NEXT - NextDecade sinks after giving up too much equity in sanctioning LNG project

2023-07-13 14:35:35 ET

NextDecade ( NASDAQ: NEXT ) -27.6% to its lowest in a month after it made a final investment decision to develop Phase 1 of the $18.4B Rio Grande liquefied natural gas project in south Texas, but some analysts said the company may have given up more equity than expected to its financial partners.

NextDecade ( NEXT ) sanctioned the project as expected, but Cowen analyst Jason Gabelman said the company gave up 20% more equity than expected, although implied project unit margins appear to be above estimates.

The company said its financial partners will hold a 79% equity stake in Phase 1, which Gabelman said was expected to come in at ~60%.

"Investors are looking at the huge portion of cash flow that the new project level investors get relative to the equity holders and don't love that," Evercore ISI analyst Sean Morgan said, adding final estimated construction costs of $12B are higher than $11.4B previously expected.

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