☒
☐2023
| Delaware | 46-5723951 | ||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
1000 Louisiana Street, | |||||
| Houston, Texas | 77002 | ||||
|
| ||||
(Address of principal executive offices) | (Zip code) | ||||
| Title of each Class: | Trading Symbol: | Name of each exchange on which registered: | |||||||
Common stock $0.0001 par value | NEXT | The Nasdaq Stock Market LLC | |||||||
Securities registered pursuant to Section 12(g) of the Act:
Redeemable Warrants, each to purchase one share of Company common stock
| Large accelerated filer |
| Accelerated filer | |||||||||
Non-accelerated filer |
| Smaller reporting company |
| ||||||||
Emerging growth company | |||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
122,174,938
4, 2024.
| Page | |||||
Organizational Structure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diversified natural gas feedstock sourcing strategy to spread risk exposure across multiple contracts, counterparties, and pricing hubs. We EPC contract and commercial arrangements are finalized. Permit issued under CWA Section 404/RHA – Section 10.We believe that the principal risks associated with our business, and consequently the principal risks associated with an investment in our common stock, are as follows:Risks Related to our Business and the Industry in which we Operate•The substantial amount of indebtedness incurred to finance construction of Phase 1 of the Rio Grande LNG Facility may adversely affect Rio Grande’s cash flow and its ability to operate its business, remain in compliance with debt covenants and make payments on its indebtedness.•Restrictions in debt agreements may prevent certain beneficial transactions.•Conducting a portion of our operations through joint ventures in which we do not have 100% ownership interest, and which are not operated solely for the benefit of our stockholders, exposes us and our stockholders to risks and uncertainties, many of which are outside of our control.•Our projects are in the development and construction phases, and the success of such projects is unpredictable; as such, positive cash flows and even revenues will be several years away, if they occur at all.•We will be required to seek additional debt and equity financing in the future to complete future phases of the Rio Grande LNG Facility and the development of CCS projects and may not be able to secure such financing on acceptable terms, or at all.•There is substantial doubt about our ability to continue as a going concern.•The Rio Grande LNG Facility’s operations will be substantially dependent on the development and operation of the Pipeline by Enbridge and its affiliates.•We may be subject to risks related to doing business in, and having counterparties based in, foreign countries.•Costs for the Rio Grande LNG Facility and CCS projects are subject to various factors.We will be dependent on third-party contractors for the successful completion of the Rio Grande LNG Facility and CCS projects, and these contractors may be unable to complete the Rio Grande LNG Facility or CCS projects or may build a non-conforming Rio Grande LNG Facility or CCS projects.•Our ability to generate cash is substantially dependent upon us entering into satisfactory contracts with third parties and the performance of those third parties under those contracts.•Our exposure to the performance and credit risks of counterparties may adversely affect our operating results, liquidity and access to financing.•Our construction and operations activities will be subject to a number of development risks, operational hazards, regulatory approvals and other risks which may not be fully covered by insurance, and which could cause cost overruns and delays that could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.•Failure of exported LNG to be a competitive source of energy for international markets could adversely affect our customers and could materially and adversely affect our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.•Decreases in the global demand for and price of natural gas (versus the price of imported LNG) could lead to reduced development of LNG projects worldwide.•There may be shortages of LNG vessels worldwide, which could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.•The operation of the Rio Grande LNG Facility and any CCS project may be subject to significant operating hazards and uninsured risks, one or more of which may create significant liabilities and losses that could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.Risks Related to Governmental Regulation•The construction and operation of the Rio Grande LNG Facility remains subject to further governmental approvals, and some approvals may be subject to further conditions, review and/or revocation and other legal and regulatory risks, which may result in delays, increased costs or decreased cash flows.6•The Rio Grande LNG Facility will be subject to a number of environmental laws and regulations that impose significant compliance costs, and existing and future environmental and similar laws and regulations could result in increased compliance costs, liabilities or additional operating restrictions.•Changes in legislation and regulations or interpretations thereof, such as those relating to the importation and exportation of LNG and incentives for reduction of emissions, could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects and could cause additional expenditures and delays in connection with the Rio Grande LNG Facility and CCS projects and their construction.Risks Related to our Securities•Raising additional capital may cause dilution to existing stockholders, restrict our operations or require us to relinquish rights. Additionally, sales of a substantial number of shares of our common stock or other securities in the public market could cause our stock price to fall.•Our largest stockholders will substantially influence our Company for the foreseeable future, including the outcome of matters requiring shareholder approval, and such control may prevent you and other stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause our stock price to decline.•Increasing attention to environmental, social and governance matters may impact our business, financial results or stock price and climate change concerns may pose challenges to our operating model.7Item 1. BusinessOurCompany Overview and FormationNextDecade Corporation, a Delaware corporation, is a Houston-based energy company primarily engaged in construction and development activities related to the liquefaction of natural gas and sale of LNG and the capture and storage of CO2 emissions. We are constructing and developing a natural gas liquefaction and export facility located in the Rio Grande Valley in Brownsville, Texas (the “Rio Grande LNG Facility”), which currently has three liquefaction trains and related infrastructure under construction. The Rio Grande LNG Facility has received Federal Energy Regulatory Commission (“FERC”) approval and Department of Energy (“DOE”) FTA and non-FTA authorizations for the construction of five liquefaction trains and LNG exports totaling 27 million tonnes per annum (“MTPA”). Liquefaction trains 1 through 3 and related infrastructure are currently under construction and liquefaction trains 4 and 5 at the Rio Grande LNG Facility are currently in development. We are also developing a planned carbon capture and storage (“CCS”) project at the Rio Grande LNG Facility and other potential CCS projects that would be located at third-party industrial facilities through our NEXT Carbon Solutions business.We were incorporated in Delaware on May 21, 2014, and were formed for the purpose of acquiring, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization, or other similar business combination, one or more businesses or entities. On July 24, 2017, one of our subsidiaries merged with and into NextDecade LLC, aan LNG development company founded in 2010 to develop LNG export projects and associated pipelines. Prior to the merger with NextDecade LLC, we had no operations and our assets consisted of cash proceeds received in connection with our initial public offering.Our common stock trades on the Nasdaq Capital Market (“Nasdaq”) under the symbol “NEXT.”Our warrants issued in connection withRio GrandeThrough our initial public offering in 2015 (the “IPO Warrants”) tradepartially owned subsidiary, Rio Grande, we are constructing the Rio Grande LNG Facility on the OTC Pink Market undernorth shore of the symbol “NEXTW.”Company OverviewOur managementBrownsville Ship Channel. The site is comprisedlocated on 984 acres of a teamland which has been leased long-term and includes 15 thousand feet of industry leaders with extensive experience in LNG marketing and project development. We have focused and continue to focus our development activitiesfrontage on the Terminal and have undertaken and continue to undertake various initiatives to evaluate, design and engineer the Terminal that we expect will result in demand for LNG supply at the Terminal, which would enable us to seek construction financing to develop the Terminal.Brownsville Ship Channel. We believe the Terminal possesses competitive advantagessite is advantaged due to its proximity to abundant natural gas resources in several important areas, includingthe Permian Basin and Eagle Ford Shale, access to an uncongested waterway for vessel loading, and location in a region that has historically been subject to fewer and less severe weather events relative to other locations along the US Gulf Coast. The Rio Grande LNG Facility has been approved by the FERC and authorized by the DOE to export up to 27 MTPA of LNG from up to five liquefaction trains.In July 2023, Rio Grande commenced construction on the first three liquefaction trains and related infrastructure (“Phase 1”) of the Rio Grande LNG Facility following a positive final investment decision (“FID”) and the closing of project financing by Rio Grande, which owns Phase 1 of the Rio Grande LNG Facility. Construction will be completed by Bechtel Energy Inc. (“Bechtel”) under fully wrapped, lump-sum turnkey engineering, design, commercial, regulatoryprocurement, and construction (“EPC”) contracts, and the facility will utilize APCI liquefaction technology, which is the predominant liquefaction technology utilized globally.Pursuant to a joint venture agreement with equity partners for ownership of Rio Grande, we expect to receive up to approximately 20.8% of distributions of available cash generated from Phase 1 operations; provided, that a majority of the cash distributions to which we are otherwise entitled will be paid for any distribution period only after our equity partners receive an agreed distribution threshold in respect of such distribution period and certain other deficit payments from prior distribution periods, if any, are made.Rio Grande has entered into long-term LNG Sale and Purchase Agreements (“SPAs”) with nine creditworthy counterparties for aggregate volumes of approximately 16.2 MTPA of LNG, which is over 90% of the expected Phase 1 nameplate LNG production capacity. The SPAs have a weighted average term of 19.2 years. Under these SPAs, the customers will purchase LNG from Rio Grande for a price consisting of a fixed fee per MMBtu of LNG plus a variable fee per MMBtu of LNG, with the variable fees structured to cover the expected cost of natural gas supply. We submittedplus fuel and other sourcing costs to produce LNG. In certain circumstances, customers may elect to cancel or suspend deliveries of LNG cargoes, in which case the customers would still be required to pay the fixed fee with respect to cargoes that are not delivered. A portion of the fixed fee under each SPA will be subject to annual adjustment for inflation. The SPAs and contracted volumes to be made available under the SPAs are not tied to a pre-filing requestspecific train; however, the commencement of the term of each SPA is tied to a specified train.8Rio Grande’s portfolio of LNG SPAs for Phase 1 of the Rio Grande LNG Facility is as follows:Customer Volume(mtpa)Tenor(years)DeliveryModel (1)TotalEnergies SE 5.4 20 FOB Shell NA LNG LLC 2.0 20 FOB ENN LNG Singapore Pte Ltd. 2.0 20 FOB ENGIE S.A. 1.75 15 FOB China Gas Hongda Energy Trading Co., LTD 1.0 20 FOB Guangdong Energy Group 1.0 20 DES Exxon Mobil LNG Asia Pacific 1.0 20 FOB Galp Trading S.A. 1.0 20 FOB Itochu Corporation 1.0 15 FOB Total 16.15 19.2 yearsweighted average(1)FOB - free on board; DES - delivered ex-shipEach of these SPAs is currently effective, and deliveries of LNG under these SPAs will commence on the respective Date of First Commercial Delivery (“DFCD”), which is primarily tied to the substantial completion or guaranteed substantial completion dates of specific trains as defined in each SPA. In aggregate, the approximately 14.65 MTPA of Phase 1 Henry Hub-linked SPAs have average fixed fees, unadjusted for inflation, totaling approximately $1.8 billion expected to be paid annually.Marketing of Uncontracted VolumesRio Grande expects to sell any commissioning LNG volumes and operational LNG volumes in excess of SPA volumes into the LNG market through spot, short-term, and medium-term agreements. Rio Grande has entered into certain time charter agreements and expects to enter into additional time charter agreements with vessel owners to provide shipping capacity for LNG sales related to its existing DES SPA, commissioning volumes, and expected portfolio volumes.Engineering, Procurement and Construction (“EPC”)Rio Grande entered into fully wrapped, lump-sum turnkey contracts with Bechtel, a well-established and reputable LNG engineering and construction firm, for the Terminalengineering, procurement, and construction of Phase 1 at the Rio Grande LNG Facility, under which Bechtel has generally guaranteed cost, performance, and schedule. Under the Phase 1 EPC contracts, Bechtel is responsible for the engineering, procurement, construction, commissioning, and startup of three liquefaction trains and related infrastructure.On July 12, 2023, Rio Grande issued final notice to proceed to Bechtel under the Federal Energy Regulatory Commission (the “FERC”) in March 2015EPC contracts for Phase 1. Total expected capital costs for Phase 1 are estimated to be approximately $18.0 billion, including estimated owner’s costs, contingencies, and filedfinancing costs, and including amounts spent prior to FID under limited notices to proceed.Natural Gas Transportation and SupplyRio Grande has entered into a formal application withfirm transportation agreement for capacity on the FERC in May 2016. We also believe we have robust commercial offtake and gas supply strategies.On March 2, 2020, we completed the sale of Rio Bravo Pipeline Company, LLC (“to transport natural gas feedstock to the Rio Bravo”) to Spectra Energy Transmission II, LLC,Grande LNG Facility. The Rio Bravo Pipeline is being developed and will be constructed and operated by a wholly owned subsidiary of Enbridge Inc ("Enbridge"Inc. (“Enbridge”). The Rio Bravo is developing a proposed interstatePipeline will provide Rio Grande access to purchase natural gas pipeline (the “Pipeline”) to supply natural gas to the Terminal. In connection with the sale of Rio Bravo, our indirect, wholly owned subsidiary, Rio Grande LNG Gas Supply LLC (“Rio Grande Gas Supply”), entered into precedent agreements (the “Transportation Precedent Agreements”) with Rio Bravo and Valley Crossing Pipeline, LLC (“VCP”), pursuant to which Rio Grande Gas Supply will retain its rights to the natural gas firm transportation capacity on the Pipeline for a term of at least twenty years and Rio Bravo and VCP, will provide pipeline transportation service to Rio Grande Gas Supplysupplies in order to supply natural gas to the Terminal. As of March 2, 2020, VCP and Rio Bravo were wholly owned subsidiaries of Enbridge.We believe that the Terminal, to be located on a 984-acre site in Brownsville, Texas, along with the Pipeline to connect the Terminal to the Agua Dulce supply area is well-positioned among the second wave of United States (“U.S.”) LNG projects. It is located to take advantage of natural gas resources in Texas, including the Permian Basin and Eagle Ford Shale. We plan to construct, develop, own and operate the Terminal. On November 22, 2019, the Terminal and the Pipeline received an order from the FERC (“the Order”) authorizing the siting, construction, and operation of six liquefaction trains, four LNG storage tanks (each with a capacity of 180,000 cubic meters), two marine jetties for ocean-going LNG vessels, one turning basin, and six truck loading bays for LNG and natural gas liquids and all associated facilities for the production of up to 27 million tonnes per annum (“mtpa”). Simultaneously, the FERC issued a certificate of public convenience and necessity authorizing the construction of the Pipeline. On January 23, 2020, the FERC issued its final order on rehearing rejecting all challenges to the Order. While the Order authorizes six liquefaction trains, we may make a positive FID on as few as two liquefaction trains.The original front-end engineering and design for the Terminal was based on six LNG trains capable of producing 27 mtpa of LNG for export. The technologies that were selected and filed with the FERC in 2015 and 2016 have evolved over the five-year permitting period; the individual LNG trains are now more efficient and will produce a greater volume of LNG with lower total carbon dioxide equivalent (“CO2e”) emissions. Multiple optimizations have been identified that will leadconnect to the delivery of a LNG project capable of producing 27 mtpa with just five LNG trains instead of six.We expect the optimization to a five-train project to result in several environmentalsix regional intra and community benefits when compared with our original six-train project including (i) approximately 21 percent lower CO2e emissions, (ii) a shortened construction timeline for the full 27 mtpa project, (iii) reduced facility footprint, and (iv) an expected reduction in roadway traffic.On August 13, 2020, the FERC approved the change of the design for the Terminal from six trains to five trains. On October 9, 2020, the FERC issued a notice of denial of rehearing for such approval in regards to challenges to its approval of the design change.Any future development of Train 6 will require us to secure authorization from the FERC, the U.S. Department of Energy (the “DOE”), and any other relevant federal or state agency with jurisdiction over the export project.In January 2021, we determined that the site in Texas City, Texas for our proposed second LNG facility (“Galveston Bay LNG”) is not suitable for a LNG facility and related infrastructure and utilities and, therefore, elected to forfeit such site. We have informed the FERC of our intent to withdraw Galveston Bay LNG from FERC pre-filing proceedings and cease all related activities. In March 2021, the DOE terminated its June 2018 authorization for export of LNG from Galveston Bay LNG.Engineering, Procurement, and ConstructionDuring the third quarter of 2018, we initiated a competitive engineering, procurement and construction (“EPC”) bid process. We received expressions of interest (the “EOIs”) from multiple EPC contractors to participate in the EPC process. We reviewed the EOIs against a series of selection criteria and issued formal invitations to bid to Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”), Fluor Enterprises, Inc. (“Fluor”) and McDermott International, Inc (“McDermott”). In December 2018, each of the EPC bidders provided us with an endorsement of the Terminal’s front-end engineering and design (“FEED”), which indicates the bidders’ confirmation that the Terminal is technically feasible and can be further designed, engineered, permitted, constructed, commissioned and safely placed into operations. On April 22, 2019, we received EPC bid packages from each of Bechtel and Fluor, two of the global LNG market’s leading EPC contractors. The technical and commercial bid packages, which were received on-schedule, were for fully wrapped lump-sum separated turnkey (“LSTK”) EPC contracts for the Terminal.On May 24, 2019,interstate pipelines, giving Rio Grande entered into two LSTK EPC agreements with Bechtel for the construction of (i) two LNG trains with expected aggregate production capacity up to approximately 11.74 mtpa, two 180,000m3 full containment LNG tanks, one marine loading berth, related utilities and facilities, and all related appurtenances thereto, together with certain additional work options (the “Trains 1 and 2 EPC Agreement”) and (ii) an LNG train with expected production capacity of up to approximately 5.87 mtpa, related utilities and facilities, and all related appurtenances thereto (the “Train 3 EPC Agreement” and together with the Trains 1 and 2 EPC Agreement, the “EPC Agreements”). During each of 2020 and 2019, we issued two limited notices to proceed to Bechtel under the Trains 1 and 2 EPC Agreement.In 2020, we developed proprietary carbon capture processes that, with the addition of storage technology, could reduce CO2e emissions at the Terminal by approximately 90 percent. While we are advancing our work in this area, we are also exploring options to address the remaining CO2e emissions to enable the Terminal to achieve carbon-neutrality.CommercialWe are continuing commercial discussions with a variety of parties ranging from large utilities and state-sponsored enterprises to portfolio and multinational commodity interests. Leveraging the global relationships and extensive experience of our management team, we expect to sign long-term binding offtake commitments for substantially all of the Terminal’s capacity prior to a FID.We believe the Terminal’s location will provide customers with access to low-cost naturalprolific gas production from the Permian Basin and Eagle Ford Shale. We are focused on selling LNGShale and providing significant flexibility to customers through a “free on board” (“FOB”) model whereby a marketing affiliate would acquire feedobtain competitively priced natural gas feedstock.The Rio Bravo Pipeline is under development and is expected to be constructed and completed prior to the Terminal would produce the LNG and the title transfer would occurstart of commissioning of Train 1 at the interface betweenRio Grande LNG Facility. Rio Grande has also entered into an agreement for capacity on an interruptible basis with Enbridge’s Valley Crossing Pipeline to provide redundant capacity for commissioning and operations.We have proposed and are in the Terminalprocess of executing a substantial and the customer’s ship.offer multiple LNG pricing options, meeting the evolving needsexpect to enter into gas supply arrangements with a wide range of suppliers, and we also expect to leverage trading platforms and exchanges to9lock in natural gas supply prices and/or hedge risk. Certain of our customers and maximizing our total addressable market. Global LNG customers are expressing interest in contracting their LNG offtake counterparties have the option to indexessell to Rio Grande some or all of the natural gas required to produce their respective contracted LNG volumes pursuant to structured options which define how much volume can be supplied and how much notice must be provided to switch to and from self-sourcing.Final Investment Decision on Train 4 and Train 5 at the Rio Grande LNG FacilityWe expect to make a positive final investment decision and commencement of construction of Train 4 and related infrastructure, and subsequently Train 5 and related infrastructure, at the Rio Grande LNG Facility, subject to, among other than Henry Hub.things, finalizing and entering into EPC contracts, entering into appropriate commercial arrangements, and obtaining adequate financing to construct each train and related infrastructure. We are workinghave commenced certain pre-FID activities for Train 4, including the Front-end Engineering and Design ("FEED") and EPC contract processes with U.S. producersBechtel.TotalEnergies SE ("TotalEnergies") has LNG purchase options of 1.5 MTPA for each of Train 4 and Train 5. If TotalEnergies exercises its LNG purchase options, we currently estimate that an additional approximately 3 MTPA of LNG must be contracted on a long-term basis for each of Train 4 and Train 5 prior to provide alternative indexation, including netback pricing, to satisfy global LNG customers’ needs. LNG pricing options may include indexation to Brent Crude Oil, Agua Dulce hub, Waha hub, Japan Korea Marker and Title Transfer Facility, among others.In March 2019, we entered intomaking a 20-year sale and purchase agreement (the “SPA”) with Shell NA LNG LLC (“Shell”)positive final investment decision for the supplyrespective train. We continue to advance commercial discussions with various potential counterparties and expect to finalize commercial arrangements for Train 4 in the coming months to support a positive final investment decision on Train 4.We expect to finance construction of two mtpaTrain 4 and associated infrastructure utilizing a combination of liquefied natural gas fromdebt and equity funding. The Company expects to enter into bank facilities for the Terminal. Pursuant to the SPA, Shell will purchase LNG on a FOB basis starting from the date the first liquefaction traindebt portion of the Terminal that is commercially operable,funding. In connection with consummating the Rio Grande Phase 1 equity joint venture, our equity partners each have options to invest in Train 4 and Train 5 equity, which, if exercised, would provide approximately three-quarters60% of the purchased LNG volume indexedequity funding required for each of Train 4 and Train 5. Inclusive of these options, we currently expect to Brentfund 40% of the equity commitments for each of Train 4 and the remaining volume indexedTrain 5, and to domestic United States gas indices, including Henry Hub. In the first quarterhave an initial economic interest of 2020, the SPA became effective upon the conditions precedent40% in each of Train 4 and Train 5, increasing to 60% after our equity partners achieve certain returns on their investments in the SPA being satisfied or waived. The SPA obligates Rio Granderespective train. We expect to deliverundertake the contracted volumes of LNG to Shell atfinancing process for Train 4 after the FOB delivery point, subject to the first liquefaction train at the Terminal being commercially operable.Governmental Permits, Approvals and AuthorizationsWe will beare required to obtain governmental approvals and authorizations to implement our proposed business strategy, which includes the design, construction and operation of the TerminalRio Grande LNG Facility and the export of LNG from the U.S. to foreign countries. The design, siting, construction and operation of LNG export terminalsfacilities and the export of LNG is a regulated activity and is subject to Section 3 of the Natural Gas Act (the "NGA"). Federal law has bifurcated regulatory jurisdiction of LNG export activities. The FERC has jurisdiction overto authorize the siting, construction and permittingoperation of LNG export facilities. The DOE has jurisdiction over the import and export of the natural gas commodity, including natural gas in the form of LNG. The FERC also has jurisdiction over the siting, construction and operation of interstate natural gas pipelines under Section 7 of the NGA and regulates interstate pipelines’ rates and terms and conditions of service under Sections 4 and 5 of the NGA. In 2002, the FERC established a policy of not regulating the terms and conditions of service for LNG import or export facilities or requiring that LNG import or export facilities operate as “open access” facilities for all customers. The Energy Policy Act of 2005, which amended the NGA, codified this policy until January 1, 2015, and the FERC has not indicated that it intends to depart from its policy of not regulating the terms or conditions of service or requiring that LNG terminalsimport or export facilities operate on an open access basis.Although the FERC acts as the lead agency with jurisdiction over LNG import and export facilities, other federal and state agencies act as cooperating agencies, coordinating with the FERC to evaluate applications for LNG export facilities. These agencies include the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (the “PHMSA”), the U.S. Coast Guard (the “Coast Guard”), the U.S. Army Corps of Engineers, the U.S. Environmental Protection Agency, the International Boundary and Water Commission and other federal agencies with jurisdiction over potential environmental impacts of LNG terminalexport facility construction and operation. Certain federal laws, such as the Clean Water Act, the Clean Air Act and the Coastal Zone Management Act, delegate authority over certain actions to state agencies, like the Texas Commission on Environmental Quality and the Railroad Commission of Texas. In reviewing an application for an LNG import or export terminalfacility or an interstate natural gas pipeline, the FERC also works with these state agencies that have jurisdiction over certain aspects of LNG terminalfacility or interstate natural gas pipeline construction or operation.In particular, the PHMSA has established safety standards for interstate natural gas pipelines and LNG facilities. Similarly, the Coast Guard has established safety regulations for marine operations at LNG facilities and the operation of LNG carriers. The FERC, the PHMSA and the Coast Guard entered into a Memorandum of Understanding in 2004 that establishes the FERC’s primary role in evaluating LNG terminalfacility applications and defines the process for coordinating the review of an LNG import or export terminalfacility application with the PHMSA and the Coast Guard. In 2018, the FERC and the10PHMSA entered into a separate Memorandum of Understanding that establishes the process and timeline by which the PHMSA should determine whether an LNG terminal projectfacility will meet the PHMSA’s LNG safety siting standards.We filed our formal applicationhave obtained all major permits required to build the Rio Grande LNG Facility and export LNG, including FERC approval and DOE FTA and non-FTA authorizations for the Terminal with the FERC on May 5, 2016, received a Final Environmental Impact Statement from the FERC on April 26,construction of five liquefaction trains and LNG exports totaling 27 MTPA.On November 22, 2019, andwe received the Order on November 22, 2019from FERC authorizing the siting, construction and operation of the Terminal (the “Order”). Other major regulatory permits obtained in 2019 include the Biological Opinion and Incidental Take Statement from the U.S. Fish and Wildlife Service. Following receipt of the Order, two requests for re-hearing were filed. One of those requests for rehearing also requested that the FERC stay the Order.Rio Grande LNG Facility. On January 23,August 13, 2020, the FERC issued its Order on Rehearing and Stay in whichapproved the FERC rejected all challenges presented in the requests for rehearing and the request for staychange of the Order. The parties who filed the requests for re-hearing have petitioned the U.S. Court of Appealsdesign for the District of Columbia to review the Order and the order denying rehearing, and that appeal is still pending. A second appeal has also been filed with the same court by the same parties, seeking a review of the FERC letter order amending the Order to account for the design changeRio Grande LNG Facility from six trains to five trains and this appeal is also pending. Similar appeals are also pending in the U.S Court of Appeals for the Fifth Circuit in respect of other permits issued bytrains. On September 22, 2021, Rio Grande received the U.S. Army Corps of Engineers and the U.S. Fish and Wildlife Service.On September 7, 2016, Rio Grande obtained an authorization for export of LNG to countries with which the U.S. has a Free Trade Agreement (“FTA”) on ourits own behalf and as an agent for others for a term of 30 years. On February 10, 2020, the DOE issued its “Opinion and Order Granting Long-Term Authorization to Export Liquefied Natural Gas to Non-Free Trade Agreement Nations to Rio Grande" in DOE/FE Order No. 4492. In addition, on October 21, 2020, the DOE issued its Order Extending Export Term for Authorization to Non-Free Trade Agreement Nations through December 31, 2050.
