Excelerate Energy has reported a robust financial performance for the second quarter of 2024, with an 18% increase in adjusted EBITDA to $89 million compared to the previous quarter. The company's strategic investments in Vietnam and ongoing discussions for a project in Alaska underscore its commitment to expanding its LNG operations and capitalizing on growing global demand. Excelerate is also enhancing its fleet efficiency with new vessels and technology while maintaining a focus on safety and value creation for shareholders.
Key Takeaways
- Excelerate Energy's adjusted EBITDA rose to $89 million, an 18% increase from the previous quarter.
- The company's core regasification business and terminal contracts were significant contributors to the financial success.
- Excelerate is expanding its fleet and integrating new technology to improve efficiency.
- Strategic investments include a greenfield LNG terminal in Vietnam and a proposed terminal in Alaska.
- Financial guidance for 2024 has been raised, with adjusted EBITDA expected to be between $320 million and $340 million.
- The share repurchase program is 40% complete, with $20 million utilized from the authorized $50 million.
Company Outlook
- Excelerate Energy has raised its financial guidance for 2024, with adjusted EBITDA anticipated to range from $320 million to $340 million.
- The company is actively pursuing expansion with a focus on organic investments and M&A opportunities that offer strong fundamentals and align with their strategy.
Bearish Highlights
- The Piran project in Bangladesh faces uncertainty due to recent political changes, with progress contingent on the formation of a new government.
Bullish Highlights
- Excelerate's strategic investment in Vietnam and discussions in Alaska demonstrate the company's positive outlook on LNG demand and market expansion.
- The company's focus on delivering gas and LNG solutions globally, coupled with the increased demand following the war in Ukraine, positions Excelerate favorably in the market.
Misses
- No specific information was provided on vessel requirements or the exact number of FSRUs under construction.
- The company did not disclose details on the timeline or financial impact of integrating reliquefaction technology into their FSRUs.
Q&A Highlights
- Excelerate discussed the challenging operating conditions in Cook Inlet for the Alaska project but expressed confidence in finding suitable technical solutions.
- The company reiterated its commitment to transparency with investors and stated that more projects will be announced once they have tangible proof points.
- Executives emphasized the long-term need for LNG in select markets and their strategy to secure anchor customers without taking commodity risks.
Excelerate Energy (ticker: EE), in its earnings call, conveyed a strong quarter with significant growth in its core business and promising expansion plans. The company's strategic investments and operational enhancements are set to position it advantageously in the evolving global LNG market. With a raised financial outlook and a commitment to strategic growth, Excelerate Energy continues to focus on safety, efficiency, and value creation for its stakeholders.
InvestingPro Insights
Excelerate Energy's recent financial performance and strategic initiatives have positioned the company as a key player in the global LNG market. As investors evaluate Excelerate's potential, InvestingPro offers valuable insights that may guide investment decisions:
InvestingPro Tips suggest that while Excelerate's stock has experienced a significant decline over the past week, analysts remain optimistic about the company's profitability in the current year. Despite a predicted sales decline, the company is expected to maintain net income growth throughout the year.
From a financial metrics standpoint, InvestingPro Data reveals that Excelerate Energy has a market capitalization of $1.95 billion, with a Price/Earnings (P/E) ratio of 16.27, which adjusts to 15.55 when looking at the last twelve months as of Q2 2024. This indicates that while the company is trading at a higher P/E ratio relative to its near-term earnings growth, it still maintains a moderate valuation. Additionally, the company's Price/Book ratio stands at 4.08, suggesting a higher market valuation compared to its book value.
Furthermore, the company's strong gross profit margin of 45.0% showcases its ability to retain a significant portion of sales as gross profit. Despite the challenges highlighted in the bearish section of the article, such as the uncertainty surrounding the Piran project in Bangladesh, Excelerate's financial resilience is evident in its ability to generate a solid operating income margin of 17.96%.
For those interested in a deeper dive into Excelerate Energy's financials and future prospects, InvestingPro provides additional tips on the company's performance and outlook. These insights, along with the 24 additional tips available on InvestingPro (https://www.investing.com/pro/EE), can be instrumental in making informed investment decisions.
Full transcript - Excelerate Energy Inc (EE) Q2 2024:
Operator: Good morning, all, and thank you for joining us for the Excelerate Energy Second Quarter 2024 Earnings Conference Call. My name is Charlie, and I will be the call coordinator for today. [Operator Instructions] I'll now hand over to Craig Hicks, VP of Investor Relations, to continue.
