New Fortress doubles revenue - Eyes more gains in changing market
New Fortress Energy, NFE, doubled its revenues in the June quarter to US$76 million, strengthened in part by earnings from its power facility at Jamalco which came on stream in March.
In newly released financials, New Fortress reported that US$45 million of its quarterly revenue to June was made in Jamaica, where it’s been delivering liquefied natural gas, or LNG, to clients for four years. The flows translate to about $6.5 billion in Jamaican currency.
The Jamalco 150 MW LNG facility, which represents a new area of operation for the American company as a power producer, accounted for US$20 million of that revenue in the quarter. The plant supplies the Jamalco alumina refinery with power, while the excess is to be sold to the national electricity grid operated by Jamaica Public Service Company, JPS.
“Each of our four major operating assets have now hit their run rate volumes totalling in excess of 1.7 million gallons per day. In fact, we expect the Jamalco boilers to begin taking gas in the next 24 hours, adding as much as 150,000 gallons a day to our total,” said NFE Chief Development Officer Brannen McElmurray on an investor call on Monday.
As a gas supplier, New Fortress now services 39 contracts from 37 clients, 15 of which it said are in Jamaica. With geographical diversification, Jamaica represented nearly 60 per cent of its top-line earnings in the June quarter. No comparative figures were provided for 2019, but then Jamaica was the off-taker of 90 per cent of the gas supplied to clients by the energy company.
Even before the gains NFE Chairman and CEO Wes Edens was bullish on the company’s prospects, and seemed even more so this week.
“So it’s 39, but it could be 390 to sum next year,” he said of the business’ prospects on the investor call. “I mean, that’s a superficial conversation but there is so much opportunity to displace distillate fuels,” he said.
Some of that ebullience appears driven by the growth the company is already seeing as the sole supplier of natural gas for Jamaica, and from contracts in places like The Bahamas and Puerto Rico, among others.
Its revenue for the June quarter at US$76.1 million was double its intake of US$37 million in the comparative 2019 period.
“The increase was primarily driven by volumes sold from the Old Harbour terminal, including volumes utilised in the Jamalco combined heat plant which commenced commercial operations during March 2020,” said NFE’s earnings report. That’s a reference to its offshore gas distribution hub at Old Harbour, St Catherine, which services JPS’s dual-fuel power station located in the same township.
In a break-out of the revenues from Jamaica, New Fortress said US$23 million was made from the Old Harbour terminal; US$20 million from the Jamalco Clarendon CHP plant; while just over US$2 million in revenues flowed from the Montego Bay terminal.
NFE does not farm gas; instead it sources it from oil and gas companies and distributes to its clients. The energy company said in its investor presentation that it is currently procuring gas at prices ranging from US$2.25 to US$5.63 per unit, which it resells at US$5.29 to US$7.57 per unit depending on the terms negotiated with individual customers.
Its clients in Jamaica include power utility JPS and a growing list of business clients, among them beer maker Red Stripe Jamaica and poultry company Caribbean Broilers.
In addition to sourcing and supplying LNG, New Fortress also builds the landing infrastructure for the gas, and, at times, gas plants.
Going forward in new markets of Mexico and Nicaragua, NFE plans to slash the development time from 18 months to three months by eliminating the build-out of landing infrastructure. Instead it will ship a vessel filled with hundreds of LNG cylinders and truck them from the port to customers.
This alternative method isn’t for large utilities, but would best serve clients that require under one million gallons of gas a day, NFE said.