Gas Supply
the FERC Order, two requests for re-hearing were filed. One of those requests for rehearing also requested that the FERC stay the Order. On January 23, 2020, the FERC issued its Order on Rehearing and Stay in which the FERC rejected all challenges presented in the requests for rehearing and the request for stay of the Order. The proposed Terminal site will be located in Brownsville, Texas, benefiting from close accessparties who filed the requests for re-hearing petitioned the U.S. Court of Appeals for the District of Columbia (“D.C. Circuit”) to review the Order and the order denying rehearing. On August 3, 2021, the D.C. Circuit denied all petitions, except for two technical issues dealing with environmental justice and GHG emissions, which were remanded to the Permian BasinFERC for further consideration. The D.C. Circuit did so without vacatur, and Eagle Ford Shale.accordingly, the Rio Grande LNG Facility's authorization from the FERC remains legally valid and enforceable. A second appeal was also filed with the same court by the same parties, seeking a review of the FERC letter order amending the Order to account for the design change from six to five trains but the petitioners moved to voluntarily dismiss this appeal on August 23, 2021. On April 21, 2023, FERC issued its order responding to the D.C. Circuit’s remand of the FERC Order, reaffirming its prior finding that the siting, construction, and operation of the Rio Grande LNG Facility is not inconsistent with the public interest (“Remand Order”).Parties sought rehearing of the Remand Order, which FERC denied by operation of law on June 22, 2023, and subsequently issued a substantive order on the merits upholding the conclusions in the Remand Order, and its reaffirmation of the FERC Order.On August 17, 2023, parties petitioned the D.C. Circuit for review of the Remand Order, which is still pending.
Through the Pipeline, projectedUnited States that produce more than one million tonnes of CO
The Permian Basin offers one of the deepest inventories of economic natural gas resource in the world. According to Enverus, there are approximately 700 trillion cubic feet ("Tcf") of remaining natural gas resource in the Permian Basin and Eagle Ford Shale. Permian Basin economics are largely driven by the production of oil, not gas; due to flaring restrictions, producers must market their natural gas in order to sustain oil production programs. We believe the Permian Basin will produce significant quantities of low-cost natural gas for decades.
Driven by the Permian Basin, natural gas production in Texas continues to grow at a rapid pace. According to data from the Energy Information Administration ("EIA"), natural gas production in the Permian Basin, alone, has grown by more than 40 percent annually in recent years. By the end of 2019, the Permian Basin was producing more than 11 Bcf/d of natural gas and additional discoveries continue to be made in Texas, including a new dry gas stacked play in the Eagle Ford Shale with announced recoverable resource of approximately 21 Tcf and a breakeven price below $1.25 per MMBtu.
We estimate dry gas production in Texas to reach nearly 40 Bcf/d by 2030. We do not believe there is sufficient domestic demand within Texas to support our projections for Texas natural gas production. We believe new LNG projects will need to absorb large volumes of natural gas. To support Permian Basin and Eagle Ford gas production, Texas may need more than 9.3 Bcf/d of incremental LNG export capacity by 2030; in a higher oil price environment, even more LNG export capacity may be needed. We estimate that at least 6.1 Bcf/d of incremental LNG FIDs, equivalent to more than 47 mtpa, may be needed in the next 12 to 36 months to support expected Permian Basin and Eagle Ford Shale natural gas production growth.
relevant source facility.
Our ability to pay dividends is almost entirely dependent upon our ability to complete Phase 1 of the TerminalRio Grande LNG Facility and future phases of development and implement CCS systems and thereafter generate cash and net operating income from operations. Rio Grande’s ability to complete the Rio Grande LNG Facility, as discussed further below, is dependent upon, among other things, performance of third-party contractors and customers under their agreements with Rio Grande. NEXT Carbon Solutions’ ability to install CCS systems at third-party industrial facilities, as discussed further below, is dependent on the development of front-end engineering and design (“FEED”) offerings and contracting with third parties to install CCS systems in their industrial facilities. We do not expect Rio Grande to generate any revenue until the completion of construction of the first phasePhase 1 of the Terminal. Upon such completion,Rio Grande LNG Facility or NEXT Carbon Solutions to generate any revenue until successful installation of CCS systems at third-party facilities. After Phase 1 of the Rio Grande LNG Facility is completed or our CCS systems are installed in third-party industrial facilities, financing and numerous other factors affecting the Terminal may reduce our cash flow. As a result, we may not make distributions of any amount or any distributions may be delayed.
Substantially all of our anticipated revenue will be dependent upon the Terminal. Due to our lack of asset diversification, adverse developments at or affecting the Terminal would have a significantly greater impact on our financial condition and results of operations than if we maintained a more diverse portfolio of assets.
Debt
Postponement
ability to obtain sufficient funding through additional debt or equity financing and to manage operating and overhead costs. There can be no assurance that we will be able to raise sufficient capital on acceptable or favorable terms to the Company, or at all.
The Terminal’sRio Grande LNG Facility’s operations will be substantially dependent on the development and operation of the Pipeline by Enbridge and its affiliates.
We may be subject to risks related to doing business in, and having counterparties based in, foreign countries.
We also may participate in global carbon capture credit markets to the extent those develop and become available to our CCS projects or their customers.
|
|
|
|
|
|
|
|
|
|
|
|
•global prices of nickel, steel, concrete, pipe, aluminum and other component parts of the Rio Grande LNG Facility or CCS projects and the contractual terms upon which our contractors are able |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to source and procure required materials;
The construction and operation of the Terminal remains subject to further governmental approvals, and some approvals may be subject to further conditions, review and/or revocation and other legal and regulatory risks, which may result in delays, increased costs or decreased cash flows.
We are required to obtain governmental approvals and authorizations to implement our proposed business strategy, which includes the design, construction and operation of the Terminal and the export of LNG from the U.S. to foreign countries. As described above under “Business− Governmental Permits, Approvals and Authorizations,” the design, construction and operation of LNG export terminals is a highly regulated activity in the U.S., subject to a number of permitting requirements, regulatory approvals and ongoing safety and operational compliance programs. There is no guarantee that we will obtain or, if obtained, maintain these governmental authorizations, approvals and permits. Failure to obtain, or failure to obtain on a timely basis, or failure to maintain any of these governmental authorizations, approvals and permits could have a material adverse effect on our business, results of operations, financial condition and prospects.
Authorizations obtained from the FERC, the DOE and other federal and state regulatory agencies also contain ongoing conditions, and additional approval and permit requirements may be imposed. We do not know whether or when any such approvals or permits can be obtained, or whether any existing or potential interventions or other actions by third parties will interfere with our ability to obtain and maintain such permits or approvals. If we are unable to obtain and maintain the necessary approvals and permits, including as a result of untimely notices or filings, we may not be able to recover our investment in the Terminal. Additionally, government disruptions, such as a U.S. government shutdown, may delay or halt our ability to obtain and maintain necessary approvals and permits. There is no assurance that we will obtain and maintain these governmental permits, approvals and authorizations, or that we will be able to obtain them on a timely basis, and failure to obtain and maintain any of these permits, approvals or authorizations could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
In addition, some of these governmental authorizations, approvals and permits require extensive environmental review. Some groups have perceived, and other groups could perceive, that the proposed construction and operation of the Terminal could negatively impact the environment or cultural heritage sites. Objections from such groups could cause delays, damage to reputation and difficulties in obtaining governmental authorizations, approvals or permits or prevent the obtaining of such authorizations, approvals or permits altogether. Although the necessary authorizations, approvals and permits to construct and operate the Terminal may be obtained, such authorizations, approvals and permits may be subject to ongoing conditions imposed by regulatory agencies or may be subject to legal proceedings not involving us, which is customary for U.S. LNG projects.
The Terminal will be subject to a number of environmental laws and regulations that impose significant compliance costs, and existing and future environmental and similar laws and regulations could result in increased compliance costs, liabilities or additional operating restrictions.
Our business will be subject to extensive federal, state and local regulations and laws, including regulations and restrictions on discharges and releases to the air, land and water and the handling, storage and disposal of hazardous materials and wastes in connection with the development, construction and operation of its liquefaction facilities. These regulations and laws will require us to maintain permits, provide governmental authorities with access to its facilities for inspection and provide reports related to its compliance. Violation of these laws and regulations could lead to substantial fines and penalties or to capital expenditures related to pollution control or remediation equipment that could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects. Federal and state laws impose liability, without regard to fault or the lawfulness of the original conduct, for the release of certain types or quantities of hazardous substances into the environment. As the owner and operator of the Terminal, we could be liable for the costs of cleaning up hazardous substances released into the environment and for damage to natural resources.
In addition, future federal, state and local legislation and regulations, such as regulations regarding greenhouse gas emissions and the transportation of LNG may impose unforeseen burdens and increased costs on our business that could have a material adverse effect on our financial results. As an international shipper of LNG, our operations could also be impacted by environmental laws applicable under international treaties or foreign jurisdictions.
Changes in legislation and regulations or interpretations thereof, such as those relating to the importation and exportation of LNG, could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects and could cause additional expenditures and delays in connection with the proposed LNG facilities and their construction.
The laws, rules and regulations applicable to our business, including federal agencies’ interpretations of and policies under such laws rules and regulations, are subject to change, either through new or modified regulations enacted on the federal, state or local level or by a change in policy of the agencies charged with enforcing such regulations. For example, the provisions of the Energy Policy Act of 2005 that codified the FERC’s policy of not regulating the terms and conditions of service for LNG import or export facilities expired in 2015. Although the FERC has not indicated that it intends to depart from this policy, there can be no assurance it will not do so in the future. The nature and extent of any changes in these laws, rules, regulations and policies may be unpredictable and may have material effects on our business. Future legislation and regulations or changes in existing legislation and regulations, or interpretations thereof, such as those relating to the liquefaction, storage, or regasification of LNG, or its transportation, could cause additional expenditures, restrictions and delays in connection with our operations as well as other future projects, the extent of which cannot be predicted and which may require us to limit substantially, delay or cease operations in some circumstances. Revised, reinterpreted or additional laws and regulations that result in increased compliance costs or additional operating costs and restrictions could have an adverse effect on our business, the ability to expand our business, including into new markets, results of operations, financial condition, liquidity and prospects.
We will be dependent on third-party contractors for the successful completion of the Terminal,Rio Grande LNG Facility and CCS projects, and these contractors may be unable to complete the TerminalRio Grande LNG Facility or CCS projects or may build a non-conforming Terminal.
Rio Grande LNG Facility or CCS projects.
|
|
|
|
|
|
|
|
|
|
Rio Grande LNG Facility.
or increase our expenses as we attempt to enforce our rights. The price of domestic natural gas, which is subject to change for reasons outside our control, also affects the competitiveness of U.S.-sourced LNG exports. Decreases in the global demand for and price of natural gas (versus the price of imported LNG) could lead to reduced development of LNG projects worldwide.Our construction and operations activities will be subject to a number of development risks, operational hazards, regulatory approvals and other risks which may not be fully covered by insurance, and which could cause cost overruns and delays that could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.Siting, developmentDevelopment and construction of the TerminalRio Grande LNG Facility and CCS projects will be subject to the risks of delay or cost overruns inherent in any construction project resulting from numerous factors, including, but not limited to, the following:•difficulties or delays in obtaining, or failure to obtain, sufficient debt or equity financing on reasonable terms;•failure to obtain all necessary government and third-party permits, approvals and licenses for the construction and operation of any of the proposed LNG facilities;•failure to obtain sale and purchase agreements that generate sufficient revenue to support the financing and construction of the Terminal;•difficulties in engaging qualified contractors necessary to the construction of the contemplated Terminal or other LNG facilities;•shortages of equipment, materials or skilled labor;•natural disasters and catastrophes, such as hurricanes, explosions, fires, floods, industrial accidents and terrorism;•delays in the delivery of ordered materials;•work stoppages and labor disputes;•competition with other domestic and international LNG export terminals;•unanticipated changes in domestic and international market demand for and supply of natural gas and LNG, which will depend in part on supplies of and prices for alternative energy sources and the discovery of new sources of natural resources;•unexpected or unanticipated additional improvements; and•adverse general economic conditions.•difficulties or delays in obtaining, or failure to obtain, sufficient debt or equity financing on reasonable terms;•failure to obtain or maintain all necessary government and third-party permits, approvals and licenses, or to comply with all the terms and conditions of those authorizations, for the construction and operation of the Rio Grande LNG Facility and CCS projects;•failure to obtain or maintain commercial agreements that generate sufficient revenue to support the financing and construction of the Rio Grande LNG Facility or CCS projects;•difficulties in engaging qualified contractors necessary to the construction of the contemplated Rio Grande LNG Facility or CCS projects;•shortages of equipment, materials or skilled labor;•natural disasters and catastrophes, such as hurricanes, explosions, fires, floods, industrial accidents and terrorism;•delays in the delivery of ordered materials;•work stoppages and labor disputes;•opposition from environmental and social groups, landowners, tribal groups, local groups and other advocates could result in organized protests, attempts to block or sabotage our construction activities or operations, intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent, disrupt or delay the construction or operation of the Rio Grande LNG Facility or CCS projects;•competition with other domestic and international LNG export facilities;•unanticipated changes in domestic and international market demand for and supply of natural gas and LNG, which will depend in part on supplies of and prices for alternative energy sources and the discovery of new sources of natural resources;•insufficiency in domestic and international market demand for verified carbon capture credits;•unexpected or unanticipated additional improvements; and•adverse general economic conditions.Delays beyond the estimated development periods, as well as cost overruns, could increase the cost of completion beyond the amounts that are currently estimated, which could require us to obtain additional sources of financing to fund the activities until the TerminalRio Grande LNG Facility is constructed and operational, which could cause further delays. The need for additional financing may also make the TerminalRio Grande LNG Facility uneconomic. Any delay in completion of the TerminalRio Grande LNG Facility may also cause a delay in the receipt of revenues projected from the TerminalRio Grande LNG Facility or cause a loss of one or more customers. As a result, any significant construction delay, whatever the cause, could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.Our20Rio Grande LNG Facility operations will be subject to all of the hazards inherent in the receipt and processing of natural gas to LNG, and associated short-term storage including:•damage to pipelines and plants, related equipment, loading terminal, and surrounding properties caused by hurricanes, tornadoes, floods, fires and other natural disasters, acts of terrorism and acts of third parties;•damage from subsurface and/or waterway activity (for example, sedimentation of shipping channel access);•leaks of natural gas, natural gas liquids, or oil or losses of natural gas, natural gas liquid, or oil as a result of the malfunction of equipment or facilities;•fires, ruptures and explosions;•other hazards that could also result in personal injury and loss of life, pollution and suspension of operations; and•hazards experienced by other operators that may affect our operations by instigating increased regulations and oversight.•damage to pipelines and plants, related equipment, loading terminal, and surrounding properties caused by hurricanes, tornadoes, floods, fires and other natural disasters, acts of terrorism and acts of third parties;•damage from subsurface and/or waterway activity (for example, sedimentation of shipping channel access);•leaks of natural gas, or natural gas liquids, or losses of natural gas, or natural gas liquids, as a result of the malfunction of equipment or facilities;•fires, ruptures and explosions;•other hazards that could also result in personal injury and loss of life, pollution and suspension of operations; and•hazards experienced by other operators that may affect our operations by instigating increased regulations and oversight.Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for:••injury or loss of life;•damage to and destruction of property, natural resources and equipment;•pollution and other environmental damage;•regulatory investigations and penalties;•suspension of our operations;•failure to perform contractual obligations; and•repair and remediation costs.12Table of Contentslife;•damage to and destruction of property, natural resources and equipment;•pollution and other environmental damage;•regulatory investigations and penalties;•suspension of our operations;•failure to perform contractual obligations; and•repair and remediation costs.Due to the scale of the Terminal,Rio Grande LNG Facility, we may encounter capacity limits in insurance markets, thereby limiting our ability to economically obtain insurance with our desired level of coverage limits and terms. WeWith respect to the Rio Grande LNG Facility or CCS projects, we may elect not to obtain insurance for any or all of these risks if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, contractual liabilities and pollution and environmental risks generally are not fully insurable. The occurrence of an event that is not fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations.We may experience increased labor costs, and the unavailability of skilled workers or our failure to attract and retain qualified personnel could adversely affect us. In addition, changes in our senior management or other key personnel could affect our business operations.We are dependent upon the available labor pool of skilled employees authorized to work in the U.S. We compete with other energy companies and other employers to attract and retain qualified personnel with the technical skills and experience required to construct and operate our facilities and pipelines and to provide our customers with the highest quality service. A shortage in the labor pool of skilled workers able to legally work in the U.S. or other general inflationary pressures or changes in applicable laws and regulations could make it more difficult for us to attract and retain qualified personnel and could require an increase in the wage and benefits packages that we offer, thereby increasing our operating costs. Any increase in our operating costs could materially and adversely affect our business, financial condition, operating results, liquidity and prospects.We depend on our executive officers for various activities. We do not maintain key person life insurance policies on any of our personnel. Although we have arrangements relating to compensation and benefits with certain of our executive officers, we do not have any employment contracts or other agreements with key personnel binding them to provide services for any particular term. The loss of the services of any of these individuals could have a material adverse effect on our business.21Technological innovation, competition or other factors may negatively impact our anticipated competitive advantage or our processes.Our success will depend on our ability to create and maintain a competitive position in the natural gas liquefaction industry.and carbon capture and storage industries. We do not have any exclusive rights to any of the liquefaction technologies that we will be utilizing.utilizing in the Rio Grande LNG Facility. In addition, the LNG technology we anticipateare using in the TerminalRio Grande LNG Facility may face competition due to the technological advances of other companies or solutions, including more efficient and cost-effective processes or entirely different approaches developed by one or more of our competitors or others. Although we have applied for and obtained patents relating to our CCS processes and rely on other procedures to protect our intellectual property, we may be unable to prevent third parties from utilizing our intellectual property; see “— We depend on our intellectual property for our CCS projects, and our failure to protect that intellectual property could adversely affect the future growth and success of our CCS business.”Continuing technological changes in the market for carbon capture solutions could make our CCS projects less competitive or obsolete, either generally or for particular applications. Our future success will depend upon our ability to develop and introduce a variety of new capabilities and enhancements to our CCS offerings to address the changing needs of the carbon capture markets. Delays in introducing enhancements, the failure to choose correctly among technical alternatives or the failure to offer innovative products or enhancements at competitive prices may cause existing and potential customers to utilize competing projects or solutions.We depend on our intellectual property for our CCS projects, and our failure to protect that intellectual property could adversely affect the future growth and success of our CCS business.We rely on a combination of internal procedures, nondisclosure agreements, licenses, patents, trademarks and copyright law to protect our intellectual property and know-how. Our intellectual property rights may not be successfully asserted in the future or may be invalidated, circumvented or challenged. For example, we frequently explore and evaluate potential relationships and projects with other parties, which often require that we provide the potential partner with confidential technical information.While confidentiality agreements are typically put in place, there is a risk the potential partner could violate the confidentiality agreement and use our technical information for its own benefit or the benefit of others whichor compromise the confidentiality. We have applied for and obtained some U.S. patents and will continue to evaluate the registration of additional patents, as appropriate. We cannot guarantee that any of our pending applications will be approved. Moreover, even if the applications are approved, third parties may seek to oppose or otherwise challenge them. A failure to obtain registrations in the United States or elsewhere could affectlimit our ability to protect our proprietary processes and could impede our business. Further, the protection of our intellectual property may require expensive investment in protracted litigation and the investment of substantial management time and there is no assurance we ultimately would prevail or that a successful outcome would lead to an economic benefit that is greater than the investment in the litigation.In addition, we may be unable to prevent third parties from using our intellectual property rights and know-how without our authorization or from independently developing intellectual property that is the same as or similar to ours. The unauthorized use of our know-how by third parties could reduce or eliminate any competitive advantage we have developed, cause us to lose sales or otherwise harm our CCS business results of operations, financial condition, liquidity and prospects.Failure of exported LNG to be a competitive source of energy for international markets could adversely affect our customers and could materially and adversely affect our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.Operations of the TerminalRio Grande LNG Facility will be dependent upon our ability to deliver LNG supplies from the U.S., which is primarily dependent upon LNG being a competitive source of energy internationally. The success of our business planthe Rio Grande LNG Facility is dependent, in part, on the extent to which LNG can, for significant periods and in significant volumes, be supplied from North America and delivered to international markets at a lower cost than the cost of alternative energy sources. Through the use of improved exploration technologies, additional sources of natural gas may be discovered outside the U.S., which could increase the available supply of natural gas outside the U.S. and could result in natural gas in those markets being available at a lower cost than that of LNG exported to those markets.22Additionally, our liquefaction projectsthe Rio Grande LNG Facility will be subject to the risk of LNG price competition at times when we need to replace any existing LNG sale and purchase contract, whether due to natural expiration, default or otherwise, or enter into new LNG sale and purchase contracts. Factors relating to competition may prevent us from entering into a new or replacement LNG sale and purchase contract on economically comparable terms as prior LNG sale and purchase contracts, or at all. Factors which may negatively affect potential demand for LNG from our liquefaction projects are diverse and include, among others:•increases in worldwide LNG production capacity and availability of LNG for market supply;•decreases in demand for LNG or increases in demand for LNG, but at levels below those required to maintain current price equilibrium with respect to supply;•increases in the cost of natural gas feedstock supplied to any project;•decreases in the cost of competing sources of natural gas or alternate sources of energy such as coal, heavy fuel oil, diesel, nuclear, hydroelectric, wind and solar;•decrease in the price of non-U.S. LNG, including decreases in price as a result of contracts indexed to lower oil prices;•increases in capacity and utilization of nuclear power and related facilities;•increases in the cost of LNG shipping; and•displacement of LNG by pipeline natural gas or alternate fuels in locations where access to these energy sources is not currently available.