HOUSTON - Abu Dhabi National Oil Company (ADNOC) has acquired an 11.7% equity stake in the first phase of NextDecade (NASDAQ:NEXT) Corporation's Rio Grande LNG project in Texas, marking its initial strategic investment in the United States. The deal also includes a 20-year agreement for ADNOC to offtake 1.9 million tons per annum (mtpa) of liquefied natural gas (LNG) from the project's Train 4, dependent on a Final Investment Decision (FID).
The transaction was facilitated through an investment vehicle of Global Infrastructure Partners (GIP), and NextDecade will maintain its expected economic interest in the first phase and the fully permitted expansion capacity of Train 4 and Train 5. This acquisition is part of ADNOC's broader strategy to grow its lower-carbon LNG portfolio to meet the increasing global energy demand.
Musabbeh Al Kaabi, ADNOC Executive Director for Low Carbon Solutions and International Growth, commented on the partnership with NextDecade, highlighting the significance of the project in ADNOC's international growth strategy and its commitment to providing a secure and responsible supply of energy.
Rio Grande LNG, located near Brownsville, Texas, stands out as the first U.S. LNG project to propose significant emissions reductions, potentially over 90%, through a planned carbon capture and storage (CCS) initiative. The CCS project is expected to capture and store over 5 million metric tons of carbon dioxide annually.
NextDecade's Chairman and CEO, Matt Schatzman, expressed enthusiasm for the multi-decade partnership with ADNOC, emphasizing the benefits of supplying customers with more affordable and less carbon-intensive LNG. The FID for Train 4 is targeted for the second half of 2024, with several conditions including the finalization of commercial arrangements and obtaining adequate financing.
InvestingPro Insights
As NextDecade Corporation (NASDAQ: NEXT) forges a significant partnership with Abu Dhabi National Oil Company (ADNOC), investors are closely monitoring the company's financial health and market performance. With a market capitalization of $1.8 billion, NextDecade is navigating through a challenging financial landscape. The company's price-to-earnings (P/E) ratio stands at -12.88, indicating that it is not currently profitable. Looking at the last twelve months as of Q1 2024, the adjusted P/E ratio is 15.9, reflecting a forward-looking valuation based on expected earnings.
InvestingPro data reveals that NextDecade has experienced robust returns in the short term, with a 7.88% return over the last week and a striking 44.81% price uptick over the last six months. This performance suggests a growing investor confidence in the company's prospects, despite the absence of profitability over the last twelve months. The company's share price is currently at 79.87% of its 52-week high, trading at a previous close of $6.98.
Among the key InvestingPro Tips, NextDecade is noted to operate with a significant debt burden and is quickly burning through cash. These factors are crucial for investors to consider, especially in the context of the company's ambitious Rio Grande LNG project and its associated financial commitments. With analysts not anticipating profitability for this year and short-term obligations exceeding liquid assets, potential investors should weigh these financial challenges against the strategic opportunities presented by the ADNOC partnership.
For a deeper dive into NextDecade's financials and to access additional InvestingPro Tips, which can provide further guidance on the company's investment potential, visit InvestingPro. Subscribers can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 11 additional InvestingPro Tips available that could further inform investment decisions regarding NextDecade Corporation.
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