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Regional natural gas supplier New Fortress Energy, NFE, reported losses of US$234 million for year ending December 2024 as it prepares to sell certain assets in Jamaica, Brazil, and its shipping charters to reduce its debt.
“The first asset that we are focused on is Jamaica,” said New Fortress Chairman and CEO Wes Edens in an investor call earlier this month.
Edens said the “expected asset sales” in targeted countries should raise “US$2 billion”, which would go towards cutting debt currently at US$9 billion. New Fortress’ debt load was four times its US$2 billion of capital as of December.
Companies typically aim to keep debt below capital levels to ensure manageable payments. NFE initially announced plans to sell its Jamaica assets last year and provided updates on the divestment earlier this month after selling an asset in Miami, Florida, in November.
The Jamaican operations generate US$125 million, or about $20 billion in Jamaican currency, in operational profit annually for the New York-based energy company. Edens emphasised the value of these assets on the earnings call.
“Jamaica is the country where we went first. It’s our oldest and most developed market. Just by review, it’s about a 30 TBtu downstream market. We generate about US$125 million in EBITDA (earnings before interest tax, depreciation, and amortisation),” he said in response to a query. TBtu is short for trillion British thermal units, a measurement of gas volumes.
“Virtually all of that is cash flow because that’s what happens to these businesses over time. Once they’re up and running, there’s very little capital expenditure to operate them. It’s an extremely attractive profile of assets,” Eden added.
New Fortress first began supplying liquefied natural gas to Jamaica nearly nine years ago and later expanded into power generation. It now operates three main facilities in Jamaica – in Montego Bay, Old Harbour, and Hayes.
Its Montego Bay facility, operational since 2016, processes up to 60,000 MMBtu or million British thermal units of LNG daily, with 7,000 cubic metres of onsite storage. That station supplies natural gas to electricity provider Jamaica Public Service Company’s Bogue power plant under a long-term contract for 25,000 MMBtu daily. It also provides LNG to industrial users, with total contracted volumes at 29,000 MMBtu per day and an average contract length of 15 years.
NFE’s Old Harbour facility, operational since June 2019, is an offshore LNG station capable of processing 750,000 MMBtu daily. It supplies the JPS’ Old Harbour Power Plant with 30,000 MMBtu daily under a 20-year contract and fuels a 100MW CHP plant that it built. Agreements for the CHP power plant include 20-year contracts to supply steam to the Jamalco alumina refinery at Hayes, Clarendon and electricity to JPS, with contracted volumes at 58,000 MMBtu daily and an average contract length of 15 years.
Edens noted that local assets have “never suffered a dollar of credit loss” in their history.
“So it is a phenomenal asset. It’s in a very, very good market, and we have phenomenal people that we’re lucky to work with down there. Not surprisingly, it’s been a very sought-after asset. We started this process back in the fourth quarter,” he said.
The company began generating profit in recent years, but the early debt repayments it made during the fourth quarter resulted in a non-cash “loss on extinguishment of debt”. New Fortress closed the year with US$966 million in cash, up from US$311 million the previous year.
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