Back in Nov 2022, I initiated a post with the subject line–
NFE pivot - is there value or hope for value?
NFE pivot - is there value or hope for value? - Investment Analysis Clubs / Value Hounds - Motley Fool Community
There were updates to that post. But I think there is now as answer to the question.
Based on the most recent NFE earnings announcement, I think the answer is the latter. NFE’s pivot is a hope for value.
Why does HoHum say that? A number of reasons actually.
Per the prior post, NFE had placed a lot of emphasis on Fast LNG. And yet, per the Q4 2022 results, NFE announce that the schedule for the first Fast LNG asset has slipped two months. FWIW, that’s not even operations start-up. Instead of a March 2023 Mechanical completion date, the date slips two months to May 2023. That means there’s still sail time, hook-up, testing, etc, - all with their own issues (this is the first Fast LNG asset to go operational). Fast LNG remains an unproven technology.
Lots of question-marks on the timetable of the other four Fast LNG units. To throw more complexity into the narrative, the “platform” changes. Per the NFE Q3 report, first Fast LNG platform is two jack-up rigs. Second and third Fast LNG units are on fixed platforms, and fourth and fifth Fast LNG are on floater drilling rigs. In Q4 2022 report, no mention of Fast LNG units 2 - 5. The original schedule had late 2023 for a second unit.
Status of two Brazil projects.
When NFE acquired Hygo from Golar-Stonepeak JV, there seemed to be baby steps on at least one LNG terminal (Barcarena) and some initial discussions on the Santa Catarina terminal. More then two years later, it is still talk. Could Barcarena LNG terminal have a converted FSRU unit ready by Dec 2023? It could. But, I’m leaning towards no. The identified asset is an LNG carrier/tanker. Last I checked it was in the mid-Atlantic waters. Could a new, modern LNG tanker be delivered to a yard for FSRU conversion, and sail to Brazil within 9 months? I guess. Also, no idea on the FSRU plans for Santa Catarina (vessel should have been Golar Penguin conversion, but I don’t think that’s happening).
Q4 2022 Investor Presentation_vF (seekingalpha.com)
Lots of things have to go right for NFE for them to become a successful FLNG-related entity.
Golar LNG (GLNG) are already a successful FLNG entity. They already have a very efficient and productive FLNG asset (FLNG Hilli). They are putting final touches on a second FLNG asset (FLNG Gimi).
Until Feb 2023, both companies benefitted from FLNG Hilli production. NFE monetized on their FLNG Hilli stake by selling the stake back to Golar LNG (GLNG). Short-term NFE gained from the monetization. I think the companies still have at least one project activity in common - Fortuna LNG.