NextDecade inks 20-year LNG deal with Aramco subsidiary

HOUSTON - NextDecade Corporation (NASDAQ: NEXT) has entered into a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) with a subsidiary of Aramco, the company announced Monday. The deal involves the offloading of 1.2 million tonnes per annum (MTPA) of LNG from the Rio Grande LNG Facility's proposed Train 4, contingent on a positive Final Investment Decision (FID). According to InvestingPro data, NextDecade currently operates with a market capitalization of $1.56 billion and has seen its stock price decline by over 22% in the past week.

The SPA stipulates that the Aramco subsidiary will procure the LNG on a free on board basis with pricing indexed to the Henry Hub benchmark. The agreement is part of NextDecade's strategy to expand its customer base for the Rio Grande LNG project, which is currently under development in Brownsville, Texas. InvestingPro analysis reveals the company faces significant financial challenges, with a debt-to-equity ratio of 10.77 and current ratio of 0.69, indicating potential liquidity concerns.

NextDecade's Chairman and Chief Executive Officer, Matt Schatzman, expressed satisfaction with the addition of Aramco as a customer, citing it as evidence of the project's quality and the company's commitment to providing lower carbon energy solutions. Despite the positive development, InvestingPro data shows the company is currently unprofitable, with a negative EBITDA of $169.14 million in the last twelve months. Subscribers to InvestingPro can access 8 additional key insights about NextDecade's financial health and growth prospects.

The realization of Train 4 at the Rio Grande LNG Facility hinges on securing adequate financing and finalizing necessary commercial arrangements. NextDecade is also exploring a potential carbon capture and storage project at the site, which is expected to contribute to carbon reduction efforts. With analyst price targets ranging from $9 to $15 per share, the stock currently trades below InvestingPro's Fair Value estimate.

NextDecade, based in Houston, is focused on the development and operation of natural gas liquefaction and carbon capture and storage infrastructure. With approximately 48 MTPA of potential liquefaction capacity in various stages of construction or planning, the company aims to deliver secure and sustainable energy solutions. The company's financial health score is rated as "WEAK" by InvestingPro analysts, with particular concerns about its cash flow and profitability metrics.

This announcement contains forward-looking statements and is based on current expectations and projections about future events. The actual outcome of these plans, including the final investment decision on Train 4, is subject to a range of factors, including securing necessary governmental approvals and financing.

The information in this article is based on a press release statement from NextDecade Corporation.

In other recent news, NextDecade Corporation has announced the departure of Eric Garcia, its principal accounting officer, with Luke Boylston stepping in as the interim replacement. Boylston, who joined the company in October 2023, brings experience from previous roles at Battle Motors, Inc., TotalEnergies Gas & Power North America, and Tellurian Inc. Meanwhile, Stifel analysts have maintained a Buy rating for NextDecade and increased their price target from $13 to $15. This adjustment follows the U.S. Court of Appeals' decision allowing construction at the Rio Grande LNG terminal to proceed while awaiting further regulatory review. The Rio Grande LNG project is a significant asset for NextDecade, with its first four trains expected to generate over $500 million in EBITDA. Stifel analysts anticipate that the Final Investment Decision for Train 4 could be made later in 2025. Additionally, NextDecade's expansion plans for the terminal include adding Trains 6, 7, and 8, which would increase capacity by approximately 18 million tonnes per annum. The company's recent 10K report outlines its financial health and strategies, with analysts optimistic about future regulatory progress and contract acquisitions.

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