•increases in worldwide LNG production capacity and availability of LNG for market supply;•decreases in demand for LNG or increases in demand for LNG, but at levels below those required to maintain current price equilibrium with respect to supply;•increases in the cost of natural gas feedstock supplied to any project;•decreases in the cost of competing sources of natural gas or alternate sources of energy such as coal, heavy fuel oil, diesel, nuclear, hydroelectric, wind and solar;•decrease in the price of non-U.S. LNG, including decreases in price as a result of contracts indexed to lower oil prices;•increases in capacity and utilization of nuclear power and related facilities;•increases in the cost of LNG shipping; and•displacement of LNG by pipeline natural gas or alternate fuels in locations where access to these energy sources is not currently available.Political instability in foreign countries that import natural gas, or strained relations between such countries and the U.S. may also impede the willingness or ability of LNG suppliers, purchasers and merchants in such countries to import LNG from the U.S. Furthermore, some foreign purchasers of LNG may have economic or other reasons to obtain their LNG from non-U.S. markets or our competitors’ liquefaction facilities in the U.S.As a result of these and other factors, LNG may not be a competitive source of energy internationally. The failure of LNG to be a competitive supply alternative to local natural gas, oil and other alternative energy sources in markets accessible to our customers could adversely affect the ability of our customers to deliver LNG from the U.S. on a commercial basis. Any significant impediment to the ability to deliver LNG from the U.S. generally or from the TerminalRio Grande LNG Facility specifically could have a material adverse effect on our customers and our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.We are subject to risks associated with the development, operation and financing of domestic LNG facilities. The development of domestic LNG facilities and projects is generally based on assumptions about the future price of natural gas and LNG and the conditions of the global natural gas and LNG markets. Natural gas and LNG prices have been, and are likely to remain in the future, volatile and subject to wide fluctuations that are difficult to predict. As a result, our activities will expose us to risks of commodity price movements, which we believe could be mitigated by entering into long-term LNG sales contracts. There can be no assurance that we will be successful in entering into or maintaining long-term LNG sales contracts. Additionally, the global LNG market could shift toward the use of shorter-term LNG sales contracts.Fluctuations in commodity prices may create a mismatch between natural gas and petroleum prices, which could have a significant impact on our future revenues. Commodity prices and volumes are volatile due to many factors over which we have no control, including competing liquefaction capacity in North America; the international supply and receiving capacity of LNG; LNG marine transportation capacity; weather conditions affecting production or transportation of LNG from the Terminal;Rio Grande LNG Facility; domestic and global demand for natural gas; the effect of government regulation on the production, transportation and sale of natural gas; oil and natural gas exploration and production activities; and the development of and changes in the cost of alternative energy sources for natural gas and political and economic conditions worldwide.Our activities are also dependent on the price and availability of materials for the construction of the Terminal,Rio Grande LNG Facility, such as nickel, aluminum, pipe, and steel, which may be subject to import tariffs in the U.S. market and are all also subject to factors affecting commodity prices and volumes. In addition, authorities with jurisdiction over wholesale power rates in the U.S., Europe and elsewhere, as well as independent system operators overseeing some of these markets, may impose price limitations, bidding rules and other mechanisms which may adversely impact or otherwise limit trading23margins and lead to diminished opportunities for gain. We cannot predict the impact energy trading may have on our business, results of operations or financial condition.Further, the development of liquefaction facilitiesthe Rio Grande LNG Facility takes a substantial amount of time, requires significant capital investment, may be delayed by unforeseen and uncontrollable factors and is dependent on our financial viability and ability to market LNG internationally.The reduction or elimination of government incentives could adversely affect our business, financial condition, future results and cash flows.We expect our CCS projects, following successful construction and deployment, to generate revenue from a combination of sources, including fees from source facilities, government incentives and carbon credits. Government incentives include federal income tax credits under Section 45Q of the Internal Revenue Code, which currently provides a federal income tax credit per metric ton of carbon captured and permanently stored. The availability of these government incentives have a significant effect on the economics and viability of our CCS projects, and any reduction or elimination of such incentives could adversely affect the growth of our CCS business, our financial condition and our future results.Competition in the LNG industryindustries in which we operate is intense, and some of our competitors have greater financial, technological and other resources.We plan to operate in the highly competitive area of LNG production and face intense competition from independent, technology-driven companies as well as from both major and other independent oil and natural gas companies and utilities.Many competing companies have secured access to, or are pursuing development or acquisition of, LNG facilities and deployment of carbon capture processes in North America. We may face competition from major energy companies and others in pursuing our proposed business strategy to provide liquefaction and export products and services at the Terminal. In addition, competitors have and are developing LNG terminals in other markets, which will compete with U.S. LNG facilities.strategy. Some of these competitors have longer operating histories, more development experience, greater name recognition, superior tax incentives, more employees and substantially greater financial, technical and marketing resources than we currently possess. NEXT Carbon Solutions will compete with other providers of CCS services, traditional original equipment manufacturers, EPC firms and midstream transportation and storage companies in offering CCS solutions. Our competitors in the CCS space may have greater financial, technical and marketing resources than we currently possess. The superior resources that some of these competitors have available for deployment could allow them to compete successfully against us, which could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.There may be shortages of LNG vessels worldwide, which could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.The construction and delivery of LNG vessels requires significant capital and long construction lead times, and the availability of the vessels could be delayed to the detriment of our business and customers due to the following:•an inadequate number of shipyards constructing LNG vessels and a backlog of orders at these shipyards;•political or economic disturbances in the countries where the vessels are being constructed;•changes in governmental regulations or maritime self-regulatory organizations;•work stoppages or other labor disturbances at the shipyards;•bankruptcies or other financial crises of shipbuilders;•quality or engineering problems;•weather interference or catastrophic events, such as a major earthquake, tsunami, or fire; or•shortages of or delays in the receipt of necessary construction materials.•an inadequate number of shipyards constructing LNG vessels and a backlog of orders at these shipyards;•political or economic disturbances in the countries where the vessels are being constructed;•changes in governmental regulations or maritime self-regulatory organizations;•work stoppages or other labor disturbances at the shipyards;•bankruptcies or other financial crises of shipbuilders;•quality or engineering problems;•weather interference or catastrophic events, such as a major earthquake, tsunami, or fire; or•shortages of or delays in the receipt of necessary construction materials.We will rely on third-party engineers to estimate the future capacity ratings and performance capabilities of the Terminal,Rio Grande LNG Facility and CCS projects, and these estimates may prove to be inaccurate.We will rely on third parties for the design and engineering services underlying our estimates of the future capacity ratings and performance capabilities of the Terminal.Rio Grande LNG Facility and CCS projects. Any of our LNGsuch facilities, when constructed, may not have the capacity ratings and performance capabilities that we intend or estimate. Failure of any of our facilities to achieve our intended capacity ratings and performance capabilities could prevent us from achieving the commercial start dates or otherwise impact the generation of revenue under our future LNG sale and purchasecommercial agreements and could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.1424Carbon credit markets may not develop as quickly or efficiently as we anticipate or at all.The continued development of Contents
Terrorist attacks, including cyberterrorism, or military campaigns involving us orglobal carbon credit marketplaces will be crucial for the Terminal could result in delays in, or cancellationsuccessful deployment of construction or closureour CCS processes, as we expect carbon credits to be a significant source of future revenue. The efficiency of the Project.
A terrorist or military incident involvingvoluntary carbon credit market is currently affected by several concerns, including insufficiency of demand, the Terminal may result in delays in, or cancellationrisk that reduction credits could be counted multiple times and a lack of constructionstandardization of credit verification. Delayed development of a global carbon credit market could negatively impact the commercial viability of our CCS projects and could limit the growth of the Terminal, which would increase our costs and prevent us from obtaining expected cash flows. A terrorist incident could also result in temporary or permanent closure of the Terminal, which could increase costs and decrease cash flows, depending on the duration of the closure. Operations at the Terminal could also become subject to increased governmental scrutiny that may result in additional security measures at a significant incremental cost. In addition, the threat of terrorism and the impact of military campaigns may lead to continued volatility in prices for natural gas that could adversely affect our business and customers, including the ability ofadversely impact our suppliers or customers to satisfy their respective obligations under our commercial agreements. Instability in the financial markets as a result of terrorism, including cyberterrorism, or war could also materially adversely affect our ability to raise capital. The continuation of these developments may subject our construction and operations to increased risks, as well as increased costs, and, depending on their ultimate magnitude, could have a material adverse effect on our business, contracts, financial condition operating results, cash flow, liquidity and prospects.
future results. These risks may similarly affect CCS projects and their host facilities. Rio Grande LNG Facility. For instance, environmental activists have attempted to intervene in the permitting process of the Rio Grande LNG Facility and persuade regulators to deny necessary permits or seek to overturn permits that have been issued. These third-party actions can materially increase the costs and cause delays in the permitting process and could cause us to not proceed with the development of the Rio Grande LNG Facility. Rio Grande LNG Facility. Rio Grande LNG Facility.The operation of the TerminalRio Grande LNG Facility and any CCS project may be subject to significant operating hazards and uninsured risks, one or more of which may create significant liabilities and losses that could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.The plan of operations for the TerminalRio Grande LNG Facility is subject to the inherent risks associated with LNG operations, including explosions, pollution, release of toxic substances, fires, hurricanes and other adverse weather conditions, and other hazards, each of which could result in significant delays in commencement or interruptions of operations and/or result in damage to or destruction of the TerminalRio Grande LNG Facility and assets or damage to persons and property.We do not, nor do we intend to, maintain insurance against all these risks and losses. We may not be able to maintain desired or required insurance in the future at rates that we consider reasonable. The occurrence of a significant event not fully insured or indemnified against could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.We are dependent on a limited number of customers for the purchase of LNG.The number of potential LNG customers is limited. Some potential purchasers of the LNG to be produced from the TerminalRio Grande LNG Facility are new to the LNG business and have limited experience in the industry. We will be reliant upon the ability of these customers to enter into satisfactory downstream arrangements in their home markets for the licenses to import and sell re-gasifiedregasified LNG. Some of these jurisdictions are heavily regulated and dominated by state entities. In certain instances, customers may require credit enhancement measures in order to satisfy project-financing requirements.Objections from local communities or environmental groups can delay the Terminal.Some local communities and/or environmental groups could perceivehave voiced opposition to the proposed construction and operation of the TerminalRio Grande LNG Facility as negatively impacting the environment, wildlife, cultural heritage sites or the public health of residents. Objections from local communities or environmental groups could cause delays, limit access to or increase the cost of construction capital, cause reputational damage and impede us in obtaining or renewing permits.The TerminalRio Grande LNG Facility will be dependent on the availability of gas supply at the Agua Dulce supply area.The Pipeline is expected to collect and transport natural gas to the Terminal.Rio Grande LNG Facility. The header system at the upstream end of the Pipeline is expected to have multiple interconnects to the existing natural gas pipeline grid located in the Agua Dulce supply area (the “Agua Dulce Hub”). The Agua Dulce Hub includes deliveries from, but not limited to, ConocoPhillip’sConocoPhillips' 1,100-mile South Texas intrastate and gas gathering pipeline system and ExxonMobil’s 925 MMcf/d King Ranch processing facility. As the Pipeline system interconnects are expected to be relatively close to the Agua Dulce Hub, it is expected that gas will be available for purchase in large volumes at commercially acceptable prices. Nonetheless, disruptions in upstream supply sources or increased market demand could impact the availability of gas supply to the Pipeline header system, which would result in curtailments at the Terminal.Each liquefaction train for the TerminalRio Grande LNG Facility is expected to involve the transportation andon the Pipeline for liquefaction of approximately 0.9 Bcf/day of natural gas, for a total of 4.5 Bcf/day for five liquefaction trains at full build-out. Gas sales agreements for the supply of these volumes could entail negotiations with multiple parties for firm and interruptible gas supply and transportation services to the Pipeline header system, as well as pipeline interconnects and ancillary operational agreements. Delays caused by third parties in the course of negotiating agreements and constructing the required interconnects could delay the start of commercial operations for the Terminal.25Litigation could expose us to significant costs and adversely affect our business, financial condition, and results of operations.We are, or may become, party to various lawsuits, arbitrations, mediations, regulatory proceedings and claims, which may include lawsuits, arbitrations, mediations, regulatory proceedings or claims relating to commercial liability, product recalls, product liability, product claims, employment matters, environmental matters, breach of contract, intellectual property, indemnification, stockholder suits, derivative actions or other aspects of our business.Litigation (including the other types of proceedings identified above) is inherently unpredictable, and although we may believe we have meaningful defenses in these matters, we may incur judgments or enter into settlements of claims that could have a material adverse effect on our business, financial condition, and results of operations. The costs of responding to or defending litigation may be significant and may divert the attention of management away from our strategic objectives. There may also be adverse publicity associated with litigation that may decrease customer confidence in our business or our management, regardless of whether the allegations are valid or whether we are ultimately found liable.Risks Related to Governmental RegulationThe construction and operation of the Rio Grande LNG Facility remains subject to further governmental approvals, and some approvals may be subject to further conditions, review and/or revocation and other legal and regulatory risks, which may result in delays, increased costs or decreased cash flows.We are required to obtain governmental approvals and authorizations to implement our proposed business strategy, which includes the design, construction and operation of the Rio Grande LNG Facility and the export of LNG from the U.S. to foreign countries. As described above under “Business− Governmental Permits, Approvals and Authorizations,” the design, construction and operation of LNG export facilities is a highly regulated activity in the U.S., subject to a number of permitting requirements, regulatory approvals and ongoing safety and operational compliance programs. There is no guarantee that we will obtain or, once obtained, maintain these governmental authorizations, approvals and permits. While the FERC has authorized the construction and operation of the Rio Grande LNG Facility, additional approvals from FERC Staff will be required as we proceed with its construction and commissioning. Failure to obtain, or failure to obtain on a timely basis, or failure to maintain any of these governmental authorizations, approvals and permits could have a material adverse effect on our business, results of operations, financial condition and prospects.Authorizations obtained from the FERC, the DOE and other federal and state regulatory agencies also contain ongoing conditions and compliance requirements, and additional approval and permit requirements may be imposed. We do not know whether or when any such approvals or permits can be obtained, or whether any existing or potential interventions or other actions by third parties will interfere with our ability to obtain and maintain such permits or approvals. If we are unable to obtain and maintain the necessary approvals and permits, including as a result of untimely notices or filings, we may not be able to recover our investment in the Rio Grande LNG Facility. Additionally, government disruptions, such as a U.S. government shutdown or the lack of quorum to issue decisions in regulatory agencies, may delay or halt our ability to obtain and maintain necessary approvals and permits. There is no assurance that we will obtain and maintain these governmental permits, approvals and authorizations, or that we will be able to obtain them on a timely basis, and failure to obtain and maintain any of these permits, approvals or authorizations could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. In the future, additional regulatory approvals may be required or significant costs may be incurred due to changes in laws and regulations or for other reasons.In addition, some of these governmental authorizations, approvals and permits require extensive environmental review. We cannot predict or control whether our authorizations, approvals or permits will attract significant opposition or whether the permitting process will be lengthened due to complexities and appeals. Some groups have perceived, and other groups could perceive, that the proposed construction and operation of the Rio Grande LNG Facility could negatively impact the environment or cultural heritage sites. Objections from such groups could cause delays, damage to reputation and difficulties in obtaining governmental authorizations, approvals or permits or prevent the obtaining of such authorizations, approvals or permits altogether. Although the necessary authorizations, approvals and permits to construct and operate the Rio Grande LNG Facility have been obtained, such authorizations, approvals and permits may be subject to ongoing conditions imposed by regulatory agencies or may be subject to legal proceedings not involving us, which is customary for U.S. LNG projects.26The Rio Grande LNG Facility will be subject to a number of environmental laws and regulations that impose significant compliance costs, and existing and future environmental and similar laws and regulations could result in increased compliance costs, liabilities or additional operating restrictions.Our business will be subject to extensive federal, state and local regulations and laws, including regulations and restrictions on discharges and releases to the air, land and water and the handling, storage and disposal of hazardous materials and wastes in connection with the development, construction and operation of the Rio Grande LNG Facility. Failure to comply with these regulations and laws could result in the imposition of administrative, civil and criminal sanctions.These regulations and laws, which include the federal Clean Air Act, the Oil Pollution Act, the National Environmental Policy Act, the Clean Water Act, the Safe Drinking Water Act, the Endangered Species Act, the Natural Gas Pipeline Safety Act and the Resource Conservation and Recovery Act, and analogous state and local laws and regulations, will restrict, prohibit or otherwise regulate the types, quantities and concentration of substances that can be released into the environment in connection with the construction and operation of our facilities. Additionally, these regulations and laws will require and have required us to obtain and maintain permits, with respect to our facilities, prepare environmental impact assessments, provide governmental authorities with access to our facilities for inspection and provide reports related to compliance. Violation of these laws and regulations could lead to substantial liabilities, fines and penalties, the denial or revocation of permits necessary for our operations, governmental orders to shut down our facilities or to capital expenditures related to pollution control or remediation equipment that could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects. Federal and state laws impose liability, without regard to fault or the lawfulness of the original conduct, for the release of certain types or quantities of hazardous substances into the environment. As the owner and operator of the Rio Grande LNG Facility and CCS systems, we could be liable for the costs of cleaning up hazardous substances released into the environment and for damage to natural resources.In addition, future federal, state and local legislation and regulations, such as regulations regarding greenhouse gas emissions, the transportation of LNG, and the sequestration of carbon dioxide may impose unforeseen burdens and increased costs on our business that could have a material adverse effect on our financial results. As an international shipper of LNG, our operations could also be impacted by environmental laws applicable under international treaties or foreign jurisdictions.Unethical conduct and non-compliance with applicable laws could have a significant adverse effect on our business.Incidents of unethical behavior, fraudulent activity, corruption or non-compliance with applicable laws and regulations could be damaging to our operations and reputation and may subject us to criminal and civil penalties or loss of operating licenses. We have implemented an anti-corruption policy which applies to all employees and contractors without exception and we are a member of TRACE International, an internationally recognized anti-bribery compliance organization. Our legal team screens potential partners, agents and advisors in multiple databases to which it has access and regularly conducts due diligence interviews with potential counterparties. Due to the global nature of the LNG business and the diversity of jurisdictions in which our customers operate, it is possible that a prospective counterparty could be accused of behavior that falls short of our expectations in this regard, leading to reputational damage and potential legal liabilities, notwithstanding our best efforts to prevent such behaviors.
our tax attributes could be limited for use to offset future taxable income.The outbreakLNG and incentives for reduction of COVID-19 and volatility in the energy markets may materially and adversely affectemissions, could have a material adverse effect on our business, results ofoperations, financial condition, operating results, cash flow, liquidity and prospects and could cause additional expenditures and delays in connection with the Rio Grande LNG Facility and CCS projects and their construction.The laws, rules and regulations applicable to our business, including our effortsfederal agencies’ interpretations of and policies under such laws rules and regulations, are subject to reachchange, either through new or modified regulations enacted on the federal, state or local level or by a final investment decision with respect to the Terminal.The outbreak of COVID-19 and its development into a pandemicchange in March 2020 have resulted in significant disruption globally. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 have restricted travel, business operations, and the overall level of individual movement and in-person interaction across the globe. Furthermore, the impactpolicy of the pandemic,agencies charged with enforcing such regulations. For example, the provisions of the Energy Policy Act of 2005 that codified the FERC’s policy of not regulating the terms and conditions of service for LNG import or export facilities expired in 2015. Although the FERC has not indicated that it intends to depart from this policy, there can be no assurance it will not do so in the future. The nature and extent of any changes in these laws, rules, regulations and policies may be unpredictable and may have material adverse effects on our business. Future legislation and regulations or changes in existing legislation and regulations, or interpretations thereof, such as those relating to (i) the liquefaction, storage, or regasification of LNG, or its transportation, and (ii) the capture of COa resultinginto new markets, results of operations, financial condition, liquidity and prospects.27In addition, our CCS systems may benefit from federal, state and local governmental incentives, mandates or other programs promoting the reduction inof emissions. Any changes to or termination of these programs could reduce demand for natural gas, coupled with the sharp decline in commodity prices following the announcement of price reductions and production increases in March 2020 by members of the Organization of the Petroleum Exporting Countries (“OPEC”) led to significant global economic contraction generally and in our industry in particular. While an agreement to cut production was announced by OPEC and its allies, the situation, coupled with the impact of COVID-19, has continued to result in a significant downturn in the oil and gas industry. Prospects for the development and financing of the Terminal are based in part on factors including global economic conditions that have been, and are likely to continue to be, adversely affected by the COVID-19 pandemic.The COVID-19 pandemic has caused us to modify our business practices, including by restricting employee travel, requiring employees to work remotely and cancelling physical participation in meetings, events and conferences, and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19 or otherwise be satisfactory to government authorities. If a number of our employees were to contract COVID-19 at the same time, our operations could be adversely affected.A sustained disruption in the capital markets from the COVID-19 pandemic, specifically with respect to the energy industry, could negatively impactCCS systems, impair our ability to raise capital. In the past, we have financed our operations by the issuance of equity and equity-based securities. However, we cannot predict when the macro-economic disruption stemming from COVID-19 will ebb or when the economy will return to pre-COVID-19 levels. This macro-economic disruption may disrupt our ability to raise additional capital to finance our operations in the future, which could materiallyobtain financing, and adversely affectimpact our business, financial condition and prospects,results of operations.We may not be able to utilize any future federal income tax credits.Our LNG and could ultimately cause our business to fail.The COVID-19 pandemic may also have the effect of heightening many of the other risks described in this Annual Report on Form 10-K, such as risks related to the development of the Terminal, postponement in making a positive FID, doing business in foreign countries, obtaining governmental approvals, and exported LNG remaining a competitive source of energy for international markets, global demand for and price of natural gas, and fluctuationCCS activities are in the priceconstruction stage and development stage, respectively, and have not historically generated any revenue; consequently, as of December 31, 2023, we had significant deferred tax assets primarily resulting from net operating losses for federal income tax purposes. See Note 15 common stock.The extenttaxable income. There is no assurance that we will be able to which COVID-19 ultimately impactstransfer these federal income tax credits or generate taxable income or otherwise be able to monetize the value represented by these federal income tax credits.Our ability to utilize our business, results of operations and financial condition will depend on future developments, which are uncertain and cannotnet operating loss carryforwards (“NOLs”) may be predicted, including, but not limited to, the duration and spread of COVID-19, its severity, the actions to contain COVID-19 or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after COVID-19 has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recessionownership changes under Section 382 of the Code.The Tax Reform Act of 1986 (as amended) contains provisions that limit the utilization of NOL and tax credit carryforwards if there has been a change in ownership as described in Section 382 of the Internal Revenue Code (“Section 382”). Such an ownership change occurs if the aggregate stock ownership of certain stockholders, generally stockholders beneficially owning five percent or more of a corporation’s common stock, applying certain look-through and aggregation rules, increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period, generally three years. Substantial changes in the Company's ownership have occurred that may limit or may occurreduce the amount of NOL carryforwards that the Company could utilize in the future to offset taxable income. At December 31, 2023, we had federal net operating loss (“NOL”) carryforwards of approximately $260.7 million. Approximately $26.1 million of these NOL carryforwards will expire between 2034 and lasting effects2038.Limitations imposed on the priceour ability to use NOLs to offset future taxable income may cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in effect and could cause such NOLs and other tax attributes to expire unused. Similar rules and limitations may apply for state and foreign income tax purposes. If we experience such an ownership change, it is possible that a significant portion of natural gas.Risks Relating to our SecuritiesOur common stock could be delisted from Nasdaq.Our common stock is currently listed on Nasdaq. However, we cannot assure you that we will be able to comply with the continued listing standards of Nasdaq. If we fail to comply with the continued listing standards of Nasdaq, our common stock may become subject to delisting. If Nasdaq delists our common stock from trading on its exchange for failure to meet the continued listing standards, we and our stockholders could face significant material adverse consequences including:•a limited availability of market quotations for our securities;•a limited amount of analyst coverage; and•a decreased ability for us to issue additional securities or obtain additional financing in the future.•a limited availability of market quotations for our securities;•a limited amount of analyst coverage; and•a decreased ability for us to issue additional securities or obtain additional financing in the future.The market price of our common stock has fluctuated in the past and is likely to fluctuate in the future. Holders of our common stock could lose all or part of their investment.The securities markets in general and our common stock have experienced significant price and volume volatility. The market price and trading volume of our common stock may continue to experience significant fluctuations due not only to general stock market conditions but also to a change in sentiment in the market regarding our operations, business prospects or those of companies in our industry. In addition to the other risk factors discussed in this section, the price and volume volatility of our common stock may be affected by:•domestic and worldwide supply of and demand for natural gas and corresponding fluctuations in the price of natural gas;•fluctuations in our quarterly or annual financial results or those of other companies in our industry;•issuance of additional equity securities which causes further dilution to stockholders;•sales of a high volume of shares of our common stock by our stockholders;•operating and stock price performance of companies that investors deem comparable to us;•events affecting other companies that the market deems comparable to us;•changes in government regulation or proposals applicable to us;•actual or potential non-performance by any customer or a counterparty under any agreement;•domestic and worldwide supply of and demand for natural gas and corresponding fluctuations in the price of natural gas;•fluctuations in our quarterly or annual financial results or those of other companies in our industry;•issuance of additional equity securities which causes further dilution to stockholders;1628•sales of Contentsa high volume of shares of our common stock by our stockholders (including sales by our directors, executive officers, and other employees) or the perception or expectation that such sales may occur;•short sales, hedging, and other derivative transactions on shares of our common stock;
|
|
|
|
|
|
|
|
|
|
The dividend, liquidation,
At March 22, 2021, we had 67,485 shares of Series A Preferred Stock, 64,496 shares of Series B Preferred Stock, and 24,990 shares of Series C Preferred Stock outstanding. The shares of Convertible Preferred Stock bear dividends at a rate of 12% per annum, which are cumulative and accrue daily from the date of issuance on the $1,000 stated value. Such dividends are payable quarterly and may be paid in cash or in-kind. No dividends may be paid to holders of ourCompany’s common stock while accumulated dividends remain unpaid on the Convertible Preferred Stock.