Craig Hicks: Good morning, everyone. Welcome to Excelerate Energy's Second Quarter 2024 Earnings Call. Participating on the call today are Steven Kobos, Chief Executive Officer; and Dana Armstrong, Chief Financial Officer. Also joining the call today are Oliver Simpson, Chief Commercial Officer; and David Liner, Chief Operating Officer. Our second quarter 2024 earnings results press release and presentation were released yesterday afternoon and can be found on our website at ir.excelerateenergy.com. I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Our actual results may differ materially from those expressed in these forward-looking statements, and we make no obligation to update or revise them. Today's remarks will also refer to certain non-GAAP financial measures. We provide a reconciliation to the most directly comparable GAAP financial measures at the back of the presentation. With that, it is my pleasure to pass the call over to Steven Kobos.
Steven Kobos: Thank you, Craig, and to all of you on the call, good morning. Today, I will share with you a story of strength, strong financial results, strong operational performance and strong execution of our strategy. On the financial side, we delivered $89 million of adjusted EBITDA in the second quarter. Our robust FSRU and terminals contract portfolio and our ability to meet our customer commitments, create the foundation for a compelling financial performance. In operations, I want to take a moment and salute Excelerate's global team. They focus every day on providing critical services to our customers and operating at the highest levels of safety. I'm extremely proud of this team. And when it comes to execution, we are doing what we said we would do. The Excelerate team continues to make great progress towards our plan to grow our company and maximize value for our shareholders. Now, I'll provide a recap of our business strategy and an overview of the progress we are making. Then I'll turn the call over to Dana for more on our financial results. Let me recap our strategy. We are operating and optimizing our core regasification business. We are executing our comprehensive growth road map, and we are focused on three key areas for value creation. First, acquiring ownership interest in LNG regasification terminals; second, establishing a diversified LNG portfolio; third, investing in downstream natural gas infrastructure. We are advancing our plans to expand our fleet. Our newbuild FSRU called 3407 remains on schedule for delivery in June 2026. Engineering and fabrication work on 347 are underway and the next major milestone in construction steel cutting is set for October. We are confident that we will place whole 3407 with one of the projects in our pipeline. Several of these projects would be an ideal fit for 3407. As an operator of one of the largest FSRU fleets in the world, we remain bullish on the asset class. Part of our strategy and investing in our fleet is to meet our customers' needs for efficiency, reliability and sustainability. We've got a great example of this with our plan to integrate modular reliquefaction kits onboard our vessels. These will improve the overall efficiency of our operations. Pleased to report we have placed an order for a reliq kit and are prioritizing it for integration into our fleet. The purpose of the reliquefaction kit is to recover excess boil-off gas by reliquefying and storing LNG in the cargo tanks. It also helps prevent the loss of LNG cargo volume. This means that the energy value of our cargo can be productively used by our customer and not wasted. This technology will enhance the value of the services we provide our customers. It will create opportunities for increased revenue generation, and it's going to support the development of the regas projects in our pipeline. You'll remember that last quarter, we shared with you a prioritized list of growth opportunities. These projects span the downstream LNG value chain and range from terminal ownership to fully integrated solutions. Today, we want to share two tangible proof points of our progress. The first one is a strategic investment we are making to enter the Vietnamese energy market. In June, Excelerate signed a term sheet with ITECO Joint Stock Company, a Vietnamese based private development company with whom we're going to develop a greenfield LNG import terminal in Haiphong Vietnam. The Northern Vietnam LNG terminal for NVLT is anticipated to be the first LNG terminal in the region. Vietnam is expected to have one of the fastest-growing economies in Southeast Asia. And Hanoi, Capital City is located in the North, and this offers an enticing entry point into the country for Excelerate due to its rapid industrial growth. As domestic production declines, these industrial complexes in the north provide a foundational base of customers with a ready need for LNG, which will play a pivotal role in their energy mix. The planned LNG import terminal will have a total import capacity of 1.2 million tonnes per annum constructed in 2 phases. Phase 1 of NVLT will have a capacity of 0.7 million tonnes per annum, and we expect operations to commence in 2027. The second quick point of our value creation strategy is an integrated solution that is going to allow for the delivery of natural gas supply into South Central, Alaska. For over 50 years, the South Central region of Alaska has relied on Cook Inlet natural gas for most local heating systems and electricity generation. But with domestic gas reserves in the Cook Inlet area declining, the region will need to import LNG to meet its anticipated local natural gas needs from 2028 onwards. Excelerate is in advanced discussions with local utilities in South Central Alaska for the development of an integrated LNG terminal in the lower Cook Inlet region. Excelerate with MDFSRE-based terminal, source LNG supply is required and sell gas to liquid utilities and other offtakers. The start of commercial operations is targeted for 2028. We talked often with many of you on this call about our efforts in LNG markets all over the world. I can assure you that as an American company, it feels great to bring the critical services we provide to customers here in the United States. Let me sum this up. Once again, when it comes to our strategy, we're doing what we said we would do. We look forward to sharing even more information about the NVLT project, the Cook Inlet project, and other projects in our pipeline with you in the future. Before I turn the call over to Dana, I want to address the current situation in Bangladesh. As many of you have seen on Monday the Prime Minister resigned, and a caretaker government is currently being formed. During this time, the safety of our team members is and remains our top priority. All of our people are safe. The continuity of our operations is an utmost importance for the country and as a long-term partner of Bangladesh, we continue to operate as usual. As an American company that provides essential energy services to the people of Bangladesh, we are confident we will continue to play a vital role in helping to meet the energy needs of the country. With that, I'll now hand the call over to Dana for a deep dive into our numbers for the quarter.
