights	48,217		(4,115)		(2,239)		41,863		38
Easements	1,556		(294)		—		1,262		30

Indefinite-lived intangible assets
Easements	1,191		—		(83)		1,108		n/a
Total intangible assets	$	157,464	$	(69,245)	$	(2,322)	$	85,897

Amortization expense for the three months ended June 30, 2023 and 2022 was $6,285 and $9,959, respectively. Amortization expense for the six months ended June 30, 2023 and 2022 was $13,081 and $18,302, respectively. Amortization expense is inclusive of reductions in expense for the amortization of unfavorable contract liabilities.

Intangible assets associated with the acquired power purchase agreements have been classified as held for sale as of June 30, 2023 and December 31, 2022; no impairment loss was recognized upon classification as held for sale (See Note 14).

14. Other non-current assets, net

As of June 30, 2023 and December 31, 2022, Other non-current assets consisted of the following:


	June 30, 2023		December 31, 2022
Assets held for sale	$	45,371	$	40,685
Contract assets, net (Note 4)	24,379		28,651
Investments in equity securities (Note 6)	20,467		17,806
Cost to fulfill (Note 4)	24,245		9,773
Upfront payments to customers	8,862		9,158
Other	40,920		35,606
Total other non-current assets, net	$	164,244	$	141,679

The Company recognized unrealized losses on its investments in equity securities of $1,314 and $898 for the three months ended June 30, 2023 and 2022, respectively, within Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss). The Company recognized an unrealized gain of $1,211 and an unrealized loss of $1,090 on its investment in equity securities for the six months ended June 30, 2023 and 2022, respectively, within Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss). Investments in equity securities include investments without a readily determinable fair value of $7,678 as of June 30, 2023 and December 31, 2022.

Upfront payments to customers consist of amounts the Company has paid in relation to two natural gas sales contracts with customers to construct fuel-delivery infrastructure that the customers will own. Other non-current assets includes deferred financing costs related to the Revolving Facility.

Assets held for sale

In the third quarter of 2022, NFE Brazil Holdings LLC ("Brazil Holdings"), a consolidated indirect subsidiary of NFE and indirect owner of Pecém Energia S.A. (“Pecém”) and Energetica Camacari Muricy II S.A. (“Muricy”), and Centrais Elétricas de Pernambuco S.A. – EPESA (“EPESA”), entered into a Share Purchase Agreement pursuant to which Brazil Holdings agreed to sell 100% of the shares of Pecém and Muricy to EPESA, following an internal reorganization. The sale price includes cash consideration of BRL 59 million (approximately $12 million using the exchange rate as of June 30,

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2023), as well as additional consideration for the satisfaction of certain milestones. Consideration under this agreement also includes potential future earnout payments based on the revenue generated from power purchase agreements held by Pecém and Muricy. The sale of Pecém and Muricy is subject to regulatory approval as well as the customary terms and conditions and conditions precedent prior to closing.

All assets and liabilities of Pecém and Muricy were classified as held for sale as of June 30, 2023 and December 31, 2022. The estimated fair value of these entities based on the consideration in the agreement was in excess of the carrying value, and no impairment loss was recognized upon classification as held for sale. The assets and liabilities held for sale have not been classified as a separate financial statement line item on the condensed consolidated balance sheets and are presented as Other non-current assets and Other long-term liabilities. Liabilities held for sale of $20,263 and $23,543 are presented as other long-term liabilities as of June 30, 2023 and December 31, 2022, respectively. Assets held for sale include a cash balance of $11,204 and $11,614 as of June 30, 2023 and December 31, 2022, respectively, which have been included in the ending cash and cash equivalents on the condensed consolidated statement of cash flows.

15. Accrued liabilities

As of June 30, 2023 and December 31, 2022, accrued liabilities consisted of the following:


	June 30, 2023		December 31, 2022
Accrued development costs	$	618,815	$	364,157
Accrued interest	61,398		51,994
Accrued inventory	50,432		45,511
Accrued bonuses	23,665		37,739

Accrued dividend	—		626,310
Other accrued expenses	66,827		36,701
Total accrued liabilities	$	821,137	$	1,162,412

16. Other current liabilities

As of June 30, 2023 and December 31, 2022, other current liabilities consisted of the following:


	June 30, 2023		December 31, 2022
Derivative liabilities	$	21,278	$	19,458
Contract liabilities	62,403		12,748
Repurchase obligation	24,327		—
Income tax payable	19,159		6,261
Due to affiliates	7,192		7,499
Other current liabilities	9,239		6,912
Total other current liabilities	$	143,598	$	52,878

As of June 30, 2023, the Company recognized a repurchase obligation of $24,327, pursuant to agreement to sell and purchase an LNG cargo with the same customer. The sale and delivery of the LNG cargo to the customer was completed in the second quarter of 2023; we expect the purchase of a the LNG cargo to be completed in the third quarter of 2023. Under these agreements, the Company's price to purchase the LNG cargo exceeded the selling price to the customer, and because the purchase price exceeds the original selling prices, the purchase of the LNG cargo is accounted for as a financing arrangement. The difference between the Company's purchase price of the LNG cargo and the selling price to the customer is recognized as interest expense.

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17. Debt

As of June 30, 2023 and December 31, 2022, debt consisted of the following:


	June 30, 2023		December 31, 2022
Senior Secured Notes, due September 2025	$	1,244,487	$	1,243,351
Senior Secured Notes, due September 2026	1,483,823		1,481,639
Vessel Financing Obligation, due August 2042	1,371,221		1,406,091
South Power 2029 Bonds, due May 2029