Further, we are required, on the earlierdue to investors’ perception that conflicts of (i) ten (10) business days following a FID Event (as defined in the certificatesinterest may exist or arise.
Holders of the Convertible Preferred Stock have certain voting and other rights that may adversely affect holders of our common stock, and the holders of Convertible Preferred Stock may have different interests from and vote their shares in a manner deemed adverse to, holders of our common stock.
The holders of Convertible Preferred Stock vote on an “as-converted” basis with the holders of our common stock on all matters brought before the holders of our common stock. In addition, prior to the conversion of the Convertible Preferred Stock, the consent of the holders of at least a majority of each of the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock then outstanding, in each case voting together as a single class, will be required for the Company to take certain actions, including, among others, (i) authorizing, creating or approving the issuance of any shares, or of any security convertible into, or convertible or exchangeable for shares of, senior to the Convertible Preferred Stock; (ii) authorizing, creating or approving the issuance of any shares of, or of any security convertible into, or convertible or exchangeable for shares of, Parity Stock (as defined in the certificates of designations of the Convertible Preferred Stock), subject to certain exceptions; (iii) adversely affecting the rights, preferences or privileges of the Convertible Preferred Stock, as applicable, subject to certain exceptions; (iv) amending, altering or repealing any of the provisions of the Certificate of Incorporation in a manner that would adversely affect the powers, designations, preferences or rights of the Convertible Preferred Stock, as applicable; or (v) amending, altering or repealing any of the provisions of the certificates of designations of the Convertible Preferred Stock, as applicable. Further, the holders of Convertible Preferred Stock have the right to purchase their pro rata share of any future issuance of preferred stock of the Company.
The holders of Convertible Preferred Stock may have different interests from the holders of our common stock and could vote their shares in a manner deemed adverse to the holders of our common stock.
Exercise of warrants may have a dilutive effect on our common stock.
As of December 31, 2020, outstanding IPO Warrants to purchase an aggregate of 12,081,895 shares of our common stock were exercisable in accordance with the terms of the warrant agreement governing such warrants. These warrants will expire at 5:00 p.m., New York time, on July 24, 2022 or earlier upon redemption or liquidation. The exercise price of these warrants is $11.50 per one full share of our common stock, subject to certain adjustments.
In addition, we
To the extent the IPO Warrants are exercised, or the warrants issued together with the Convertible Preferred Stock are exercised, additional shares of our common stock will be issued, which will result in dilution to the holders of our common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of our common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We depend on digital technology in many aspects of our business, including the processing and recording of financial and operating data, analysis of information, and communications with our employees and third parties. Cyberattacks on our systems and those of third-party vendors and other counterparties occur frequently and have grown in sophistication. A successful cyberattack on us or a vendor or other counterparty could have a variety of adverse consequences, including theft of proprietary or commercially sensitive information, data corruption, interruption in communications, disruptions to our existing or planned activities or transactions, and damage to third parties, any of which could have a material adverse impact on us. Further, as cyberattacks continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities to cyberattacks.Terrorist attacks, including cyberterrorism, or military campaigns involving us or our projects could result in delays in, or cancellation of, construction or closure of the Rio Grande LNG Facility.A terrorist or military incident involving the Rio Grande LNG Facility or any industrial facility that hosts a CCS project may result in delays in, or cancellation of, construction of the Rio Grande LNG Facility or the relevant CCS project, which would increase our costs and prevent us from obtaining expected cash flows. A terrorist incident could also result in temporary or permanent closure of the Rio Grande LNG Facility or such host industrial facility, which could increase costs and decrease cash flows, depending on the duration of the closure. Operations at the Rio Grande LNG Facility and CCS projects could also become subject to increased governmental scrutiny that may result in additional security measures at a significant incremental cost. In addition, the threat of terrorism and the impact of military campaigns may lead to continued volatility in prices for natural gas that could adversely affect our business and customers, including the ability of our suppliers or customers to satisfy their respective obligations under our commercial agreements. Instability in the financial markets as a result of terrorism, including cyberterrorism, or war, including the Russia-Ukraine conflict or hostilities in the Middle East, could also materially adversely affect our ability to raise capital. The continuation of these developments may subject our construction and operations to increased risks, as well as increased costs, and, depending on their ultimate magnitude, could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.Item 1B. Unresolved Staff CommentsNone.
Item 1C. CybersecurityRisk Management and StrategyOur cybersecurity program is an important component of our broader risk management strategy in which cyber risk has been identified and is actively managed with preventive and mitigating measures. We design and assess our cybersecurity program based on the National Institute of Standards and Technology's Cybersecurity Framework, ISO 27001, and industry-specific regulations. This does not imply that we meet any particular technical standards, specification or requirements, but rather that we use these frameworks as a guide to help us identify, assess and manage cybersecurity risks relevant to our business.On an ongoing basis, we assess our people, processes, and technology, and when necessary, modify the overall program in order to meet the demands of the ever-changing cyber risk environment. As part of our regular training and readiness program, we conduct phishing and penetration testing campaigns in order to ensure that our employees are familiar with all types of phishing emails and similar threats.Our data is dynamically backed up to mitigate against data loss. To prevent unauthorized access and data breaches, we encrypt sensitive data both in transit and at rest and we have also implemented access controls and multi-factor authentication to ensure that only authorized personnel can access sensitive information. We also utilize third-party information technology systems vendors to conduct constant network and endpoint monitoring.We develop and implement robust cybersecurity policies and procedures that address access control, data encryption, use of assets, and data protection. We ensure that all employees, contractors, and third-party vendors adhere to these policies and receive training on cybersecurity best practices.33GovernanceOur cybersecurity function resides within the broader security function and reports to the Vice President of Health, Safety, Security & Environmental (“VP HSSE”), who is responsible for the delivery of a robust and risk-based cybersecurity program. The Senior Manager of Cybersecurity, reporting to the VP HSSE, is responsible for all activities, including improvements, incident response, and investigation. Cyber governance oversight is provided by the Audit Committee of the Board of Directors. The Audit Committee discusses with management our cybersecurity risk exposures and the steps management has taken to mitigate such exposures, including our risk assessment and risk management policies.Incident Response ReportingOur strength in incident response reporting lies in our proactive and transparent approach to addressing cybersecurity incidents swiftly and effectively. We focus on preventative measures to reduce the likelihood of a cybersecurity incident and we have a robust response and recovery program and a cross-functional response team, which would be activated in the event of an incident to manage and reduce the escalation of the incident. We have established a robust incident response framework that enables us to detect, respond to, and mitigate threats with precision and speed. Our strategy involves clear communication channels, defined roles and responsibilities, and regular drills and simulations to ensure readiness.When an incident occurs, we adhere to strict reporting protocols, promptly notifying appropriate regulatory authorities and affected customers and stakeholders, while maintaining transparency and accountability throughout the process, which allows us to not only mitigate the impact of cyber threats but also demonstrate our commitment to cybersecurity risk prevention and response.During the year ended December 31, 2023, there were no cybersecurity incidents or threats that materially affected our business, results of operations or financial condition.Item 2. PropertiesWe currently lease approximately 25,60090,000 square feet of office space for general and administrative purposes in Houston, Texas under a lease agreement that expires on September 30, 2021.In January 2017, NextDecade LLC executed surface lease agreements with the City of Texas City and the State of Texas for a 994-acre site for a potential second U.S. LNG project (collectively, the “Galveston Bay Leases”). The Galveston Bay Leases expired on December 31, 2020.On March 6, 2019, 2035.Rio Grande has entered into a lease agreement (the “Rio Grande Site Lease”) with the Brownsville Navigation District of Cameron County, Texas (“BND”) pursuant to which we have agreed to leaseRio Grande has leased approximately 984 acres of land situated in Brownsville, Cameron County, Texas for the purposes of constructing, operating, and maintaining the TerminalRio Grande LNG Facility and gas treatment and gas pipeline facilities. The initial term of the Rio Grande Site Lease is for 30 yearsexpires on July 12, 2053 (the “Primary Term”), which will commence on the date specified in a written notice by us to BND. We have. Rio Grande has the option to renew and extend the term of the Rio Grande Site Lease beyond the Primary Term for up to two consecutive renewal periods of ten years each provided that it has not caused an event of default under the Rio Grande Site Lease.We do not own or lease any other real property that is materially important to our business. We believe that our current properties are adequate for our current needs and that additional office space will be available when and as needed.As of December 31, 2023, management was not aware of any claims or legal actions that, separately or in the aggregate, are likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows, although the Company cannot guarantee that a material adverse event will not occur.Item 4.Mine Safety DisclosuresNot applicable.1934
Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as a Part of Publicly Announced Plans Maximum Number of Units That May Yet Be Purchased Under the Plans October 2020 November 2020 December 2020 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket Information, Holders and DividendsOur common stock trades on Nasdaq under the symbol “NEXT.” The IPO Warrants trade on the OTC Pink Market under the symbol “NEXTW.”As of March 18, 2021, 122.24, 2024, 256.7 million shares of Company common stock were outstanding held by approximately 6968 record owners. All shares of Company common stock held in street name are recorded in our stock register as being held by one stockholder.We currently intend to retain earnings to finance the growth and development of our business and do not anticipate paying any cash dividends on Company common stock in the foreseeable future. Any future change in our dividend policy will be made at the discretion of our boardBoard of directorsDirectors in light of our financial condition, capital requirements, earnings, prospects and any restrictions under any financing agreements, as well as other factors it deems relevant.Purchase of Equity Securities by the IssuerThe following table summarizes stock repurchases for the three months ended December 31, 2020: 3,525 $ 2.59 — — — $ — — — 4,870 $ 2.40 — — (1)Represents shares of Company common stock surrendered to us by participants in our 2017 Omnibus Incentive Plan (the “2017 Plan”) to settle the participants’ personal tax liabilities that resulted from the lapsing of restrictions on shares awarded to the participants under the 2017 Plan.(2)The price paid per share of Company common stock was based on the closing trading price of Company common stock on the dates on which we repurchased shares of Company common stock from the participants under the 2017 Plan.Period Total Number ofShares Purchased (1)AveragePrice PaidPer Share (2)Total Number of
Shares Purchased as
a Part of Publicly
Announced PlansMaximum Number of
Units That May Yet
Be Purchased Under
the PlansOctober 2023 — $ — — — November 2023 609 $ 4.35 — — December 2023 3,247 $ 5.23 — — (1)Represents shares of Company common stock surrendered to us by participants in our 2017 Omnibus Incentive Plan (the “2017 Plan”) to settle the participants’ personal tax liabilities that resulted from the lapsing of restrictions on shares awarded to the participants under the 2017 Plan.(2)The price paid per share of Company common stock was based on the closing trading price of Company common stock on the dates on which we repurchased shares of Company common stock from the participants under the 2017 Plan.Item 6. Selected Financial DataWe are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.2035
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We are a LNG development company focused on LNG export projects in the State of Texas. We have focused and continue to focus our development activities on the Terminal and have undertaken and continue to undertake various initiatives to design and engineer the Terminal that we expect will result in demand for contracted capacity at the Terminal, which would allow us to seek construction financing to develop the Terminal. We believe the Terminal possesses competitive advantages in several important areas, including, engineering, commercial, regulatory, and gas supply. We submitted a pre-filing request for the Terminal to the FERC in March 2015 and filed a formal application with the FERC in May 2016. In November 2019, the FERC issued an order authorizing the siting, construction and operation of the Terminal. We also believe we have robust commercial offtake and gas supply strategies in place.
Carbon-Neutrality
On March 18, 2021, we announced the formation ofRio Grande LNG Facility and other potential CCS projects that would be located at third-party industrial facilities through our NEXT Carbon Solutions LLCbusiness.
|
|
|
|
|
|
|
|
NEXT Carbon Solutions’ CCS to Bechtel under the EPC contracts for Phase 1.
We are working with sustainable Permian and Eagle Ford producers seeking to supply responsibly sourced natural gas to the Terminal. Combining responsibly sourced natural gasline with the anticipated CO2 emissions reduction associatedschedule under the EPC contract. Within this project completion percentage, engineering was 47.9% complete, procurement was 26.8% complete, and construction was 1.0% complete.
To realize the significant benefits associated with co-development of the Terminal and the CCS project, we anticipate achieving FID on a minimum of two trains at the Terminal in 2021 and FID on the CCS project soon after FID at the Terminal.
Terminal Optimization
The original front-end engineering and design (“FEED”) and EPC contract processes with Bechtel for the Terminal was based on six LNG trains capable of producing 27 mtpa of LNG for export. The technologies that were selectedTrain 4 and filedare progressing numerous discussions with the FERC in 2015 and 2016 have evolved over the five-year permitting period; the LNG trains are now more efficient and will produce more LNG with lower total CO2e emissions. Multiple optimizations have been identified that will lead to the delivery of a LNG project capable of producing 27 mtpa with just five LNG trains instead of six.
We expect these optimizations to result in several environmental and community benefits when compared with our original six-train project, including (i) approximately 21 percent lower CO2e emissions, (ii) shortened construction timeline for the full 27 mtpa project, (iii) reduced facility footprint, and (iv) an expected reduction in traffic on roadways.
On August 13, 2020, the FERC approved the change of the design for the Terminal from six trains to five trains. On October 9, 2020, the FERC issued a notice of denial of rehearing for such approval in regards to challenges to its approval of the design change.
Any future development of Train 6 will require us to secure authorization from the FERC, the DOE, and any other relevant federal or state agency with jurisdiction over the export project.
LNG Sale and Purchase Agreement
In March 2019, we entered into the SPA with Shell for the supply of approximately two mtpa of liquefied natural gas from the Terminal. Pursuant to the SPA, Shell will purchase LNG on a FOB basis starting from the date the first liquefaction train of the Terminal that is commercially operable, with approximately three-quarters of the purchased LNG volume indexed to Brent and the remaining volume indexed to domestic United States gas indices, including Henry Hub.
In the first quarter of 2020, the SPA became effective upon the conditions precedent in the SPA being satisfied or waived. The SPA obligates Rio Grande to deliver the contracted volumespotential buyers of LNG to Shell at the FOB delivery point, subject to the first liquefaction train at the Terminal being commercially operable.
Rio Grande Site Lease
On March 6, 2019, Rio Grande entered into the Rio Grande Site Leaseprovide commercial support for the purposes of constructing, operating and maintaining the Terminal and gas treatment and gas pipeline facilities. The Primary Term will commence on the date specified in a written notice by us to BND. We have the option to renew and extend the term of the Rio Grande Site Lease beyond the Primary Term for up to two consecutive renewal periods of ten years each provided that it has not caused an event of default under the Rio Grande Site Lease.
On January 27, 2020, the City of Port Isabel, Texas and other parties filed a lawsuit in state court in Cameron County against the BND seeking to enjoin the federally-authorized siting, construction, and operation of LNG terminals on land owned by the BND. On August 5, 2020, the state court dismissed the lawsuit.
On April 30, 2020, Rio Grande and the BND amended the Rio Grande Site Lease (the “Rio Grande Site Lease Amendment”) to extend the effective date for commencing the Rio Grande Site Lease to May 6, 2021 (the “Effective Date”). The Rio Grande Site Lease Amendment further provides that Rio Grande has the right, exercisable in its sole discretion, to extend the Effective Date to May 6, 2022 by providing the BND with written notice of its election no later than the close of business on the Effective Date.
Extension of Contract Validity of Engineering, Procurement, and Construction Contract
During the third quarter of 2018,Train 4.
On April 22, 2019, we received EPC bid packages from each of Bechtel and Fluor, two of the global LNG market’s leading EPC contractors. The technical and commercial bid packages, which were received on-schedule, were for LSTK EPC contracts for the Terminal.
On May 24, 2019, Rio Grande entered into the EPC Agreements. We agreed to pay to Bechtel a contract price of $7.042 billion for the work under the Trains 1 and 2 EPC Agreement and a contract price of $2.323 billion for the work under the Train 3 EPC Agreement. In each of 2020 and 2019, we issued two limited notices to proceed to Bechtel under the Trains 1 and 2 EPC Agreement.
On October 1, 2019, we issued 2,119,728sold approximately 5.8 million shares of Companyour common stock for gross proceeds of $35 million to BDC Oil and Gas Holdings, LLC, an affiliate of Bechtel. The shares of Company common stock were issued in lieu of a cash payment of $15 million for amounts invoiced by Bechtel pursuant to the Trains 1 and 2 EPC Agreement.
As previously disclosed, Rio Grande and Bechtel completed a contract price refresh on the Trains 1 and 2 EPC Agreement and the Train 3 EPC Agreement resulting in no changes to the contract prices and such contract prices are now valid until December 31, 2021.
By amendment dated March 5, 2021, Rio Grande and Bechtel amended the Trains 1 and 2 EPC Agreement to extend the contract validity to July 31, 2022. By amendment dated March 5, 2021, Rio Grande and Bechtel amended the Train 3 EPC Agreement to extend the contract validity to July 31, 2022.
FERC Order for Terminal
On November 22, 2019, FERC issued an order authorizing the siting, construction and operation of the Terminal. Following receipt of the Final Order from FERC two requests for re-hearing were filed. One of those requests for rehearing also requested that the FERC stay its Final Order. On January 22, 2020, the FERC issued an order extending the time by which it would respond to these requests for rehearing. On January 23, 2020, the FERC issued its Order on Rehearing and Stay, by which FERC denied all re-hearings and requests for stay. The parties who filed the requests for re-hearing have petitioned the U.S. Court of Appeals for the District of Columbia to review the FERC Order and the FERC order denying rehearing, and that appeal is still pending. Similar appeals are also pending in the U.S. Court of Appeals for the Fifth Circuit in respect of other permits issued by the U.S. Army Corps of Engineers and the U.S. Fish and Wildlife Service.
Export of LNG to Non-FTA countries
On September 7, 2016, Rio Grande obtained an authorization for export of LNG to countries with which the U.S. has a FTA on our own behalf and as an agent for others for a term of 30 years. On February 10, 2020, the DOE issued an order granting authorization to export LNG from the Terminal to non-FTA countries.
Sale of Rio Bravo Pipeline Company, LLC
On March 2, 2020, NextDecade LLC closed the transactions (the “Closing”) contemplated by that certain Omnibus Agreement, dated February 13, 2020, with Buyer, pursuant to which NextDecade LLC sold one hundred percent of the Equity Interests in Rio Bravo to Buyer in consideration of approximately $19.4 million. Buyer paid $15.0 million of the purchase price to NextDecade LLC at the Closing and the remainder will be paid within five business days after the date that Rio Grande has received, after a final positive investment decision, the initial funding of financing for the development, construction and operation of the Terminal. In connection with the Closing, Rio Grande Gas Supply entered into (i) a Precedent Agreement for Firm Natural Gas Transportation Service for the Rio Bravo Pipeline (the “RBPL Precedent Agreement”) with Rio Bravo and (ii) a Precedent Agreement for Natural Gas Transportation Service (the “VCP Precedent Agreement”) with VCP. VCP and Rio Bravo are wholly owned subsidiaries of Enbridge. The Valley Crossing Pipeline is owned and operated by VCP.
Pursuant to the RBPL Precedent Agreement, Rio Bravo agreed to provide Rio Grande Gas Supply with firm natural gas transportation services on the Pipeline in a quantity sufficient to match the full operational capacity of each proposed liquefaction train of the Terminal. Rio Bravo’s obligation to construct, install, own, operate and maintain the Pipeline is conditioned on its receipt, no later than December 31, 2023, of notice that Rio Grande Gas Supply or its affiliate has issued a full notice to proceed to the engineering, procurement and construction contractor (the “EPC Contractor”) for the construction of the Terminal. Under the RBPL Precedent Agreement, in consideration for the provision of such firm transportation services, Rio Bravo will be remunerated on a dollar-per-dekatherm, take-or-pay basis, subject to certain adjustments, over a term of at least twenty years, all in compliance with the federal and state authorizations associated with the Pipeline.
