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New Fortress (NFE) Boosts Presence in Brazil, Buys Power Asset
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New Fortress Energy Inc. (NFE - Free Report) , the U.S.-based liquefied natural gas (LNG) firm, has entered into an agreement to expand its presence in Brazil. Per the agreement, NFE is set to snap up a 1.6 GW Capacity Reserve Contract, known as PortoCem PPA, from the Latin America-focused electric utility company Ceiba Energy. This will help New Fortress Energy solidify its position as the “leading LNG-to-Power” company in Brazil.
The transaction involves an exchange of NFE convertible preferred stock and appropriation of some of the liabilities from a subsidiary of Ceiba Energy. Through the 15-year contract period, PortoCem PPA is expected to contribute more than $280 million annually.
According to New Fortress Energy, the transaction is expected to close in March 2024, with cash flows trickling in by July 2026.
NFE's approach involves leveraging its existing infrastructure in Brazil, particularly its local LNG terminals — Barcarena and Terminal Gas Sul (TGS). The company plans on strategically expanding its power complex by 1.2 GW by utilizing the infrastructure in place at Barcarena, with commercial operations expected in 2026.
Additionally, New Fortress Energy is looking to transfer the remaining 0.4 GW of the PPA to another power generation asset that is associated with the TGS terminal.
NFE aims to enhance profitability by minimizing costs and generating incremental throughput and earnings from its existing asset base. For New Fortress Energy, the acquisition of the PPA enables it to add significant downstream power infrastructure to its asset base and improve the utilization of the terminal infrastructure at Barcarena and TGS.
In conclusion, the acquisition of PortoCem PPA consolidates NFE’s position as the leading LNG-to-power company in South America’s largest economy. According to Wes Edens, the CEO of New Fortress Energy, this acquisition has added a long-duration asset to the portfolio, which is “highly complementary” to its presence in Brazil.
Investors interested in the energy sector might want to look at some better-ranked stocks like Sunoco LP (SUN - Free Report) , The Williams Companies (WMB - Free Report) and Murphy USA Inc. (MUSA - Free Report) , each sporting a Zacks Rank #1.
Sunoco LP is one of the largest independent distributors of motor fuels to customers across the United States.
SUN is currently valued at $5.72 billion. The company pays a dividend of $3.37 per share, or 5.92%, on an annual basis.
The Williams Companies Inc. is a leading energy infrastructure provider in North America. The company also ranks among the largest domestic transporters of natural gas by volume.
WMB is currently valued at $43.21 billion. The company pays investors $1.79 per share, or 5.04%, on an annual basis. The company has increased its dividend payment five times over the last five years.
Murphy USA Inc. is one of the largest retailers of gasoline products and convenience merchandise across the United States.
MUSA is currently valued at $7.64 billion. Murphy USA pays a dividend of $1.64 per share, or 0.46%, annually. The company has increased its dividend eight times in the last five years.
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New Fortress (NFE) Boosts Presence in Brazil, Buys Power Asset
New Fortress Energy Inc. (NFE - Free Report) , the U.S.-based liquefied natural gas (LNG) firm, has entered into an agreement to expand its presence in Brazil. Per the agreement, NFE is set to snap up a 1.6 GW Capacity Reserve Contract, known as PortoCem PPA, from the Latin America-focused electric utility company Ceiba Energy. This will help New Fortress Energy solidify its position as the “leading LNG-to-Power” company in Brazil.
The transaction involves an exchange of NFE convertible preferred stock and appropriation of some of the liabilities from a subsidiary of Ceiba Energy. Through the 15-year contract period, PortoCem PPA is expected to contribute more than $280 million annually.
According to New Fortress Energy, the transaction is expected to close in March 2024, with cash flows trickling in by July 2026.
NFE's approach involves leveraging its existing infrastructure in Brazil, particularly its local LNG terminals — Barcarena and Terminal Gas Sul (TGS). The company plans on strategically expanding its power complex by 1.2 GW by utilizing the infrastructure in place at Barcarena, with commercial operations expected in 2026.
Additionally, New Fortress Energy is looking to transfer the remaining 0.4 GW of the PPA to another power generation asset that is associated with the TGS terminal.
NFE aims to enhance profitability by minimizing costs and generating incremental throughput and earnings from its existing asset base. For New Fortress Energy, the acquisition of the PPA enables it to add significant downstream power infrastructure to its asset base and improve the utilization of the terminal infrastructure at Barcarena and TGS.
In conclusion, the acquisition of PortoCem PPA consolidates NFE’s position as the leading LNG-to-power company in South America’s largest economy. According to Wes Edens, the CEO of New Fortress Energy, this acquisition has added a long-duration asset to the portfolio, which is “highly complementary” to its presence in Brazil.
Zacks Rank and Key Picks
Currently, NFE carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the energy sector might want to look at some better-ranked stocks like Sunoco LP (SUN - Free Report) , The Williams Companies (WMB - Free Report) and Murphy USA Inc. (MUSA - Free Report) , each sporting a Zacks Rank #1.
Sunoco LP is one of the largest independent distributors of motor fuels to customers across the United States.
SUN is currently valued at $5.72 billion. The company pays a dividend of $3.37 per share, or 5.92%, on an annual basis.
The Williams Companies Inc. is a leading energy infrastructure provider in North America. The company also ranks among the largest domestic transporters of natural gas by volume.
WMB is currently valued at $43.21 billion. The company pays investors $1.79 per share, or 5.04%, on an annual basis. The company has increased its dividend payment five times over the last five years.
Murphy USA Inc. is one of the largest retailers of gasoline products and convenience merchandise across the United States.
MUSA is currently valued at $7.64 billion. Murphy USA pays a dividend of $1.64 per share, or 0.46%, annually. The company has increased its dividend eight times in the last five years.