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Investing.com -- Shares of New Fortress Energy LLC (NASDAQ:NFE) climbed 5.2%, while Excelerate Energy (NYSE:EE) saw a modest increase of 0.5% following the announcement that New Fortress Energy will sell its Jamaican assets and operations to Excelerate Energy for $1.055 billion. The transaction, which is anticipated to close in the second quarter of 2025, is seen as a strategic move for NFE to optimize its asset portfolio and enhance financial flexibility.
New Fortress Energy’s decision to divest its Jamaican assets, including an LNG import terminal in Montego Bay, an offshore floating storage and regasification terminal in Old Harbour, and a 150 MW Combined Heat and Power Plant in Clarendon, comes after years of contributing to the country’s energy transition. Since 2016, NFE’s investments have helped reduce Jamaica’s reliance on oil-based fuels and supported the growth of renewable energy, leading to significant fuel savings and more reliable energy sources.
Wes Edens, Chairman and CEO of New Fortress Energy, emphasized the importance of the transaction, stating, "This transaction with Excelerate is a meaningful step as we continue to streamline our operations. We are proud of the contributions we have made to Jamaica’s energy transition." He expressed confidence that Excelerate Energy would further the progress in Jamaica’s energy future.
Excelerate Energy’s President and CEO, Steven Kobos, acknowledged the opportunity to build upon NFE’s success in Jamaica, stating, "This acquisition will allow us to provide reliable, sustainable, and cost-effective energy solutions to the people of Jamaica for many years to come, while also expanding and diversifying Excelerate’s global market presence."
Investors have responded positively to the news, reflected in the uptick in NFE’s stock price. The proceeds from the sale will be used by NFE to reduce corporate debt and for general corporate purposes, enhancing the company’s financial position. Excelerate Energy’s slight stock increase suggests investor optimism about the potential for growth and market diversification.
The market’s reaction underscores the significance of strategic asset management and the ongoing demand for sustainable energy solutions globally. As both companies work towards a seamless transition, the focus remains on delivering long-term energy solutions to Jamaica and reinforcing their respective positions in the global energy market.
In other news, on March 24 Stifel analysts maintained their Buy rating for New Fortress Energy, reiterating their price target of $16.00 on the stock. The analysts commented, "The company still has far too much leverage and the sooner they are able to improve the balance sheet and build the bridge to future cash flows, the better. Step #1 is the sale of the Jamaica business, which should have an announcement in the next week or two. Step #2 is repaying debt which we discuss below. Step #3 is transitioning the capital already deployed into cash flow growth. We still view this as a binary name given the credit profile, but if the company is able to successfully improve liquidity and increase cash flows, which increasingly seems likely, we see substantially more upside relative to the downside risk."
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