Pursuant to the VCP Precedent Agreement, VCP agreed to provide Rio Grande Gas Supply with natural gas transportation services on the Valley Crossing Pipeline in a quantity sufficient to match the commissioning requirements of each proposed liquefaction train of the Terminal. VCP’s obligation to construct, install, own, operate and maintain the necessary interconnection to the Terminal and the Pipeline is conditioned on its receipt, no later than December 31, 2023, of notice that Rio Grande Gas Supply or its affiliate has issued a full notice to proceed to the EPC Contractor for the construction of the Terminal. VCP will be responsible, at its sole cost and expense, to construct, install, own, operate and maintain the tap, riser and valve facilities (the “VCP Transporter Facilities”), which shall connect to Rio Grande Gas Supply’s custody transfer meter and such other facilities as necessary in order for the Terminal to receive gas from the VCP Transporter Facilities (the “Rio Grande Gas Supply Facilities”). Rio Grande Gas Supply will be responsible, at its sole cost and expense, to construct, install, own, operate and maintain the Rio Grande Gas Supply Facilities. Under the VCP Precedent Agreement, in consideration for the provision of the commissioning transportation services, VCP will be remunerated on the same dollar-per-dekatherm, take-or-pay basis as set forth in the RBPL Precedent Agreement for the duration of such commissioning services, all in compliance with the federal and state authorizations associated with the Valley Crossing Pipeline.
If Rio Grande or its affiliate fail to issue a full notice to proceed to the EPC Contractor on or prior to December 31, 2023, Buyer has the right to sell the Equity Interests back to NextDecadeHGC NEXT INV LLC and NextDecade LLC has the right to repurchase the Equity Interests from Buyer, in each case at a price not to exceed $23 million.
Series C Convertible Preferred Stock Purchase Agreements
As previously disclosed,Ninteenth Investment Company.
For additional detailsFID under limited notices to proceed.
COVID-19 Pandemic30 and its EffectSeptember 30 each year, beginning on our Business
September 30, 2023.
Liquidity and Capital Resources
Capital Resources
We have funded
In October 2019, we sold an aggregate of 7,974,4825,835,277 shares of Company common stock at $6.27 per share for an aggregate purchase price of $50.0 million to Ninteenth Investment Company LLC.
$35.0 million.
SourcesNextDecade LLC and Uses of Cash
The following table summarizes the sources and uses of our cash for the periods presented (in thousands):
Year Ended | ||||||||
December 31, | ||||||||
2020 | 2019 | |||||||
Operating cash flows | $ | (26,253 | ) | $ | (40,700 | ) | ||
Investing cash flows | 18,521 | (16,693 | ) | |||||
Financing cash flows | 14,604 | 69,960 | ||||||
Net increase in cash and cash equivalents | 6,872 | 12,567 | ||||||
Cash and cash equivalents – beginning of period | 15,736 | 3,169 | ||||||
Cash and cash equivalents – end of period | $ | 22,608 | $ | 15,736 | ||||
Operating Cash Flows
Operating cash outflows during the years ended December 31, 2020 and 2019 were $26.3 million and $40.7 million, respectively. The decrease in operating cash outflows in 2020 compared to 2019 was primarilyits subsidiaries, including development costs related to the decrease in invitation to bid contract costsfourth liquefaction train and related common facilities at the Rio Grande LNG Facility.
Investing Cash Flows
Investing cash inflows during the year ended December 31, 2020 was $18.5 million and investing cash outflows during the year ended December 31, 2019 was $16.7 million. The investing cash inflows in 2020 were primarily the result of the sale of investment securities of $62.0 million partially offset by cash used in the development of the Terminal of $32.4 million and cash used in the acquisition of other assets of $10.9 million. The investing cash outflows in 2019 were the result of cash used in the development of the Terminal and the Pipeline of $27.2 million and a net redemption of $10.5 million in investment securities.
Financing Cash Flows
Financing cash inflows during the years ended December 31, 2020 and 2019 were $14.6 million and $70.0 million, respectively. Financing cash inflows in 2020 were primarily the result of proceeds from the sale of Rio Bravo of $15.0 million. Financing cash inflows in 2019 were the result of $71.0 million of proceeds from the issuance of preferred and common equity offset by $0.3 million of equity issuance costs and $0.7 million of shares repurchased related to share based compensation.
Pre-FID Liquidity
In 2020, we incurred approximately $67 million on pre-FID development activities in support of the Terminal. To preserve pre-FID liquidity, we have implemented certain measures to manage costs:
|
|
|
|
| NextDecade Corporation We |
|
|
We expect pre-FID development spending to average approximately $3 million per month through year-end 2021. We believe that the measures taken to manage costs will not negatively affect our ability to successfully deliver the Terminal and will create value for stockholders.
Capital Development Activities
We are primarily engaged in developing the Terminal, which may require additional capital to support further project development, engineering, regulatory approvals and compliance, and commercial activities in advance of a FID made to finance and construct the Terminal. Even if successfully completed, the Terminal will not begin to operate and generatereceive significant cash flows until at least several years from now. ConstructionPhase 1 of the Terminal would not beginRio Grande LNG Facility until among otherit is operational, and the commercial operation date for the first train of Phase 1 is expected to occur in late 2027 based on the schedule under the EPC contracts. Any future phases of development at the Rio Grande LNG Facility and CCS projects will similarly take an extended period of time to develop, construct and become operational and will require significant capital deployment.
We have engaged SG Americas Securities, LLC (a business unit of Société Générale) and Macquarie Capital (USA) Inc. to advise and assist us in raising capital for post-FID construction activities.
We currently expect that the long-term capital requirements for the Terminal will be financed predominately through project financing and proceeds from future debt, equity-based, and equity offerings by us. There can be no assurance that we will succeed in securing additional debt and/or equity financing in the future to fund future phases of development and construction at the Rio Grande LNG Facility or complete the Terminalany CCS projects or, if successful, that the capital we raise will not be expensive or dilutive to stockholders. Additionally, if these types of financing are not available, we will be required to seek alternative sources of financing, which may not be available on terms acceptable to us, if at all.
| Year Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Operating cash flows | $ | (73,620) | $ | (40,076) | |||||||
| Investing cash flows | (1,752,800) | (40,888) | |||||||||
| Financing cash flows | 2,058,109 | 118,201 | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 231,689 | 37,237 | |||||||||
| Cash and cash equivalents – beginning of period | 62,789 | 25,552 | |||||||||
| Cash, cash equivalents and restricted cash – end of period | $ | 294,478 | $ | 62,789 | |||||||
Total | 2021 | 2022-2023 | 2024-2025 | Thereafter | ||||||||||||||||
Operating lease obligations | $ | 2,685 | $ | 2,685 | $ | — | $ | — | $ | — | ||||||||||
| Other | 85 | 53 | 32 | — | — | |||||||||||||||
Total | $ | 2,770 | $ | 2,738 | $ | 32 | $ | — | $ | — | ||||||||||
2023:
| Total | 2024 | 2025-2026 | 2027-2028 | Thereafter | |||||||||||||||||||||||||
| Operating lease obligations | $ | 243,581 | $ | 8,029 | $ | 17,137 | $ | 19,174 | $ | 199,241 | |||||||||||||||||||
| Other | 2,800 | 2,800 | — | — | — | ||||||||||||||||||||||||
| Total | $ | 246,381 | $ | 10,829 | $ | 17,137 | $ | 19,174 | $ | 199,241 | |||||||||||||||||||
Texas and Singapore. A discussion of these obligations can be found at Note 6
—Year Ended | ||||||||||||
December 31, | ||||||||||||
2020 | 2019 | Change | ||||||||||
Revenues | $ | — | $ | — | $ | — | ||||||
General and administrative expenses | 20,213 | 22,548 | (2,335 | ) | ||||||||
Invitation to Bid Contract Costs | — | 10,163 | (10,163 | ) | ||||||||
Land option and lease expenses | 1,603 | 2,039 | (436 | ) | ||||||||
Depreciation expense | 196 | 251 | (55 | ) | ||||||||
Operating loss | (22,012 | ) | (35,001 | ) | 12,989 | |||||||
Gain (loss) on Common Stock Warrant Liabilities | 7,870 | (2,657 | ) | 10,527 | ||||||||
| Loss on redemption of investment securities | (412 | ) | — | (412 | ) | |||||||
Interest income, net | 243 | 1,718 | (1,475 | ) | ||||||||
Other | (18 | ) | 69 | (87 | ) | |||||||
Net loss attributable to NextDecade Corporation | (14,329 | ) | (35,871 | ) | 21,542 | |||||||
Preferred stock dividends | (14,327 | ) | (11,164 | ) | (3,163 | ) | ||||||
Deemed dividends on Series A Convertible Preferred Stock | (128 | ) | (1,517 | ) | 1,389 | |||||||
Net loss attributable to common stockholders | $ | (28,784 | ) | $ | (48,552 | ) | $ | 19,768 | ||||
| Year Ended December 31, | |||||||||||||||||
| 2023 | 2022 | Change | |||||||||||||||
| Revenues | $ | — | $ | — | $ | — | |||||||||||
| General and administrative expense | 111,468 | 49,093 | 62,375 | ||||||||||||||
| Development expense, net | 4,891 | 4,101 | 790 | ||||||||||||||
| Lease expense | 6,141 | 1,119 | 5,022 | ||||||||||||||
| Depreciation expense | 168 | 162 | 6 | ||||||||||||||
| Operating loss | (122,668) | (54,475) | (68,193) | ||||||||||||||
| Loss on common stock warrant liabilities | (1,879) | (5,747) | 3,868 | ||||||||||||||
| Derivative loss, net | (44,803) | — | (44,803) | ||||||||||||||
| Interest expense, net of capitalized interest | (50,285) | — | (50,285) | ||||||||||||||
| Loss on debt extinguishment | (9,531) | — | (9,531) | ||||||||||||||
| Other income, net | 7,526 | 151 | 7,375 | ||||||||||||||
| Net loss attributable to NextDecade Corporation | (221,640) | (60,071) | (161,569) | ||||||||||||||
| Less: net loss attributable to non-controlling interest | (59,379) | — | (59,379) | ||||||||||||||
| Less: preferred stock dividends | 20,484 | 24,282 | (3,798) | ||||||||||||||
| Net loss attributable to common stockholders | $ | (182,745) | $ | (84,353) | $ | (98,392) | |||||||||||
For the year ended December 31, 2020, there were no invitation to bid contract costs compared to approximately $10.2 million incurred during the year ended December 31, 2019. The decrease in invitation to bid contract costs is due to the conclusion of the competitive EPC bid process.
The gain on Common Stock Warrant Liabilities of approximately $7.9 million in 20202023 was primarily due to the recognition of compensation cost on restricted stock awards and units that vested at FID of Phase 1 of the Rio Grande LNG Facility. Employee costs and professional fees increased during 2023 as we prepared for and achieved a decrease inpositive FID on Phase 1 of the price of common stock from $6.14 per share at December 31, 2019 to $2.09 per share at December 31, 2020.
Interest income,Rio Grande LNG Facility.
Preferred stock dividends of $14.3 million in 2020 consisted of dividends paid-in-kind with the issuance of an additional 7,310 shares of Series A Preferred Stock and 6,967 additional shares of Series B Preferred Stock.
Deemed dividends on the Series A Preferred Stock fornon-controlling interest during the year ended December 31, 20202023 of $59.4 million is due to the sale of equity in Intermediate Holdings in July 2023 and December 31, 2019 represents the accretionnon-controlling interests share of the beneficial conversion feature associated with the Series A Preferred Stock issued in 2018.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2020.
Summary of Critical Accounting Estimates
Recent Accounting Standards
Recent Accounting StandardsThe Company does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our Consolidated Financial Statements or related disclosures.Item 7A. Quantitative and Qualitative Disclosures About Market RiskWe are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.2745
Item 8. Financial Statements and Supplementary DataIndex to Consolidated Financial StatementsNextDecade Corporation and SubsidiariesPage Supplemental Information to Consolidated Financial Statements – Summarized Quarterly Financial Data472846
matter Rio Grande LNG Intermediate Holdings, LLC under the variable interest entity model related to the purpose of the VIE, rights and obligations of the variable interest holders, mechanisms for the resolution of disputes among variable interest holders, and other executed agreements with the legal entity and its variable interest holders. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of Directors and StockholdersNextDecade CorporationOpinion on the financial statementsWe have audited the accompanying consolidated balance sheets of NextDecade Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 20202023 and 2019,2022, the related consolidated statements of operations, stockholders’ equity series A and series B convertible preferred stock, and cash flows for the years then ended, and the related notes (collectively(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Companyas of December 31, 20202023 and 2019,2022, and the results of itsoperations and itscash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.Going concernThe accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred operating losses since its inception and management expects operating losses and negative cash flows to continue for the foreseeable future. These conditions, along with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.Basis for opinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical audit mattersThe critical audit mattersmatter communicated below are mattersis a matter arising from the current period audit of the financial statements that werewas communicated or required to be communicated to the audit committee and that: (1) relaterelates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.Valuationit relates.Consolidation of common stock warrant liabilitiesAs described further in Note 10note 2 to the financial statements, when the Company had $4.2 million of common stock warrant liabilities as of December 31, 2020. At each balance sheet date,has a variable interest in another legal entity, management determinesevaluates whether that legal entity is within the estimated fair value of common stock warrant liabilities using a Monte Carlo valuation method. The following qualitative information is used by management to determine the fair value measurementscope of the common stock warrant liabilities: stock price, exercise price, risk-free rate, volatility,variable interest entity ("VIE") model and, if so, whether the warrants term in years, among other inputs.Company is the primary beneficiary of the VIE. Management consolidates a VIE if the Company's involvement indicates that it is the primary beneficiary. The Company is the primary beneficiary of a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. We identified the valuationconsolidation of common stock warrant liabilitiesRio Grande LNG Intermediate Holdings, LLC under the VIE model (“consolidation under the VIE model”) as a critical audit matter.47The principal considerations for our determination thatare (i) the valuation of common stock warrant liabilities is a critical audit matter are that (i) there was significant judgment by management when determining whether the estimated volatility, risk-free interest rate,Company is the primary beneficiary of the VIE based on whether the Company has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, and the expected life ofobligation to absorb losses or the common stock warrants,right to receive benefits that could potentially be significant to the VIE and (ii) the audita high degree of auditor judgment, subjectivity and effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures andwhen evaluating the audit evidence obtained from these procedures.Our audit procedures related to the valuation of common stock warrant liabilitiesconsolidation under the VIE model included the following, among others.others:•We compared the rights of each party to underlying executed legal documents and discussed with management the purpose and design of the VIE.•We evaluated management's analysis of significant activities of the VIE such as capital decisions, financing decisions and operating decisions, and which variable interest holder has the power to direct such activities. In our evaluation, we considered the purpose and design of the entity, the composition of the board of directors and other legal rights of the parties, including the significance of the decision-making rights of each party in assessing which party has power to direct the activities that most significantly affect the economic performance of the VIE, as well as the substance of the arrangements.•We tested the initial determination of non-controlling interests in Rio Grande LNG Intermediate Holdings, LLC, and the allocation of subsequent profits and losses in Rio Grande LNG Intermediate Holdings, LLC for controlling and non-controlling interest holders based on what the holders of these interests may legally claim at the end of each reporting period./s/ ●We testedhave served as the design of controls over the valuation of common stock warrant liabilities and gained an understanding of the valuation credentials and industry expertise of the third-party valuation group and valuation methodologies used.Company’s auditor since 2018.Houston, Texas ●March 11, 2024 We tested the schedule of fully dilutive shares used to value common stock warrants by confirming outstanding common stock with the third-party transfer agent and testing the conversion value of preferred stock and dividend issuances.●With the assistance of Grant Thornton internal valuation specialists, we tested management’s and the third-party’s process for determining the fair value of common stock warrants, including evaluating significant assumptions used, testing supporting documents, and assessing reasonableness by comparing to historical trends and industry expectations. Certain key inputs/assumptions tested by us included the following:oVolatilityoRisk-free interest rateoWarrant terms2948
Sale of Rio Bravo accounting treatment
As described further in Note 5 to the financial statements, on March 2, 2020, the Company completed the sale of Rio Bravo Pipeline Company, LLC (“Rio Bravo”) to Spectra Energy Transmission II, LLC, a wholly owned subsidiary of Enbridge, Inc ("Enbridge"). In connection with the closing of the sale, the Company entered into a precedent agreement where Rio Bravo agreed to provide the Company with firm natural gas transportation services on the proposed interstate natural gas pipeline in a quantity sufficient to match the full operational capacity of each proposed liquefaction train of the liquefied natural gas terminal. Additionally, if the Company fails to issue a full notice to proceed to the terminal contractor on or prior to December 31, 2023, Enbridge has the right to sell the equity interests back to the Company, and the Company has the right to repurchase the equity interests from Enbridge. Due to the aforementioned terms of the agreement, the proceeds from the sale of the equity interests and additional costs incurred by Enbridge are presented as a non-current liability and the assets of Rio Bravo have not been de-recognized in the consolidated balance sheet at December 31, 2020. We identified the sale of Rio Bravo accounting treatment as a critical audit matter.
The principal considerations for our determination that the sale of Rio Bravo accounting treatment is a critical audit matter are (i) the complexity of the terms of the sale agreement, (ii) the complexity and judgment involved in the determination of the applicable accounting authoritative guidance, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained from these procedures.
Our audit procedures related to the sale of Rio Bravo accounting treatment included the following, among others.
|
|
|
|
|
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2018.
