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HOUSTON - NextDecade Corporation (NASDAQ: NEXT), currently trading at $7.68 and valued at approximately $2 billion in market capitalization, has signed a 20-year agreement to supply liquefied natural gas (LNG) to JERA, Japan’s largest power generator, from its Rio Grande LNG project in Texas. According to InvestingPro analysis, the company appears overvalued at current levels, despite showing strong returns over the past five years. This deal, announced on Tuesday, involves JERA purchasing two million tonnes per annum (MTPA) of LNG, with deliveries to commence following a positive final investment decision (FID) on the facility’s Train 5.
The sale and purchase agreement (SPA) is contingent on several factors, including commercial arrangements, construction agreements, and securing adequate financing for Train 5 and its associated infrastructure. The LNG will be priced based on the Henry Hub index, a standard for natural gas pricing. With a significant debt burden and a weak financial health score according to InvestingPro, securing financing could be crucial for the company’s future growth.
Matt Schatzman, Chairman and Chief Executive Officer of NextDecade, expressed satisfaction with the partnership with JERA, highlighting it as a step towards commercializing Train 5 and moving closer to a positive FID.
NextDecade focuses on delivering secure and sustainable energy solutions, with operations centered around natural gas liquefaction and carbon capture and storage infrastructure. The Rio Grande LNG project, located near Brownsville, Texas, is expected to have a total potential liquefaction capacity of approximately 48 MTPA. While analysts maintain a consensus price target between $9-10 per share, InvestingPro data reveals the company faces challenges with negative EBITDA of -$182.4 million and rapid cash burn. Unlock 8 additional key insights about NextDecade with an InvestingPro subscription.
The company also noted its commitment to a lower carbon future, with plans to develop a carbon capture and storage project at the Rio Grande LNG facility.
The agreement with JERA marks a significant milestone for NextDecade, as it continues to secure customers for its LNG project, which is still subject to final investment decisions and regulatory approvals. The information in this report is based on a press release statement from NextDecade Corporation.
In other recent news, NextDecade Corporation has announced significant progress in its Rio Grande LNG facility expansion, with plans to increase its production capacity to 48 million tonnes per annum. The company has completed agreements for Train 4 with Aramco and TotalEnergies, which secure long-term commitments necessary for a final investment decision. Additionally, NextDecade is in discussions for a Train 5 EPC contract and plans to start financing for Train 5 soon. Stifel analysts have maintained a Buy rating and a $15 price target for NextDecade, following the company’s binding sale and purchase agreement with Saudi Aramco for LNG off-take from Train 4. This agreement, alongside a favorable court ruling, has reduced regulatory hurdles and enhanced prospects for the project’s final investment decision. On the financial side, NextDecade has decreased its working capital facility commitments by $250 million, saving approximately $2 million annually in fees. In leadership updates, Luke Boylston has been appointed as interim principal accounting officer following the departure of Eric Garcia. These developments highlight NextDecade’s continued efforts to expand its LNG production and strengthen its market position.
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