Dana Armstrong: Thank you, Steven, and good morning, everyone. As Steven said, we are pleased with our second quarter financial results. Adjusted EBITDA for the second quarter was $89 million, up $14 million or up about 18% versus last quarter. The sequential increase in adjusted EBITDA was driven by the impact of the FSRU Summit drydock, which occurred and was expensed in the first quarter of 2024. As a reminder, because the FSRU Summit is under a build, own, operate transfer or boot structure. The majority of the drydock costs were expensed last quarter through the income statement instead of being recorded as maintenance CapEx to the balance sheet. We continue to invest in our fleet to ensure that we consistently operate at the highest levels of reliability, doing so essential to maintaining a best-in-class fleet and vessels. Our maintenance CapEx spend for the quarter was $21 million, and year-to-date through the second quarter, we spent roughly $32 million on maintenance CapEx. As of the end of the second quarter, our total debt, including finance leases, was $1,734 million. We had $609 million of cash and cash equivalents on hand and roughly all of the $350 million of capacity under our revolver was available for borrowings as of quarter end. With the free cash flow generated by our core regacication business, our stellar balance sheet and the liquidity provided by our revolving credit facility, we remain confident that we have more than sufficient capacity to fund our near-term growth and strategic objectives. As an update on our share repurchase program, during the second quarter, Excelerate purchased 674,000 shares or $11 million of our Class A common stock at a weighted average price of $16.27 per share. Through the second quarter, we've utilized 40% of the $50 million share repurchase program that was authorized in early 2024. We will continue to take an opportunistic approach to the share repurchase program throughout the remainder of the previously authorized 2-year tenure, which runs through February 2026. Now let's turn to an update on our financial guidance for 2024. We are raising our previously communicated adjusted EBITDA guidance for 2024. For the full year, we are now expecting adjusted EBITDA to range between $320 million and $340 million. For the full year, we continue to expect maintenance CapEx to range between $50 million and $60 million and committed growth capital to range between $70 million and $80 million. The majority of our committed growth capital range is related to capital spend on our newbuild FSRU or 3407, including a 15% milestone payment due to the shipyard in the fourth quarter of this year. As a reminder, committed growth capital is defined as capital allocated and committed to specific investments for previously approved capital projects. For the projects that we talked about today, plus the average in our pipeline, once we've signed definitive agreements, we'll layer in the incremental estimated capital spend into our committed growth capital estimates at that time. With that, we'll open up the call for Q&A.
Operator: [Operator Instructions] First question comes from Chris Robertson of Deutsche Bank (ETR:DBKGn). Chris, your line is now open.
Chris Robertson: Thank you, operator, and good morning, Steven and Dana. Thanks for the taking the time to answer my questions today. This is related to the Alaska proposal. I know one of the concerns that the utilities up there have had is the some of the extreme title ranges that happened in the cookie and the operating environment there as it relates to an FSRU. In these discussions, have you guys discussed that particular problem and kind of proposed a technical solution that would sway their fear around that issue?