Houston, Texas
March 25, 2021
NextDecade Corporation and Subsidiaries
December 31, | December 31, | |||||||
2020 | 2019 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 22,608 | $ | 15,736 | ||||
Investment securities | 0 | 62,207 | ||||||
Prepaid expenses and other current assets | 670 | 859 | ||||||
Total current assets | 23,278 | 78,802 | ||||||
Property, plant and equipment, net | 161,662 | 134,591 | ||||||
Operating lease right-of-use assets, net | 429 | 1,054 | ||||||
Other non current assets | 16,299 | 6,748 | ||||||
Total assets | $ | 201,668 | $ | 221,195 | ||||
Liabilities, Series A and Series B Convertible Preferred Stock and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 207 | $ | 11,912 | ||||
Share-based compensation liability | 182 | 182 | ||||||
Accrued liabilities and other current liabilities | 1,032 | 8,751 | ||||||
| Current Common Stock Warrant liabilities | 3,290 | 0 | ||||||
Current operating lease liabilities | 432 | 698 | ||||||
Total current liabilities | 5,143 | 21,543 | ||||||
Non-current Common Stock Warrant liabilities | 874 | 12,034 | ||||||
Non-current operating lease liabilities | 0 | 3 | ||||||
| Other non-current liabilities | 22,916 | 0 | ||||||
Total liabilities | 28,933 | 33,580 | ||||||
Commitments and contingencies (Note 14) | ||||||||
Series A Convertible Preferred Stock, $1,000 per share liquidation preference, Issued and outstanding: 65,507 shares and 58,197 shares at December 31, 2020 and December 31, 2019, respectively | 55,522 | 48,084 | ||||||
Series B Convertible Preferred Stock, $1,000 per share liquidation preference, Issued and outstanding: 62,612 shares and 55,645 shares at December 31, 2020 and December 31, 2019, respectively | 56,781 | 49,814 | ||||||
Stockholders’ equity | ||||||||
Common stock, $0.0001 par value Authorized: 480.0 million shares at December 31, 2020 and December 31, 2019, Issued and outstanding: 117.8 million shares and 117.3 million shares at December 31, 2020 and December 31, 2019, respectively | 12 | 12 | ||||||
Treasury stock: 249,742 shares and 137,860 shares at December 31, 2020 and December 31, 2019, respectively, at cost | (1,031 | ) | (685 | ) | ||||
Preferred stock, $0.0001 par value Authorized: 0.9 million, after designation of the Series A and Series B Convertible Preferred Stock, Issued and outstanding: none at December 31, 2020 and December 31, 2019 | 0 | 0 | ||||||
Additional paid-in-capital | 209,481 | 224,091 | ||||||
Accumulated deficit | (148,030 | ) | (133,701 | ) | ||||
Total stockholders’ equity | 60,432 | 89,717 | ||||||
Total liabilities, Series A and Series B Convertible Preferred Stock and stockholders’ equity | $ | 201,668 | $ | 221,195 | ||||
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 38,241 | $ | 62,789 | |||||||
| Restricted cash | 256,237 | — | |||||||||
| Derivative asset | 17,958 | — | |||||||||
| Prepaid expenses and other current assets | 2,089 | 1,149 | |||||||||
| Total current assets | 314,525 | 63,938 | |||||||||
| Property, plant and equipment, net | 2,437,733 | 218,646 | |||||||||
| Operating lease right-of-use assets | 170,827 | 1,474 | |||||||||
| Debt issuance costs | 389,695 | — | |||||||||
| Other non-current assets | 11,021 | 28,372 | |||||||||
| Total assets | $ | 3,323,801 | $ | 312,430 | |||||||
| Liabilities, Convertible Preferred Stock and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 243,129 | $ | 1,084 | |||||||
| Accrued and other current liabilities | 299,264 | 23,184 | |||||||||
| Common stock warrant liabilities | 6,851 | — | |||||||||
| Operating lease liabilities | 3,143 | 1,093 | |||||||||
| Total current liabilities | 552,387 | 25,361 | |||||||||
| Common stock warrant liabilities | 1,818 | 6,790 | |||||||||
| Operating lease liabilities | 145,962 | 465 | |||||||||
| Derivative liability | 66,899 | — | |||||||||
| Debt, net | 1,816,301 | — | |||||||||
| Other non-current liabilities | — | 23,000 | |||||||||
| Total liabilities | 2,583,367 | 55,616 | |||||||||
| Commitments and contingencies (Note 16) | |||||||||||
| Series A-C convertible preferred stock (Note 10) | — | 202,443 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock, $0.0001 par value, 480.0 million authorized: 256.5 million and 143.5 million outstanding, respectively | 26 | 14 | |||||||||
| Treasury stock: 2.2 million and 1.0 million respectively, at cost | (14,214) | (4,587) | |||||||||
| Preferred stock, $0.0001 par value, 0.5 million authorized after designation of the convertible preferred stock: none outstanding | — | — | |||||||||
| Additional paid-in-capital | 693,883 | 289,084 | |||||||||
| Accumulated deficit | (391,772) | (230,140) | |||||||||
| Total stockholders' equity | 287,923 | 54,371 | |||||||||
| Non-controlling interest | 452,511 | — | |||||||||
| Total equity | 740,434 | 54,371 | |||||||||
| Total liabilities, convertible preferred stock and stockholders’ equity | $ | 3,323,801 | $ | 312,430 | |||||||
NextDecade Corporation and Subsidiaries
Year Ended | ||||||||
December 31, | ||||||||
2020 | 2019 | |||||||
Revenues | $ | 0 | $ | 0 | ||||
Operating Expenses | ||||||||
General and administrative expenses | 20,213 | 22,548 | ||||||
Invitation to Bid Contract Costs | 0 | 10,163 | ||||||
Land option and lease expenses | 1,603 | 2,039 | ||||||
Depreciation expense | 196 | 251 | ||||||
Total operating expenses | 22,012 | 35,001 | ||||||
Total operating loss | (22,012 | ) | (35,001 | ) | ||||
Other income (expense) | ||||||||
Gain (loss) on Common Stock Warrant liabilities | 7,870 | (2,657 | ) | |||||
| Loss on redemption of investment securities | (412 | ) | 0 | |||||
Interest income, net | 243 | 1,718 | ||||||
Other | (18 | ) | 69 | |||||
Total other income | 7,683 | (870 | ) | |||||
Net loss attributable to NextDecade Corporation | (14,329 | ) | (35,871 | ) | ||||
Preferred stock dividends | (14,327 | ) | (11,164 | ) | ||||
Deemed dividends on Series A Convertible Preferred Stock | (128 | ) | (1,517 | ) | ||||
Net loss attributable to common stockholders | $ | (28,784 | ) | $ | (48,552 | ) | ||
| Net loss per common share - basic and diluted | $ | (0.24 | ) | $ | (0.45 | ) | ||
Weighted average shares outstanding - basic and diluted | 117,524 | 109,057 | ||||||
| Year Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Revenues | $ | — | $ | — | |||||||
| Operating expenses: | |||||||||||
| General and administrative expense | 111,468 | 49,093 | |||||||||
| Development expense, net | 4,891 | 4,101 | |||||||||
| Lease expense | 6,141 | 1,119 | |||||||||
| Depreciation expense | 168 | 162 | |||||||||
| Total operating expenses | 122,668 | 54,475 | |||||||||
| Total operating loss | (122,668) | (54,475) | |||||||||
| Other income (expense): | |||||||||||
| Loss on common stock warrant liabilities | (1,879) | (5,747) | |||||||||
| Derivative loss, net | (44,803) | — | |||||||||
| Interest expense, net of capitalized interest | (50,285) | — | |||||||||
| Loss on debt extinguishment | (9,531) | — | |||||||||
| Other income, net | 7,526 | 151 | |||||||||
| Total other expense | (98,972) | (5,596) | |||||||||
| Net loss attributable to NextDecade Corporation | (221,640) | (60,071) | |||||||||
| Less: net loss attributable to non-controlling interest | (59,379) | — | |||||||||
| Less: preferred stock dividends | 20,484 | 24,282 | |||||||||
| Net loss attributable to common stockholders | $ | (182,745) | $ | (84,353) | |||||||
| Net loss per common share - basic & diluted | $ | (0.94) | $ | (0.65) | |||||||
| Weighted average shares outstanding - basic & diluted | 194,595 | 130,136 | |||||||||
NextDecade Corporation and Subsidiaries
| Common Stock | Treasury Stock | |||||||||||||||||||||||||||||||||||
| Par | Additional | Total | Series A | Series B | ||||||||||||||||||||||||||||||||
| Value | Paid-in | Accumulated | Stockholders’ | Convertible | Convertible | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | Preferred Stock | Preferred Stock | ||||||||||||||||||||||||||||
Balance at January 1, 2019 | 106,856 | $ | 11 | 6 | $ | (35 | ) | $ | 180,862 | $ | (97,617 | ) | $ | 83,221 | $ | 40,091 | $ | 26,159 | ||||||||||||||||||
Adoption of ASC Topic 842 | 0 | 0 | 0 | 0 | 0 | (213 | ) | (213 | ) | 0 | 0 | |||||||||||||||||||||||||
Adoption of ASU 2018-07 | 0 | 0 | 0 | 0 | 2,116 | 0 | 2,116 | 0 | 0 | |||||||||||||||||||||||||||
Share-based compensation | — | 0 | — | 0 | (8,525 | ) | 0 | (8,525 | ) | 0 | 0 | |||||||||||||||||||||||||
Restricted stock vesting | 510 | 0 | 0 | 0 | 495 | 0 | 495 | 0 | 0 | |||||||||||||||||||||||||||
Issuance of common stock net of equity issuance costs | 10,094 | 1 | 0 | 0 | 61,824 | 0 | 61,825 | 0 | 0 | |||||||||||||||||||||||||||
Shares repurchased related to share-based compensation | (131 | ) | 0 | 131 | (650 | ) | 0 | 0 | (650 | ) | 0 | 0 | ||||||||||||||||||||||||
Issuance of Series B preferred stock | — | 0 | — | 0 | 0 | 0 | 0 | 0 | 19,009 | |||||||||||||||||||||||||||
Preferred stock dividends | — | 0 | — | 0 | (11,164 | ) | 0 | (11,164 | ) | 6,476 | 4,646 | |||||||||||||||||||||||||
Deemed dividends - accretion of beneficial conversion feature | — | 0 | — | 0 | (1,517 | ) | 0 | (1,517 | ) | 1,517 | 0 | |||||||||||||||||||||||||
Net Loss | — | 0 | — | 0 | 0 | (35,871 | ) | (35,871 | ) | 0 | 0 | |||||||||||||||||||||||||
Balance at December 31, 2019 | 117,329 | $ | 12 | 137 | $ | (685 | ) | $ | 224,091 | $ | (133,701 | ) | $ | 89,717 | $ | 48,084 | $ | 49,814 | ||||||||||||||||||
Share-based compensation | — | 0 | — | 0 | (155 | ) | 0 | (155 | ) | 0 | 0 | |||||||||||||||||||||||||
Restricted stock vesting | 612 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Shares repurchased related to share-based compensation | (112 | ) | 0 | 112 | (346 | ) | 0 | 0 | (346 | ) | 0 | 0 | ||||||||||||||||||||||||
Preferred stock dividends | — | 0 | — | 0 | (14,327 | ) | 0 | (14,327 | ) | 7,310 | 6,967 | |||||||||||||||||||||||||
Deemed dividends - accretion of beneficial conversion feature | — | 0 | — | 0 | (128 | ) | 0 | (128 | ) | 128 | 0 | |||||||||||||||||||||||||
Net Loss | — | 0 | — | 0 | 0 | (14,329 | ) | (14,329 | ) | 0 | 0 | |||||||||||||||||||||||||
Balance at December 31, 2020 | 117,829 | $ | 12 | 249 | $ | (1,031 | ) | $ | 209,481 | $ | (148,030 | ) | $ | 60,432 | $ | 55,522 | $ | 56,781 | ||||||||||||||||||
| Year Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Total stockholders' equity, beginning balances | $ | 54,371 | $ | 19,892 | |||||||
| Common stock: | |||||||||||
| Beginning balances | 14 | 12 | |||||||||
| Issuance of common stock | 6 | 2 | |||||||||
| Preferred stock conversion | 6 | — | |||||||||
| Ending balances | 26 | 14 | |||||||||
| Treasury Stock: | |||||||||||
| Beginning balance | (4,587) | (1,315) | |||||||||
| Shares repurchased related to share-based compensation | (9,627) | (3,272) | |||||||||
| Ending balance | (14,214) | (4,587) | |||||||||
| Additional paid-in-capital: | |||||||||||
| Beginning balances | 289,084 | 191,264 | |||||||||
| Share-based compensation | 26,600 | 7,472 | |||||||||
| Issuance of common stock, net | 254,394 | 111,066 | |||||||||
| Sale of equity in subsidiary | (78,579) | — | |||||||||
| Exercise of common stock warrants | — | 3,564 | |||||||||
| Preferred stock dividends | (20,484) | (24,282) | |||||||||
| Preferred stock conversion | 222,868 | — | |||||||||
| Ending balances | 693,883 | 289,084 | |||||||||
| Accumulated deficit: | |||||||||||
| Beginning balances | (230,140) | (170,069) | |||||||||
| Subsidiary deconsolidation due to sale | 629 | — | |||||||||
| Net loss | (162,261) | (60,071) | |||||||||
| Ending balances | (391,772) | (230,140) | |||||||||
| Total stockholders' equity | 287,923 | 54,371 | |||||||||
| Non-controlling interest: | |||||||||||
| Beginning balance | — | — | |||||||||
| Sale of equity in subsidiary | 511,890 | — | |||||||||
| Net loss | (59,379) | — | |||||||||
| Ending balance | 452,511 | — | |||||||||
| Total equity, ending balances | $ | 740,434 | $ | 54,371 | |||||||
| Preferred Stock, Series A-C: | |||||||||||
| Beginning balance | $ | 202,443 | $ | 168,400 | |||||||
| Preferred stock dividends | 20,431 | 24,207 | |||||||||
| Preferred stock conversion | (222,874) | — | |||||||||
| Issuance of preferred stock | — | 9,836 | |||||||||
| Ending balance | $ | — | $ | 202,443 | |||||||
NextDecade Corporation and Subsidiaries
Year Ended | ||||||||
December 31, | ||||||||
2020 | 2019 | |||||||
Operating activities: | ||||||||
Net loss attributable to NextDecade Corporation | $ | (14,329 | ) | $ | (35,871 | ) | ||
Adjustment to reconcile net loss to net cash used in operating activities | ||||||||
Depreciation | 196 | 251 | ||||||
Share-based compensation expense | (341 | ) | (9,646 | ) | ||||
(Gain) loss on Common Stock Warrant liabilities | (7,870 | ) | 2,657 | |||||
Gain on investment securities | 0 | (100 | ) | |||||
| Realized loss (gain) on investment securities | 423 | (138 | ) | |||||
| Amortization of right-of-use assets | 1,230 | 955 | ||||||
| Amortization of other non-current assets | 1,360 | 127 | ||||||
| Changes in operating assets and liabilities: | ||||||||
Prepaid expenses | 191 | 573 | ||||||
Accounts payable | (370 | ) | 207 | |||||
| Operating lease liabilities | (874 | ) | (1,624 | ) | ||||
Accrued expenses and other liabilities | (5,869 | ) | 1,909 | |||||
Net cash used in operating activities | (26,253 | ) | (40,700 | ) | ||||
Investing activities: | ||||||||
Acquisition of property, plant and equipment | (32,352 | ) | (20,303 | ) | ||||
| Acquisition of other non-current assets | (10,911 | ) | (6,875 | ) | ||||
Proceeds from sale of investment securities | 61,972 | 77,000 | ||||||
Purchase of investment securities | (188 | ) | (66,515 | ) | ||||
Net cash provided by (used in) investing activities | 18,521 | (16,693 | ) | |||||
Financing activities: | ||||||||
| Proceeds from sale of Rio Bravo Pipeline Company, LLC | 15,000 | 0 | ||||||
Proceeds from equity issuance | 0 | 70,945 | ||||||
| Preferred stock dividends | (50 | ) | (42 | ) | ||||
Equity issuance costs | 0 | (293 | ) | |||||
Shares repurchased related to share-based compensation | (346 | ) | (650 | ) | ||||
Net cash provided by financing activities | 14,604 | 69,960 | ||||||
Net increase in cash and cash equivalents | 6,872 | 12,567 | ||||||
Cash and cash equivalents – beginning of period | 15,736 | 3,169 | ||||||
Cash and cash equivalents – end of period | $ | 22,608 | $ | 15,736 | ||||
Non-cash investing activities: | ||||||||
Accounts payable for acquisition of property, plant and equipment | $ | 16 | $ | 11,351 | ||||
Accrued liabilities for acquisition of property, plant and equipment | 650 | 2,503 | ||||||
| Pipeline assets obtained in exchange for other non-current liabilities | 7,916 | 0 | ||||||
| Common stock issued in lieu of cash | 0 | 12,082 | ||||||
Non-cash financing activities: | ||||||||
Paid-in-kind dividends on Series A Convertible Preferred Stock | 14,277 | 11,122 | ||||||
Accretion of deemed dividends on Series A Convertible Preferred Stock | 128 | 1,517 | ||||||
| Year Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Operating activities: | |||||||||||
| Net loss attributable to NextDecade Corporation | $ | (221,640) | $ | (60,071) | |||||||
| Adjustment to reconcile net loss to net cash used in operating activities | |||||||||||
| Depreciation | 168 | 162 | |||||||||
| Share-based compensation expense | 26,553 | 7,472 | |||||||||
| Loss on common stock warrant liabilities | 1,879 | 5,747 | |||||||||
| Derivative loss, net | 44,803 | — | |||||||||
| Net cash provided by settlement of derivative instruments | 4,138 | — | |||||||||
| Amortization of right-of-use assets | 2,980 | 756 | |||||||||
| Gain on sale of assets | (5,712) | — | |||||||||
| Amortization of debt issuance costs | 41,390 | — | |||||||||
| Loss on debt extinguishment | 9,531 | — | |||||||||
| Interest expense | 26,432 | — | |||||||||
| Amortization of other non-current assets | — | 354 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Prepaid expenses and other current assets | (940) | (314) | |||||||||
| Accounts payable | 4,057 | 684 | |||||||||
| Operating lease liabilities | (179) | (678) | |||||||||
| Accrued expenses and other liabilities | (7,080) | 5,812 | |||||||||
| Net cash used in operating activities | (73,620) | (40,076) | |||||||||
| Investing activities: | |||||||||||
| Acquisition of property, plant and equipment | (1,737,636) | (33,753) | |||||||||
| Acquisition of other non-current assets | (15,164) | (7,135) | |||||||||
| Net cash used in investing activities | (1,752,800) | (40,888) | |||||||||
| Financing activities: | |||||||||||
| Proceeds from debt issuance | 2,083,000 | — | |||||||||
| Proceeds from sale of equity in subsidiaries | 457,659 | — | |||||||||
| Proceeds from sale of preferred stock | — | 10,500 | |||||||||
| Proceeds from sale of common stock | 254,400 | 115,000 | |||||||||
| Repayment of debt | (233,000) | — | |||||||||
| Debt and equity issuance costs | (494,270) | (3,952) | |||||||||
| Preferred stock dividends | (53) | (75) | |||||||||
| Shares repurchased related to share-based compensation | (9,627) | (3,272) | |||||||||
| Net cash provided by financing activities | 2,058,109 | 118,201 | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 231,689 | 37,237 | |||||||||
| Cash, cash equivalents and restricted cash – beginning of period | 62,789 | 25,552 | |||||||||
| Cash, cash equivalents and restricted cash – end of period | $ | 294,478 | $ | 62,789 | |||||||
| Balance per Consolidated Balance Sheet: | |||||||||||
| December 31, 2023 | |||||||||||
| Cash and cash equivalents | $ | 38,241 | |||||||||
| Restricted cash | 256,237 | ||||||||||
| Total cash, cash equivalents and restricted cash | $ | 294,478 | |||||||||
NextDecade Corporation and SubsidiariesNotes to Consolidated Financial Statements
PresentationNote 1 — Background and Basis of PresentationNextDecade Corporation engages(“we” or the “Company”) is primarily engaged in construction and development activities related to the liquefaction of natural gas and sale of liquefied natural gas (“LNG”) and the capture and storage of CO2 emissions. We are constructing and developing a natural gas liquefaction and export facility located in the Rio Grande Valley in Brownsville, Texas (the “Rio Grande LNG Facility”), which currently has three liquefaction trains and related infrastructure under construction (“Phase 1”). We have focused and continue to focus our development activitiesConstruction commenced on Phase 1 of the Rio Grande LNG terminal facilityFacility in July 2023, following a positive final investment decision (“FID”) and the closing of project financing by our subsidiary, Rio Grande LNG, LLC (“Rio Grande”). The Rio Grande LNG Facility has received Federal Energy Regulatory Commission approval and Department of Energy FTA and non-FTA authorizations for the construction of up to five liquefaction trains and LNG exports totaling 27 million tonnes per annum (“MTPA”). We are also developing liquefaction trains 4 and 5 at the PortRio Grande LNG Facility, a planned carbon capture and storage (“CCS”) project at the Rio Grande LNG Facility, and other potential CCS projects that would be located at third-party industrial source facilities.Basis of Brownsville in southern Texas (the “Terminal”). Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation.Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on the Company's financial position, results of operations or cash flows.
The Company has incurred operating losses since its inception and management expects operating losses and negative cash flows to continue until the commencement of operations at the Rio Grande LNG Facility and, as a result, the Company will require additional capital to fund its operations and execute its business plan. As of December 31, 2023, the Company had $38.2 million in cash and cash equivalents, which may not be sufficient to fund the Company's planned operations and development activities for future phases of the Rio Grande LNG Facility and CCS projects through one year after the date the consolidated financial statements are issued. Accordingly, there is substantial doubt about the Company's ability to continue as a going concern. The analysis used to determine the Company's ability to continue as a going concern does not include cash sources outside of the Company's direct control that management expects to be available within the next twelve months.The Company plans to alleviate the going concern issue by obtaining sufficient funding through additional equity, equity-based or debt instruments, or any other means, and by managing certain operating and overhead costs. The Company's ability to raise additional capital in the equity and debt markets, should the Company choose to do so, is dependent on a number of factors, including, but not limited to, the market demand for the Company's equity or debt securities, which itself is subject to a number of business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are satisfactory to the Company. In the event the Company is unable to obtain sufficient additional funding, there can be no assurance that it will be able to continue as a going concern.These consolidated financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event the Company can no longer continue as a going concern.Note 2— Summary of Significant Accounting PoliciesVariable Interest Entities (“VIEs”)The Company makes a determination at the inception of each arrangement whether an entity in which the Company has made an investment, sold equity in a subsidiary or in which it has other variable interests is considered a VIE. Generally, an entity is a VIE if either (1) the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, (2) the entity's investors lack any characteristics of a controlling financial interest or (3) the entity was established with non-substantive voting rights.The Company consolidates VIEs when it is deemed to be the primary beneficiary. The primary beneficiary of a VIE is generally the party that has the power to make decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits that in either case, could be potentially significant to the VIE. If the Company is not deemed to be the primary beneficiary of a VIE, the Company accounts for the investment or other variable interests in a VIE in accordance with other applicable GAAP.53NextDecade CorporationNotes to Consolidated Financial StatementsNon-controlling interestsWhen the Company consolidates an entity, 100% of the assets, liabilities, revenues and expenses of the entity are included in the Company's Consolidated Financial Statements. For those consolidated entities in which the Company owns less than 100%, the Company records a non-controlling interest as a component of equity in the Consolidated Balance Sheets, which represent the third party ownership in the net assets of the respective consolidated subsidiary. Additionally, the portion of the net income or loss attributable to the non-controlling interest is reported as net loss attributable to non-controlling interest on the Consolidated Statements of Operations. Changes in the Company's ownership interests in an entity that do not result in deconsolidation are generally recognized within equity.Use of EstimatesThe preparation of Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to the value of property, plant and equipment, income taxes including valuation allowances for net deferred tax assets, share-based compensation and fair value measurements. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.Concentrations of Credit RiskFinancial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents. We maintain cash and cash equivalent balances with a single financial institution, which may at times be in excess of federally insured levels. We have not incurred losses related to these cash and cash equivalent balances to date.35
Cash Equivalents
Investment Securities
We define investment securities as investments in marketable securities
Balance Sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share.
Note 3 — Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
December 31, | December 31, | |||||||
2020 | 2019 | |||||||
Prepaid subscriptions | $ | 29 | $ | 161 | ||||
Prepaid insurance | 314 | 292 | ||||||
Prepaid marketing and sponsorships | 60 | 25 | ||||||
Other | 267 | 381 | ||||||
Total prepaid expenses and other current assets | $ | 670 | $ | 859 | ||||
Note 4 — Investment Securities
We previously invested in Class L shares of the JPMorgan Managed Income Fund. In March 2020, we redeemed the balance of the JPMorgan Managed Income Fund and realized a loss of $0.4 million.
Investment securities are included in Level 1 of the fair value hierarchy and consisted of the following (in thousands):
December 31, | December 31, | |||||||||||||||
2020 | 2019 | |||||||||||||||
Fair value | Cost | Fair value | Cost | |||||||||||||
JPMorgan Managed Income Fund | $ | 0 | $ | 0 | $ | 62,207 | $ | 6,278 | ||||||||
Note 5 — Sale of Equity Interests in Rio Bravo Pipeline
On March 2, 2020, NextDecade LLC closed the transactions (the “Closing”) contemplated by that certain Omnibus Agreement, dated February 13, 2020, with Spectra Energy Transmission II, LLC, a wholly owned subsidiary of Enbridge Inc. (“Buyer”), pursuant to which NextDecade LLC sold 100 percent of theits’ equity interests (the “Equity Interests”) in Rio Bravo Pipeline Company, LLC (“Rio Bravo”) to Buyera third party for consideration of approximately $19.4 million. Buyer paid $15.0 millionUnder the terms of the purchase price to NextDecade LLC atagreement, if the Closing and the remainder will be paid within five business days after the date that Rio Grande has received, after a final positive investment decision, the initial funding of financing for the development, construction and operation of the Terminal. In connection with the Closing, Rio Grande LNG Gas Supply LLC, an indirect wholly-owned subsidiary of the Company (“Rio Grande Gas Supply”), entered into (i) a Precedent Agreement for Firm Natural Gas Transportation Service for the Rio Bravo Pipeline (the “RBPL Precedent Agreement”) with Rio Bravo and (ii) a Precedent Agreement for Natural Gas Transportation Service (the “VCP Precedent Agreement”) with Valley Crossing Pipeline, LLC (“VCP”). VCP and, as of the Closing, Rio Bravo are wholly owned subsidiaries of Enbridge Inc. The Valley Crossing Pipeline is owned and operated by VCP.
Pursuant to the RBPL Precedent Agreement, Rio Bravo agreed to provide Rio Grande Gas Supply with firm natural gas transportation services on the Pipeline in a quantity sufficient to match the full operational capacity of each proposed liquefaction train of the Terminal. Rio Bravo’s obligation to construct, install, own, operate and maintain the Pipeline is conditioned on its receipt, no later than December 31, 2023, of notice that Rio Grande Gas Supply or its affiliate has issued a full notice to proceed to the engineering, procurement and construction contractor (the “EPC Contractor”) for the construction of the Terminal. Under the RBPL Precedent Agreement, in consideration for the provision of such firm transportation services, Rio Bravo will be remunerated on a dollar-per-dekatherm, take-or-pay basis, subject to certain adjustments, over a term of at least twenty years, all in compliance with the federal and state authorizations associated with the Pipeline.
Pursuant to the VCP Precedent Agreement, VCP agreed to provide Rio Grande Gas Supply with natural gas transportation services on the Valley Crossing Pipeline in a quantity sufficient to match the commissioning requirements of each proposed liquefaction train of the Terminal. VCP’s obligation to construct, install, own, operate and maintain the necessary interconnection to the Terminal and the Pipeline is conditioned on its receipt, no later than December 31, 2023, of notice that Rio Grande Gas Supply or its affiliate has issued a full notice to proceed to the EPC Contractor for the construction of the Terminal. VCP will be responsible, at its sole cost and expense, to construct, install, own, operate and maintain the tap, riser and valve facilities (the “VCP Transporter Facilities”), which shall connect to Rio Grande Gas Supply’s custody transfer meter and such other facilities as necessary in order for the Terminal to receive gas from the VCP Transporter Facilities (the “Rio Grande Gas Supply Facilities”). Rio Grande Gas Supply will be responsible, at its sole cost and expense, to construct, install, own, operate and maintain the Rio Grande Gas Supply Facilities. Under the VCP Precedent Agreement, in consideration for the provision of the commissioning transportation services, VCP will be remunerated on the same dollar-per-dekatherm, take-or-pay basis as set forth in the RBPL Precedent Agreement for the duration of such commissioning services, all in compliance with the federal and state authorizations associated with the Valley Crossing Pipeline.
If Rio Grande or its affiliate failfailed to issue a full notice to proceed to theits’ EPC Contractor on orcontractor prior to December 31, 2023, Buyer has2024, the purchaser had the right to sell the Equity Interestsequity interests back to NextDecade LLCthe Company and NextDecade LLC hasthe Company had the right to repurchase the Equity Interestsequity interests from Buyer,Buyer.
