New Fortress Energy Powers Up Brazil Business With Game-Changing 1.6 GW Capacity Reserve Contract

New Fortress Energy Inc NFE penned an agreement to acquire a 1.6 GW Capacity Reserve Contract (PPA) from Ceiba Energy, a portfolio company of Denham Capital. 

The company is buying the assets in exchange for NFE Convertible Preferred Stock and assuming certain liabilities from a subsidiary of Ceiba Energy.

The company will transfer the PPA to power assets connected to its existing LNG terminals in Brazil - Barcarena and Terminal Gas Sul.

NFE projects to close the transaction in March 2024, with cash flows expected to begin by July 2026.

Following customary closing conditions, including regulatory approval for the transfer of the PPA in Brazil, the PPA will add over $280 million per annum through its 15-year contract life. 

The PPA positions NFE as the leading LNG-to-power company in Brazil and aligns with the company's organic growth strategy through existing LNG terminals, long-duration contracted cash flows, and accretive infrastructure projects in existing regions.

"We are pleased to support NFE's efforts to expand their activities in Brazil. This transaction will allow the Brazilian power market to benefit from clean capacity reserve consistent with the country's stated goal of providing reliable power capacity supporting renewable power resources. Importantly as well, the transaction enables Ceiba Energy to continue developing its LNG import energy hub in the State of Ceara," said Emilio Vicens, Chief Executive Officer of Ceiba Energy.

Last month, NFE reported adjusted EBITDA of $208 million (vs. $290.7 million a year ago) and adjusted EPS of $0.30, missing the consensus of $0.43 in Q3.

Price Action: NFE shares closed lower by 1.10% at $38.60 on Wednesday.