Note 64 — Property, Plant and Equipment
December 31, | December 31, | |||||||
2020 | 2019 | |||||||
Fixed Assets | ||||||||
Computers | $ | 487 | $ | 487 | ||||
Furniture, fixtures, and equipment | 464 | 471 | ||||||
Leasehold improvements | 101 | 547 | ||||||
Total fixed assets | 1,052 | 1,505 | ||||||
Less: accumulated depreciation | (660 | ) | (793 | ) | ||||
Total fixed assets, net | 392 | 712 | ||||||
Terminal and Pipeline Assets (not placed in service) | ||||||||
Terminal | 140,253 | 121,081 | ||||||
Pipeline | 21,017 | 12,798 | ||||||
Total Terminal and Pipeline assets | 161,270 | 133,879 | ||||||
Total property, plant and equipment, net | $ | 161,662 | $ | 134,591 | ||||
Depreciation expense for the years ended December 31, 2020 and 2019 was $196 thousand and $251 thousand, respectively.
| December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Rio Grande LNG Facility (not placed in service) | $ | 2,431,389 | $ | 197,144 | |||||||
| Rio Bravo pipeline (not placed in service) | — | 21,017 | |||||||||
| Corporate and other | 7,518 | 1,491 | |||||||||
| Total property, plant and equipment, at cost | 2,438,907 | 219,652 | |||||||||
| Less: accumulated depreciation | (1,174) | (1,006) | |||||||||
| Total property, plant and equipment, net | $ | 2,437,733 | $ | 218,646 | |||||||
Note 75 — LeasesWe currently lease approximately 25,600 square feet of office space for general and administrative purposes in Houston, Texas under a lease agreement that expires on September 30, 2021.On March 6, 2019, DerivativesIn July 2023, Rio Grande entered into interest rate swaps agreements (the “Swaps”) to protect against interest rate volatility by hedging a lease agreement (the “Rio Grande Site Lease”)portion of the floating-rate interest payments associated with the Brownsville Navigation Districtcredit facilities described in Note 9 — Debt. As of Cameron County, Texas (“BND”) pursuantDecember 31, 2023, Rio Grande has the following Swaps outstanding (in thousands):Initial Notional Amount Maximum Notional Amount Maturity Weighted Average Fixed Interest Rate Paid Variable Interest Rate Received $ 123,000 $ 8,500,000 July 12, 2030 3.4 % USD - SOFR The Swaps are not designated as cash flow hedging instruments, and changes in fair value are recorded within our Consolidated Statements of Operations.The Company values the Swaps using an income-based approach based on observable inputs to whichthe valuation model including interest rate curves, risk adjusted discount rates, credit spreads and other relevant data. The fair value of the Swaps is approximately $48.9 million as of December 31, 2023, and is classified as Level 2 in the fair value hierarchy.57NextDecade CorporationNotes to Consolidated Financial StatementsNote 6 — LeasesThe Company commenced the Rio Grande LNG Facility site lease on July 12, 2023 and it has agreed to lease approximately 984 acres of land situated in Brownsville, Cameron County, Texas for the purposes of constructing, operating, and maintaining the Terminal and gas treatment and gas pipeline facilities.Thean initial term of the Rio Grande Site Lease is for 30 years (the “Primary Term”), which will commence on the date specified in a written notice by Rio Grande to BND (the “Effective Date Notice”), if given, confirming that Rio Grande or a Rio Grande affiliate has made a positive FID for the first phase of the Terminal. Under the Rio Grande Site Lease, the Effective Date Notice was to be delivered no later than November 6, 2019 (the “Outside Effective Date”) unless Rio Grande was unable to deliver the Effective Date Notice prior to the Outside Effective Date due to reasons unrelated to its own acts or omissions or its inability to secure one or more of the required permits for the Terminal. In such a case, the Outside Effective Date would be automatically extended on a month-to-month basis (the “Effective Date Notice Extension Period”). Rio Grandeyears. The Company has the option to renew and extend the term of the Rio Grande Site Lease beyond the Primary Termlease for up to two consecutive renewal periods of ten years each, provided that Rio Grande has not caused an event of default under the Rio Grande Site Lease. On April 30, 2020, Rio Grande and the BND amended the Rio Grande Site Lease (the “Rio Grande Site Lease Amendment”) to extend the effective date for commencing the Rio Grande Site Lease to May 6, 2021 (the “Effective Date”). The Rio Grande Site Lease Amendment further provides that Rio Grande has the right, exercisable in its sole discretion, to extend the Effective Date to May 6, 2022 by providing the BND with written notice of its election no later than the close of business on the Effective Date.In January 2017, NextDecade LLC executed surface lease agreements with the City of Texas City and the State of Texas for a 994-acre site for a potential second U.S. LNG project (collectively, the “Galveston Bay Leases”). The term of the Galveston Bay Leases is 36 months with an option to extend for an additional 12 months. Such option was included in the measurement of Operating lease right-of-use assets and Operating lease liabilities and was exercised in the fourth quarter of 2019. The Galveston Bay Leases were not renewed upon expiration on December 31, 2020.In adopting Topic 842,but as the Company has elected the “packageis not reasonably certain that those options will be exercised, none are recognized as part of practical expedients,” which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected the use-of-hindsight and the practical expedient pertaining to land easements. The Company elected not to apply Topic 842 to arrangements with original lease termsour right of 12 months or less. At lease commencement date, the Company estimated the lease liability and the right-of-use assets at present value, at inception, of $2.3 million. On January 1, 2019, upon adoption of Topic 842, the Company recorded right-of-use assets of $1.6 million, lease liabilities of $1.9 million, eliminated deferred rent of $0.1 million and recorded a cumulative-effect adjustment of $0.2 million.The Company determines if a contractual arrangement represents or contains a lease at inception. Operating leases with lease terms greater than twelve months are included in Operating lease right-of-use assets and Operating lease liabilities in the Consolidated Balance Sheets. Operating lease right-of-useuse assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. The Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The right-of-use assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.liabilities. The Company has also entered into an office space lease arrangements thatwhich expires on December 31, 2035, and does not include bothany options for renewal.For the years ended December 31, 2023 and 2022, our operating lease costs were $6.1 million and non-lease components. The Company accounts for non-lease components separately from the lease component.$1.1 million, respectively.39
Operating lease right-of-use assets are as follows (in thousands):
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
Office leases | $ | 429 | $ | 610 | ||||
Land leases | 0 | 444 | ||||||
Total operating lease right-of-use assets, net | $ | 429 | $ | 1,054 |
Operating lease liabilities are as follows (in thousands):
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
Office leases | $ | 432 | $ | 698 | ||||
Land leases | 0 | 0 | ||||||
Total current lease liabilities | 432 | 698 | ||||||
Non-current office leases | 0 | 3 | ||||||
Non-current land leases | 0 | 0 | ||||||
Total lease liabilities | $ | 432 | $ | 701 |
Operating lease expense is as follows (in thousands):
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
Office leases | $ | 829 | $ | 719 | ||||
Land leases | 446 | 456 | ||||||
Total operating lease expense | 1,275 | 1,175 | ||||||
Short-term lease expense | 319 | 321 | ||||||
Land option expense | 9 | 543 | ||||||
Total land option and lease expense | $ | 1,603 | $ | 2,039 |
Maturity of operating lease liabilities as of December 31, 20202023 are as follows (in thousands)thousands, except lease term and discount rate):
2021 | $ | 452 | ||
2022 | 0 | |||
2023 | 0 | |||
| 2024 | 0 | |||
2025 | 0 | |||
Thereafter | 0 | |||
Total undiscounted lease payments | 452 | |||
Discount to present value | (20 | ) | ||
Present value of lease liabilities | $ | 432 |
| 2024 | $ | 8,029 | |||
| 2025 | 7,615 | ||||
| 2026 | 9,522 | ||||
| 2027 | 9,565 | ||||
| 2028 | 9,609 | ||||
| Thereafter | 199,241 | ||||
| Total undiscounted lease payments | 243,581 | ||||
| Discount to present value | (94,476) | ||||
| Present value of lease liabilities | $ | 149,105 | |||
| Weighted average remaining lease term - years | 27.9 | ||||
| Weighted average discount rate - percent | 4.0 | ||||
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
Cash paid for amounts included in the measurement of operating lease liabilities: | ||||||||
Cash flows from operating activities | $ | 1,004 | $ | 1,844 | ||||
Noncash right-of-use assets recorded for operating lease liabilities: | ||||||||
Adoption of Topic 842 | 0 | 1,562 | ||||||
In exchange for new operating lease liabilities during the period | 605 | 443 |
| Year Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Operating cash flows for amounts paid included in the measurement of operating lease liabilities | $ | 3,122 | $ | 678 | |||||||
| Noncash right-of-use assets recorded for new operating lease liabilities during the period | 147,727 | 1,640 | |||||||||
Other non-current assets consisted of the following (in thousands): December 31, December 31, 2020 2019 Permitting costs(1) Enterprise resource planning system, net December 31, December 31, 2020 2019 Employee compensation expense Terminal and Pipeline asset costs Accrued legal services Other accrued liabilities Total accrued liabilities and other current liabilitiesNote 87 — Other Non-Current Assets $ 7,385 $ 2,637 1,805 3,165 Rio Grande Site Lease initial direct costs 7,109 946 Total other non-current assets, net $ 16,299 $ 6,748 (1)Permitting costs primarily represent costs incurred in connection with our permit applications to the United States Army Corps of Engineers and the U.S. Fish and Wildlife Service for wetlands and habitat mitigation measures for potential impacts to wetlands and habitat that may be caused by the construction of the Terminal.40Other non-current assets consisted of the following (in thousands):December 31, 2023 2022 Contributions in aid of construction (1)$ 7,534 $ — Permitting costs (2)— 8,575 Rio Grande Site Lease initial direct costs (3)— 19,612 Deposits and other 3,487 185 Total other non-current assets $ 11,021 $ 28,372 (1)Contributions in aid of construction relate to amounts paid to third parties to begin construction of utilities required for the Rio Grande LNG Facility.(2)Permitting costs were reclassified to property, plant and equipment in July 2023 with the positive final investment decision on Phase 1 of the Rio Grande LNG Facility.(3)Rio Grande Site Lease initial direct costs were reclassified to operating lease right-of-use asset in July 2023 upon commencement of the Rio Grande site lease.58Note 98 — Accrued Liabilities and Other Current LiabilitiesAccrued expenses and other current liabilities consisted of the following (in thousands): $ 14 $ 4,221 650 2,503 5 1,060 363 967 $ 1,032 $ 8,751 December 31, 2023 2022 Rio Grande LNG Facility costs $ 268,821 $ 12,046 Accrued interest 20,392 — Employee compensation expense 9,270 6,650 Other accrued liabilities 781 4,488 Total accrued and other current liabilities $ 299,264 $ 23,184
December 31, December 31, 2020 2019 Stock price Exercise price Risk-free rate Volatility Term (years) Year Ended December 31, 2019 Series B Series B Convertible Warrants Preferred Gross proceeds Equity issuance costs Net proceeds - Initial Fair Value Allocation Per balance sheet upon issuanceNote 9 — DebtDebt consisted of the following (in thousands):December 31, 2023 Senior Secured Notes and Loans: 6.67% Senior Secured Notes due 2033 $ 700,000 6.72% Senior Secured Loans due 2033 356,000 7.11% Senior Secured Loans due 2047 251,000 Total Senior Secured Notes and Loans 1,307,000 Credit Facilities: CD Credit Facility 484,000 TCF Credit Facility 59,000 Total debt 1,850,000 Unamortized debt issuance costs (33,699) Total non-current debt, net of unamortized debt issuance costs $ 1,816,301 Senior Secured Notes and LoansThe 6.67% Senior Secured Notes (the “Senior Secured Notes”), 6.72% Senior Secured Loans (the “6.72% Senior Secured Loans”) and 7.11% Senior Secured Loans (the “7.11% Senior Secured Loans” and, together with the 6.72% Senior Secured Loans, the “Senior Secured Loans”) are senior secured obligations of Rio Grande, ranking senior in right of payment to any and all of Rio Grande’s future indebtedness that is subordinated to the Senior Secured Notes and the Senior Secured Loans, and equal in right of payment with Rio Grande’s other existing and future indebtedness that is senior and secured by the same collateral securing the Senior Secured Notes and Senior Secured Loans. The Senior Secured Notes and Senior Secured Loans are secured on a first-priority basis by a security interest in all of the membership interests in Rio Grande and substantially all of Rio Grande’s assets, pari passu withthe CD Credit Agreement and the loans made under the TCF Credit Facility.Debt MaturitiesYears Ending December 31, Principal Payments 2024 - 2028 $ — Thereafter 1,850,000 Total $ 1,850,000 59NextDecade CorporationNotes to Consolidated Financial StatementsCredit FacilitiesBelow is a summary of our committed credit facilities as of December 31, 2023 (in thousands):CD Senior Working Capital Facility (1)CD Credit Facility (1)TCF Credit Facility (2)Total facility size $ 500,000 $ 9,730,000 $ 800,000 Less: Outstanding balance — 484,000 59,000 Letters of credit issued 47,662 — — Available commitment $ 452,338 $ 9,246,000 $ 741,000 Priority ranking Senior secured Senior secured Senior secured Interest rate on outstanding balance SOFR plus margin of 2.25% SOFR plus margin of 2.25% SOFR plus margin of 2.25% Commitment fees on undrawn balance 0.68 % 0.68 % 0.68 % Maturity date July 12, 2030 July 12, 2030 July 12, 2030 (1)The obligations of Rio Grande under the CD Senior Working Capital Facility and CD Credit Facility are secured by substantially all of the assets of Rio Grande as well as a pledge of all of the membership interests in Rio Grande on a first-priority basis, pari passu with the Senior Secured Notes, the Senior Secured Loans and the loans made under the TCF Credit Facility.(2)The obligations of Rio Grande under the TCF Credit Agreement are secured by substantially all of the assets of Rio Grande as well as a pledge of all of the membership interests in Rio Grande on a first-priority basis, pari passu with the Senior Secured Notes, the Senior Secured Loans and the loans made under the CD Credit Agreement. Total Energies Holdings SAS (“Total Holdings”) provides contingent credit support to the lenders under the TCF Credit Agreement to pay past due amounts owing from Rio Grande under the agreement upon demand.Restrictive Debt CovenantsThe CD Credit Facility and the TCF Credit Facility (collectively, the “Facilities”) include certain covenants and events of default that are supplemental to the covenants and events of default set forth in the P1 Common Terms Agreement and that are customary for project financing facilities of this type, including a requirement that interest rates for a minimum of 75% of the projected principal amount of Senior Secured Debt outstanding be hedged or have fixed interest rates. In addition, certain covenants and events of default in the Facilities are more restrictive than the corresponding covenants and events of default in the P1 Common Terms Agreement, including covenants limiting Rio Grande’s ability to incur additional indebtedness, make certain investments or pay dividends (which are subject to customary conditions set out in the Facilities and certain related financing documents) or distributions on equity interests or subordinated indebtedness or purchase, redeem, or retire equity interests, sell or transfer assets, incur liens, dissolve, liquidate, consolidate, merge, sell, or lease all or substantially all of Rio Grande’s assets or enter into certain LNG sales contracts. The Facilities include a requirement for Rio Grande to maintain a historical debt service coverage ratio of at least 1.10:1.00 at the end of each fiscal quarter starting from the initial principal payment date, a default of which may be cured with equity contributions.The Senior Secured Notes and Senior Secured Loans contain customary terms and events of default and certain covenants that, among other things, limit Rio Grande’s ability to incur additional indebtedness, make certain investments or pay dividends or distributions on equity interests or subordinated indebtedness or purchase, redeem, or retire equity interests, sell or transfer assets, incur liens, dissolve, liquidate, consolidate, merge, or sell or lease all or substantially all of Rio Grande’s assets. The Senior Secured Notes and Senior Secured Loans further require Rio Grande to submit certain reports and information and maintain certain LNG offtake agreements. With respect to certain events, including a change of control event and receipt of certain proceeds from asset sales, events of loss or liquidated damages, the Senior Secured Notes and Senior Secured Loans require Rio Grande to make an offer to repurchase or offer to prepay, respectively, at 101% (with respect to a change of control event) or par (with respect to each other event). The Senior Secured Notes Senior and Secured Loans covenants are subject to a number of important limitations and exceptions, including the terms and covenants contained in the P1 Common Terms Agreement.60NextDecade CorporationNotes to Consolidated Financial StatementsThe Senior Secured Notes require Rio Grande to maintain a debt service coverage ratio of at least 1.10:1.00 at the end of each fiscal quarter starting from the initial principal payment date. The Senior Secured Loans require Rio Grande to maintain a debt service coverage ratio of at least 1.10:1.00 at the end of each fiscal quarter starting from the first quarterly payment date to occur on or after the date that is ninety days following the project completion date.As of December 31, 2023, Rio Grande was in compliance with all covenants related to its respective debt agreements.Debt ExtinguishmentOn December 28, 2023, the Company repaid $233.0 million of the outstanding principal balance of the CD Credit Facility. As a result of the repayment, the Company recognized an approximate $9.5 million loss on extinguishment for the year ended December 31, 2023.Interest ExpenseTotal interest expense, net of capitalized interest, consisted of the following (in thousands):Year Ended December 31, 2023 Interest cost of non-current debt Interest per contractual rate $ 43,268 Amortization of debt issuance costs 41,390 Total interest cost 84,658 Capitalized interest (34,373) Total interest expense, net of capitalized interest $ 50,285 Fair Value DisclosuresThe following table shows the carrying amount and estimated fair value of our debt (in thousands):December 31, 2023 Carrying Value Fair Value Senior Secured Notes $ 700,000 $ 743,593 Senior Secured Loans 607,000 632,998 The fair value of the Company's Senior Secured Notes and Senior Secured Loans was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates on debt issued by parties with comparable credit ratings.The fair value of the Company’s CD Credit Facility and TCF Credit Facility approximates its' carrying amount due to its variable interest rate, which approximates a market interest rate.Note 10 — Preferred Stock and Common Stock WarrantsPreferred StockIn August 2018, As of December 31, 2022, the Company sold an aggregate of 50,000had outstanding 82,948 shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock), at $1,000 per share for an aggregate purchase price of $50 million and issued an additional 1,000 shares of Series A Preferred Stock in aggregate as origination fees to (i) York Capital Management Global Advisors, LLC, severally on behalf of certain funds or accounts managed by it or its affiliates (“York”Stock”), (ii) Valinor Management, L.P., severally on behalf of certain funds or accounts for which it is investment manager (“Valinor”), (iii) Bardin Hill Investment Partners LP (formerly known as Halcyon Capital Management LP), severally on behalf of certain funds or accounts managed by it or its affiliates (“Bardin Hill,” and together with York and Valinor, the “Fund Purchasers”) and (iv) HGC NEXT INV LLC (“HGC” and, together with the Fund Purchasers, the “Series A Preferred Stock Purchasers”). Warrants were issued together with the shares of Series A Preferred Stock (the “Series A Warrants”). In connection with the issuance of Series A Preferred Stock and pursuant to backstop commitment agreements with the Fund Purchasers dated April 11, 2018, as subsequently amended on August 3, 2018 (as amended, the “Backstop Agreements”), the Company also issued a total of 413,658 shares of Company common stock as fees to the Fund Purchasers. Each Fund Purchaser is a Company stockholder and, pursuant to that certain Agreement and Plan of Merger, dated as of April 17, 2017, by and among the Company, each Fund Purchaser and/or one or more of its affiliates, and the other parties named therein, three individuals, two individuals, and one individual from York, Valinor, and Bardin Hill, respectively, were appointed to the Company’s board of directors. In September 2018, the Company sold an aggregate of 29,05579,239 shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”) and 59,366 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock” and, together with the Series A Preferred Stock and the Series B Preferred Stock, the “Convertible Preferred Stock”), at $1,000 per share for an aggregate purchase price of $29.055 million and the Company issued an additional 581 shares of Series B Preferred Stock in aggregate as origination fees to certain funds managed by BlackRock, Inc. (“BlackRock”). In May 2019, the Company sold an aggregate of 20,945 shares of Series B Preferred Stock, at $1,000 per share for an aggregate purchase price of $20.945 million and we issued an additional 418 shares of Series B Preferred Stock in aggregate as origination fees to York Tactical Energy Fund, L.P. and York Tactical Energy Fund PIV-AN, L.P. (the “York Tactical Funds” and, together with BlackRock, Bardin Hill, Valinor and HGC, the “Series B Preferred Stock Purchasers”), (ii) Bardin Hill, (iii) Valinor and (iv) HGC. Warrants were issued together with the shares of Series B Preferred Stock (the “Series B Warrants” and, together with the Series A Warrants, the “Common Stock Warrants”).The Company has the option to convert all, but not less than all, of the Convertible Preferred Stock into shares of Company common stock at a strike price of $7.34 per share of Company common stock (the “Conversion Price”) on any date on which the volume weighted average trading price of shares of Company common stock for each trading day during any 60 of the prior 90 trading days is equal to or greater than 175% of the Conversion Price, in each case subject to certain terms and conditions. Furthermore, the Company must convert all of the Convertible Preferred Stock into shares of Company common stock at the Conversion Price on the earlier of (i) ten (10) business days following a FID Event (as defined in the certificates of designations of the Convertible Preferred Stock) and (ii) the date that is the tenth (10th) anniversary of the closings of the issuances of the Convertible Preferred Stock, as applicable.The shares of Convertible Preferred Stock bearbore dividends at a rate of 12% per annum, which arewere cumulative and accrueaccrued daily from the daterespective dates of issuance on the $1,000 stated value.value per share. Such dividends arewere payable quarterly and may be paid in cash or in-kind. During the twelve monthsyear ended December 31, 2020 2023 and 20192022, the Company paid-in-kind $14.3$20.5 million and $11.2$24.3 million of dividends, respectively, to the holders of the Convertible Preferred Stock.On January 12, 2021, the Company declared dividends to holders ofJuly 26, 2023, the Convertible Preferred Stock aswas converted into 59,542,066 shares of the close of business on December 15, 2020. On January 15, 2021, thecommon stock.61NextDecade CorporationNotes to Consolidated Financial StatementsCommon Stock WarrantsThe Company paid-in-kind $3.9 million of dividendsissued warrants exercisable to holders of the Convertible Preferred Stock.The holders of Convertible Preferred Stock vote on an “as-converted” basis with the holders of thepurchase Company common stock on all matters brought before the holdersin connection with its issuances of Company common stock. In addition, the holders of Convertible Preferred Stock have separate class voting rights with respect to certain matters affecting their rights.The Convertible Preferred Stock do not qualify as liability instruments under ASC 480, because they are not mandatorily redeemable. However, as SEC Regulation S-X, Rule 5-02-27 does not permit a probability assessment for a change of control provision, the Convertible Preferred Stock must be presented as mezzanine equity between liabilities and stockholders’ equity in our Consolidated Balance Sheets because a change of control event, could force the Company to redeem the Convertible Preferred Stock for cash or assets of the Company. At each balance sheet date, we must re-evaluate whether the Convertible Preferred Stock continue to qualify for equity classification.41Common Stock WarrantsThe Series A Warrants issued to the Series A Preferred Stock, Purchasers represent the right to acquire in the aggregate a number of shares of common stock equal to approximately 71 basis points (0.71%) of all outstanding shares of Company common stock, measured on a fully-diluted basis, on the exercise date with a strike price of $0.01 per share. The Series B Warrants issued to the Series B Preferred Stock Purchasers represent the right to acquire in the aggregate a number of shares of common stock equal to approximately 71 basis points (0.71%) of all outstanding shares of Company common stock, measured on a fully diluted basis on the exercise date with a strike price of $0.01 per share.The Common Stock Warrants have a fixed three-year term that commenced on the closings of the issuances of the associated Convertible Preferred Stock. The Common Stock Warrants may only be exercised by holders of the Common Stock Warrants at the expiration of such three-year term, except that the Company can force the exercise of the Common Stock Warrants prior to expiration of such term if the volume weighted average trading price of shares of Common Stock for each trading day during any 60 of the prior 90 trading days is equal to or greater than 175% of the of the applicable Convertibleand Series C Preferred Stock conversion price and, with respect to(collectively, the Series B Warrants, the Company simultaneously elects to force a mandatory exercise of all other warrants then outstanding and un-exercised and held by any holder of parity stock. Pursuant to ASC 815-40, the fair value of the Common“Common Stock Warrants was recorded as a non-current liability on our Consolidated Balance Sheet on the issuance dates.Warrants”). The Company revalues the Common Stock Warrants at each balance sheet date and recognized a gain of $7.9 million and a loss of $2.7 million as of December 31, 2020 and 2019, respectively. The Common Stock Warrant liabilities are included in Level 3 of the fair value hierarchy.The assumptions used in the Monte Carlo simulation model to estimate the fair value of the Common Stock Warrants as of December 31, 2020are as follows: $ 2.09 $ 6.14 $ 0.01 $ 0.01 0.1 % 1.6 % 58.6 % 27.6 % 0.8 1.8 Initial Fair Value AllocationNet proceeds in 2019 were allocated onDecember 31, 2023 2022 Stock price $ 4.77 $ 4.94 Exercise price $ 0.01 $ 0.01 Risk-free rate 4.7 % 4.6 % Volatility 78.4 % 52.5 % Term (years) 0.5 1.5 The following table shows a fair value basis to the Series B Warrants and on a relative fair value basis to the Series B Preferred Stock. The allocationreconciliation of net cash proceeds from the sale of Series B Preferred Stock in 2019 is as follows (in thousands): $ 20,945 0 $ 20,945 $ 1,936 $ 19,009 $ 1,936 $ 19,009 Beneficial Conversion FeatureASC 470-20-20 – Debt – Debt with conversion and Other Options (“ASC 470-20”) defines a BCF as a nondetachable conversion feature that ischanges in the money at the issuance date. The Company was required by ASC 470-20 to allocate a portion of the proceeds from the Series A Preferred Stock equal to the intrinsicfair value of the BCFCommon Stock Warrants which are classified as Level 3 in the fair value hierarchy (in thousands):December 31, 2023 2022 Beginning balance $ 6,790 $ 3,963 Increase in fair value 1,879 5,747 Exercise — (3,564) Issuance — 644 Ending balance $ 8,669 $ 6,790 Note 11 — Variable Interest EntityIntermediate Holdings and its wholly owned subsidiaries, including Rio Grande, have been formed to additional paid-in capital. The intrinsic valueundertake Phase 1 of the BCFconstruction and operation of the Rio Grande LNG Facility. The Company is calculated atnot obligated to fund losses of Intermediate Holdings, however, the issuance date asCompany's capital account, which would be considered in allocating the differencenet assets of Intermediate Holdings were it to be liquidated, continues to share in losses of Intermediate Holdings. Further, Rio Grande has granted the Company decision-making rights regarding the construction of Phase 1 of the Rio Grande LNG Facility and key aspects of its operation, which may only be terminated by equity holders for cause, via agreements with NextDecade LLC. Due to the foregoing, the Company determined that it holds a variable interest in Rio Grande through Intermediate Holdings and is its primary beneficiary, and therefore consolidates Intermediate Holdings in these Consolidated Financial Statements.The following table presents the summarized assets and liabilities (in thousands) of Intermediate Holdings, which are included in the Company's Consolidated Balance Sheets. The assets in the table below may only be used to settle the obligations of Rio Grande. In addition, there is no recourse to us for the consolidated VIE’s liabilities. The assets and liabilities in the table below include assets and liabilities of Intermediate Holdings and its subsidiaries only and exclude intercompany balances between Intermediate Holdings and NextDecade, which are eliminated in the “accounting conversion price”Consolidated Financial Statements of NextDecade.62NextDecade CorporationNotes to Consolidated Financial StatementsDecember 31, 2023 2022 Assets Current assets Cash $ 256,237 $ — Current derivative asset 17,958 — Prepaid expenses and other current assets 108 24 Total current assets 274,303 24 Property, plant and equipment, net 2,428,583 194,289 Operating lease right-of-use assets, net 157,053 — Debt issuance costs, net of amortization 389,695 — Non-current derivative assets — — Other non-current assets 9,374 28,187 Total assets $ 3,259,008 $ 222,500 Liabilities Current liabilities Accounts payable $ 238,582 $ 108 Accrued liabilities and other current liabilities 288,779 15,457 Current operating lease liabilities 2,554 — Total current liabilities 529,915 15,565 Non-current operating lease liabilities 131,901 — Non-current derivative liability 66,899 — Non-current debt, net of unamortized debt issuance costs 1,816,301 — Total liabilities $ 2,545,016 $ 15,565 Note 12 — Stockholders' EquityCommon Stock Purchase AgreementsOn February 3, 2023, the Company entered into a common stock purchase agreement (the “Stock Purchase Agreement”) for a private placement with HGC NEXT INV LLC and Ninteenth Investment Company LLC, pursuant to which the market priceCompany sold an aggregate of 5.8 million shares of the Company common stock multipliedfor aggregate proceeds of $35.0 million.On June 13, 2023, the Company entered into a common stock purchase agreement for three private placements with Global LNG North America Corp., an affiliate of TotalEnergies SE pursuant to which we agreed to sell an aggregate of 17.5% of the Company's common stock outstanding by the numberclosing of third private placement. In aggregate, the Company sold approximately 44.9 million shares for aggregate proceeds of Company common stock into which the Series A Preferred Stock is convertible.approximately $219.4 million. The accounting conversion prices of $5.58 per share and $6.24 per share for the Fund Purchasers and HGC, respectively, is different than the initial conversion price of $7.50 per share. The “accounting conversion price” is derived by dividing the proceeds allocated to the Series A Preferred Stock by the number of shares of Company common stock into which the Series A Preferred Stock is convertible. We are recording the accretiondetails of the $2.5three private placements are as follows:•Approximately 8.0 million Series A Preferred Stock discount attributableshares were sold for proceeds of $40.0 million on June 14, 2023.•Approximately 22.1 million shares were sold for proceeds of $110.0 million on July 26, 2023.•Approximately 14.8 million shares were sold for proceeds of $69.4 million on September 8, 2023.63NextDecade CorporationNotes to the BCF as a deemed dividend using the effective yield method over the period prior to the expected conversion date.Consolidated Financial Statements42
Note 1113 — Net Loss Per Share Attributable to Common Stockholders
The following table (in thousands, except for loss per share) reconciles basic and diluted weighted average common shares outstanding for the years ended December 31, 2020 and 2019:
Year Ended | ||||||||
December 31, | ||||||||
2020 | 2019 | |||||||
Weighted average common shares outstanding: | ||||||||
Basic | 117,524 | 109,057 | ||||||
Dilutive unvested stock, convertible preferred stock, Common Stock Warrants and IPO Warrants | 0 | 0 | ||||||
Diluted | 117,524 | 109,057 | ||||||
| Basic and diluted net loss per share attributable to common stockholders | $ | (0.24 | ) | $ | (0.45 | ) | ||
Year Ended | ||||||||
December 31, | ||||||||
2020 | 2019 | |||||||
Unvested stock (1) | 916 | 861 | ||||||
Convertible preferred stock | 16,635 | 13,697 | ||||||
Common Stock Warrants | 1,976 | 1,662 | ||||||
IPO Warrants(2) | 12,082 | 12,082 | ||||||
Total potentially dilutive common shares | 31,609 | 28,302 | ||||||
|
|
|
|
| Year Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
Unvested stock and stock units (1) | 4,842 | 1,904 | |||||||||
| Convertible preferred stock | — | 46,533 | |||||||||
| Common Stock Warrants | 1,548 | 1,382 | |||||||||
| Total potentially dilutive common shares | 6,390 | 49,819 | |||||||||
Plan. Year Ended December 31, 2020 2019 Share-based compensation: Equity awards Liability awards Total share-based compensation Capitalized share-based compensation Total share-based compensation expense Shares Weighted Average Grant Date Fair Value Per Share Non-vested at January 1, 2020 Granted Vested Forfeited Non-vested at December 31, 2020Note 1214 — Share-based CompensationWe have granted shares of Company common stock, restricted Company common stock and restricted stock units to employees, consultants and non-employee directors under our 2017 Omnibus Incentive Plan (the “2017 Plan”) and in connection with the special meeting of stockholders on July 24, 2017.Total share-based compensation consisted of the following (in thousands): $ (155 ) $ (8,525 ) 0 0 (155 ) (8,525 ) (186 ) (1,121 ) $ (341 ) $ (9,646 ) On January 1, 2019, we adopted Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (“ASU 2018-07”). This standard simplifies aspects of share-based compensation issued to non-employees by making the guidance consistent with accounting for employee share-based compensation. Upon adoption of this standard, we reclassified $2.1 million from Share-based compensation liability to Additional paid-in-capital in our Consolidated Balance Sheets.Certain employee contracts provided for cash bonuses upon a positive FID in the Terminal (the “FID Bonus”). In January 2018, the Compensation Committee (formerly the Nominating, Corporate Governance and Compensation Committee) of the board of directors approved, and certain employees party to such contracts accepted, an amendment to such contracts whereby the FID Bonuses would be settled in shares of Company common stock equal to 110% of the FID Bonus. The associated liability for FID Bonuses to be settled in shares of Company common stock of $0.2 million is included in share-based compensation liability in our Consolidated Balance Sheets at each of December 31, 2020 and 2019.Year Ended December 31, 2023 2022 Share-based compensation expense: Equity awards $ 26,039 $ 7,472 Liability awards 514 — Total share-based compensation expense 26,553 7,472 The total unrecognized compensation costs at December 31, 20202023 relating to equity-classified awards were $3.1$52.5 million, which is expected to be recognized over a weighted average period of 1.01.8 years.Restricted Stock AwardsRestricted stock awards are awards of Company common stock that are subject to restrictions on transfer and to a risk of forfeiture if the recipient’s employment with the Company is terminated prior to the lapse of the restrictions. Restricted stock awards vest based on service conditions and/or performance conditions. The amortization of the value of restricted stock grants is accounted for as a charge to compensation expense, or capitalized, depending on the nature of the services provided by the employee, with a corresponding increase to additional-paid-in-capital over the requisite service period.Grants of restricted stock to employees, non-employees and non-employee directors that vest based on service and/or performance conditions are measured at the closing quoted market price of our common stock on the grant date.The table below provides a summary of our restricted stock awards outstanding as of December 31, 20202023 and changes during the year ended December 31, 20202023 (in thousands, except for per share information): 4,772 $ 7.95 225 3.02 (612 ) 5.38 (874 ) 8.08 3,511 $ 8.05 44Shares Weighted Average Grant Date Fair Value Per Share Non-vested at January 1, 2023 1,083 $ 7.51 Granted 107 5.99 Vested (1,161) 8.55 Forfeited (16) 6.39 Non-vested at December 31, 2023 13 $ 2.24 64Restricted Stock Units and Performance Stock UnitsRestricted stock units are stock awards that vest over a service period of Contentsone, two, or three years and entitle the holder to receive shares of our common stock upon vesting, subject to restrictions on transfer and to a risk of forfeiture if the recipient terminates employment with us prior to the lapse of the restrictions. Certain performance stock units provide for cliff vesting after a period of three years with payouts based upon market conditions achieved over the defined performance period compared to pre-established performance targets. The settlement amounts of the awards are based on market conditions consisting of total shareholder return (“TSR”) and relative total shareholder return (“RTSR”) of our common stock.Where applicable, the compensation for performance stock units containing market conditions of TSR and RTSR are based on a fair value using a Monte Carlo simulation as of the grant date, which utilizes level 3 inputs such as projected stock volatility and projected risk-free rates and remains constant through the vesting period. The number of shares that may be earned at the end of the vesting period ranges from 0% up to 100% of the target award amount. Both restricted stock units and performance stock units will be settled in Company common stock (on a one-for-one basis) and are classified as equity awards.
Year Ended December 31, 2020 2019 U.S. federal statutory rate, beginning of year Officers' compensation Other Valuation allowance Effective tax rate as reported Year Ended December 31, 2020 2019 Deferred tax assets Net operating loss carryforwards and credits Share-based compensation expense Property, plant and equipment Other Less: valuation allowance Total deferred tax assets Deferred tax liabilities Total deferred tax liabilities Net deferred tax assets (liabilities)The table below provides a summary of our restricted stock units outstanding as of December 31, 2023 and changes during the year ended December 31, 2023 (in thousands, except for per share information):Shares Weighted Average Grant Date Fair Value Per Share Non-vested at January 1, 2023 10,304 4.82 Granted 5,680 5.72 Vested (2,782) 7.82 Forfeited (403) 5.06 Non-vested at December 31, 2023 12,799 $ 4.72 Note 1315 — Income TaxesThe reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows: 21 % 21 % 2 7 (3 ) (2 ) (20 ) (26 ) 0 % 0 % Year Ended December 31, 2023 2022 U.S. federal statutory rate, beginning of year 21 % 21 % Non-controlling interest (6) — Officers' compensation (2) (1) Other — (1) Valuation allowance (13) (19) Effective tax rate as reported — % — % — % 65NextDecade CorporationNotes to Consolidated Financial StatementsSignificant components of our deferred tax assets and liabilities at December 31, 2020 2023 and 20192022 are as follows (in thousands): $ 20,698 $ 15,064 3,813 3,441 725 1,025 Common stock warrant liabilities 0 524 Operating lease liabilities 91 147 54 21 (22,669 ) (19,802 ) 2,712 420 Common stock warrant liabilities (1,129 ) 0 Operating lease Right-of-use assets (1,583 ) (420 ) (2,712 ) (420 ) $ 0 $ 0 December 31, 2023 2022 Deferred tax assets Net operating loss carryforwards and credits $ 54,839 $ 36,835 Investment in Intermediate Holdings 31,782 — Property, plant and equipment — 749 Operating lease liabilities 2,972 187 Other 4,996 3,179 Less: valuation allowance (91,465) (36,642) Total deferred tax assets 3,124 4,308 Deferred tax liabilities Operating lease right-of-use assets (2,809) (4,308) Other (315) — Total deferred tax liabilities (3,124) (4,308) Net deferred tax assets (liabilities) $ — $ — The federal deferred tax assets presented above do not include the state tax benefits as our net deferred state tax assets are offset with a full valuation allowance.At December 31, 2020,2023, we had federal net operating loss (“NOL”) carryforwards of approximately $98.6$260.7 million. Approximately $26.1 million of these NOL carryforwards will expire between 2034 and 2038.Due to our history of NOLs, current year NOLs and significant risk factors related to our ability to generate taxable income, we have established a valuation allowance to offset our deferred tax assets as of December 31, 2020 2023 and 2019.2022. We will continue to evaluate our ability to release the valuation allowance in the future. Due to our full valuation allowance, we have not recorded a provision for federal or state income taxes during the years ended December 31, 20202023 or 2019.2022. Deferred tax assets and deferred tax liabilities are classified as non-current in our Consolidated Balance Sheets.The Tax Reform Act of 1986 (as amended) contains provisions that limit the utilization of NOL and tax credit carryforwards if there has been a change in ownership as described in Section 382 of the Internal Revenue Code (“Section 382”). Substantial changes in the Company's ownership have occurred that may limit or reduce the amount of NOL carryforwards that the Company could utilize in the future to offset taxable income. The Company has not completed a detailed Section 382 study at this time to determine what impact, if any, that ownership changes may have had on its NOL carryforwards. In each period since its inception, the Company has recorded a valuation allowance for the full amount of its deferred tax assets, as the realization of the deferred tax asset is uncertain. As a result, the Company has not recognized any federal or state income tax benefit in its Consolidated Statement of Operations.We remain subject to periodic audits and reviews by taxing authorities; however, we did not have any open income tax audits as of December 31, 2020. 2023. The federal tax returns for the years beginning 20152019 remain open for examination.In response to the global pandemic related to COVID-19, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020 and the Consolidated Appropriations Act, 2021 (the “CAA”) on December 27, 2020. The CARES Act and the CAA provide numerous relief provisions for corporate taxpayers, including modification of the utilization limitations on NOLs, favorable expansions of the deduction for business interest expense under Internal Revenue Code Section 163(j), and the ability to accelerate timing of refundable alternative minimum tax credits. For the year ended December 31, 2020, there were no material tax impacts to our consolidated financial statements from the CARES Act, the CAA or other COVID-19 measures. The Company continues to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others.45
Note 1416 — Commitments and Contingencies
Other Commitments
On March 6, 2019, Rio Grande entered into a lease agreement (the “Rio Grande Site Lease”) with the Brownsville Navigation District of Cameron County, Texas (“BND”) for the lease by Rio Grande of approximately 984 acres of land situated in Brownsville, Cameron County, Texas for the purposes of constructing, operating, and maintaining (i) a liquefied natural gas facility and export terminal and (ii) gas treatment and gas pipeline facilities. On April 30, 2020, Rio Grande and the BND amended the Rio Grande Site Lease (the “Rio Grande Site Lease Amendment”) to extend the effective date for commencing the Rio Grande Site Lease to May 6, 2021 (the “Effective Date”). The Rio Grande Site Lease Amendment further provides that Rio Grande has the right, exercisable in its sole discretion, to extend the Effective Date to May 6, 2022 by providing the BND with written notice of its election no later than the close of business on the Effective Date.
In connection with the Rio Grande Site Lease Amendment, Rio Grande is committed to pay approximately $1.5 million per quarter to the BND through the earlier of the Effective Date and lease commencement.
Obligation under LNG Sale and Purchase Agreement
In March 2019, we entered into a 20-year sale and purchase agreement (the “SPA”) with Shell NA LNG LLC (“Shell”) for the supply of approximately two million tonnes per annum of liquefied natural gas from the Terminal. Pursuant to the SPA, Shell will purchase LNG on a free-on-board (“FOB”) basis starting from the date the first liquefaction train of the Terminal that is commercially operable, with approximately three-quarters of the purchased LNG volume indexed to Brent and the remaining volume indexed to domestic United States gas indices, including Henry Hub.
In the first quarter of 2020, pursuant to the terms of the SPA, the SPA became effective upon the conditions precedent in the SPA being satisfied or waived. The SPA obligates Rio Grande to deliver the contracted volumes of LNG to Shell at the FOB delivery point, subject to the first liquefaction train at the Terminal being commercially operable.
As of December 31, 2020,2023, management was is not aware of any claims or legal actions that, separately or in the aggregate, are likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows, although the Company cannot guarantee that a material adverse eventeffect will not occur.
Supplemental Cash Flows
|
|
|
| |||
|
|
cash flow information (in thousands):
| Year Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Cash paid for interest, net of amounts capitalized | $ | 23,365 | $ | — | |||||||
| Non-cash investing activities: | |||||||||||
| Accounts payable for acquisition of property, plant and equipment | $ | 238,105 | $ | 162 | |||||||
| Accrued liabilities for acquisition of property, plant and equipment | 268,821 | 12,046 | |||||||||
| Accrued liabilities for acquisition of other non-current assets | — | 279 | |||||||||
| Non-cash financing activities: | |||||||||||
| Paid-in-kind dividends on Convertible Preferred Stock | $ | 20,431 | $ | 24,207 | |||||||
| Accrued liabilities for debt and equity issuance costs | 764 | — | |||||||||
We have evaluated subsequent events through March 25, 2021, the date the financial statements were issued. Any material subsequent events that occurred during this time have been properly recognized and/or disclosed in these financial statements.
NextDecade Corporation and Subsidiaries
Supplemental Information
Summarized Quarterly Financial Data
(unaudited)
Summarized Quarterly Financial Data – (in thousands, except per share amounts)
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
Year ended December 31, 2020: | ||||||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | — | ||||||||
Total operating loss | (7,241 | ) | (5,211 | ) | (5,557 | ) | (4,003 | ) | ||||||||
Net loss attributable to common stockholders | (2,617 | ) | (9,304 | ) | (10,807 | ) | (6,056 | ) | ||||||||
Basic and diluted loss per share (1) | (0.02 | ) | (0.08 | ) | (0.09 | ) | (0.05 | ) | ||||||||
Year ended December 31, 2019: | ||||||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | — | ||||||||
Total operating loss | (12,488 | ) | (5,582 | ) | (4,412 | ) | (12,519 | ) | ||||||||
Net loss attributable to common stockholders | (17,566 | ) | (7,207 | ) | (6,362 | ) | (17,417 | ) | ||||||||
Basic and diluted loss per share (1) | (0.16 | ) | (0.07 | ) | (0.06 | ) | (0.16 | ) | ||||||||
|
|
Pursuant to paragraph 3 of General Instruction G to Form 10-K, the
Exhibit No. Description 3.1 3.2 3.3 3.4 4.1 4.2 4.3 4.4 4.5Item 15.Exhibit and Financial Statement Schedules(a)Financial Statements, Schedules and Exhibits(1)Financial Statements – NextDecade Corporation and Subsidiaries:(a)Financial Statements, Schedules and ExhibitsPage (1)Financial Statements – NextDecade Corporation and Subsidiaries:Supplemental Information to Consolidated Financial Statements – Summarized Quarterly Financial Data(2)Financial Statement Schedules:(2)Financial Statement Schedules:All schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.(3)Exhibits:(3)Exhibits:(1)(2)(3)(4)3.5 (5)3.6 (6)3.7 (7)3.8 (8)3.9 (9)3.10 (10)(11)(12)70NextDecade CorporationNotes to Consolidated Financial Statements(13)(14)(15)4.6 (16)4.7 (17)10.1(18)†10.2(19)†10.3(20)†71NextDecade CorporationNotes to Consolidated Financial Statements72NextDecade CorporationNotes to Consolidated Financial Statements5173
23.1* | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
97.1*† | ||||||||
| 101.INS | Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Indicates management contract | ||||||||
| + | Certain portions of this exhibit have been omitted. | |||||||
(Registrant) /s/ Matthew K. Schatzman Matthew K. Schatzman Chairman of the Board and Chief Executive Officer (Principal Executive Officer) March Date /s/ Matthew K. Schatzman Chairman of the Board and Chief Executive Officer Matthew K. Schatzman (Principal Executive Officer) /s/ Brent E. Wahl Chief Financial Officer Brent E. Wahl (Principal Financial Officer) /s/ Eric Garcia Senior Vice President and Chief Accounting Officer Eric Garcia (Principal Accounting Officer) /s/ Frank Chapman /s/ Avinash Kripalani Avinash Kripalani /s/ William Vrattos William Vrattos /s/ Spencer Wells Spencer WellsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.NextDecade Corporation By: By:Date: Date:25, 202176NextDecade CorporationNotes to Consolidated Financial StatementsPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.Signature Title TitleMarch 25, 202111, 2024March 25, 202111, 2024March 25, 202111, 2024/s/ Giovanni Oddo Director March 11, 2024 Giovanni Oddo /s/ Brian Belke Director DirectorMarch 25, 202111, 2024Brian Belke Director DirectorMarch 25, 202111, 2024Frank Chapman /s/ Taewon JunDirectorMarch 25, 2021Taewon JunDirector DirectorMarch 25, 202111, 2024/s/ Thibaud de Préval Director March 11, 2024 Thibaud de Préval /s/ Edward Andrew Scoggins, Jr. Director March 11, 2024 /s/ Khalifa Abdulla Al RomaithiDirectorMarch 25, 2021Khalifa Abdulla Al Romaithi/s/ Thanasi SkafidasDirectorMarch 25, 2021Thanasi SkafidasDirector DirectorMarch 25, 202111, 2024Director DirectorMarch 25, 202111, 2024/s/ Tim Wyatt Director March 11, 2024 Tim Wyatt 5377