Steven Kobos: I'll lead off there, Chris, and then hand it over. Also joining Dana on me in the room today are Oliver Simpson, our Chief Commercial Officer; and David Liner, our Chief Operations Officer. So I'll take a crack and then hand it off to David. But we're well aware of conditions in Cook Inlet. And let's face it. We have embraced tough conditions all over the world. Most of our fleet was designed for the North Atlantic. We deal with cyclones in the Bay of Bengal. We have been in all kinds of extreme weather. We're well aware of the title nations of Cook Inlet. And we believe that there are suitable technical solutions for that to provide the reliability that is essential to any of these projects. Energy needs to be reliable. But David's team ultimately will be involved with that. So Dave, do you want to add some insight?
David Liner: Yeah. It's certainly an issue that's on our radar screen, and it's going to be a challenge for the project, no doubt. There are existing facilities in the area that are similar to what's proposed for this project. So we feel fairly confident we're going to be able to develop a technical solution. As Steven says, we do this all over the world in similar challenging environments. This one is just a little bit done. But it's a technical problem. The engineering capabilities would a really strong engineering team that can develop a solution that's appropriate for the conditions that are there at the site. So yeah, we're fully aware of it and confident we can work through it.
Chris Robertson: Okay. Yeah, I appreciate the confidence on there. I guess turning to other parts of that project, would this be part of a, I guess, conversion of the existing Kenai LNG export facility? Or is this imagined as a new location?
Steven Kobos: I'll hand this to Oliver Simpson for a little more color, but the answer to that one is pretty crystal I think.
Oliver Simpson: Thanks, Steven. Thanks, Chris. I think we're focused on delivering a solution to the customers in the region. I mean, I think you just heard from David, we have some ideas on the technical solutions. We'll continue to work with our partners there. And there's a number of options to the technical solution. I mean, I think for us, ultimately, it's a product that has refundmentls. There is -- we see the demand for gas in the cook and met region, and that's what we're focused on. We'll work on the best technical solution over the course of the budget.
Chris Robertson: Okay, great. I guess last question related to this, the utilities group up there and put out a study with a cost estimate around $700 million for an FSRU solution. Is that a fair starting point for some type of CapEx assumption? Or do you guys have any guidance as it relates to what you think the project might cost?
Steven Kobos: I don't think we're going to -- I mean, we're not in a position to comment on the cost, but typically, we come in well-below that. As you guys know, we've been looking at our other facilities.
Chris Robertson: Yes. All right. Great. I’ll turn it over. Thank you.
Steven Kobos: Thanks, Chris.
Operator: Thank you very much. Our next question comes from Theresa Chen of Barclays (LON:BARC). Theresa, your line is now open.
Theresa Chen: Good morning. Thank you for taking my question. On the Northern Vietnam onshore terminal project, can you just give us a little bit more color on the genesis of this project, how long you’ve been in discussion related to this, what got it across the finishing line and potential economics to think about and other potential projects like this in emerging markets that you're assessing right now.
Steven Kobos: I'm going to hand this to Oliver, Theresa. It's good to hear from you, by the way. I'm going to hand it to Oliver. I think what I want to say, though, in general, we're giving you guys a peak at different types of projects using different types of assets. We've told everybody we love FSRUs, but we're not wed to them, if that's not the right solution for a particular project. In terms of Vietnam in general, man, we've been looking at Vietnam forever. And overtime, I think -- I don't know, they've been -- when you look at all the gas to power to the south and everything else, I think at one-time or another, there have probably been more than 50 projects proposed. But we've been patient. We've been a little counterintuitive into what we think will cross the post first in time in terms of demand and the like. Oliver, you're closer to Vietnam. Why don't you take a run at it?
Oliver Simpson: Yeah. Thanks. And thanks, Teresa. Yeah, I think, look, as Stephen said, we've been looking at Vietnam for a while that there's been a number of projects. And stepping back the prospect for LNG in Vietnam, we're extremely bullish on. I think when we saw this project the fundamentals Steven said in his remarks the fundamentals and markets would be the first LNG terminal up there. This is based on industrial demand and demand that's there today. It's not the LNG to power projects, which we believe in, but we think have a slightly longer timeline potentially. So we look at the number of projects, but we felt that this one had the right attributes for us. And importantly, to your broad questions, think of projects, like this is an integrated project where accelerate brings its international expertise. We can bring our LNG supply portfolio and deliver gas and LNG solutions to these customers. That's what we're doing here in Vietnam. That's what we said, we're going to do, but that's also what we're looking to do in other projects around the world. So I think this is a good poster child of the type of projects that we're looking at.
Theresa Chen: Thank you both for that nuanced answer. Maybe turning to capital allocation, just with the visible growth ahead of you, while still executing the share repurchase plan. What is your updated view at this point on balancing growth endeavors, returning cash to shareholders while still optimizing liquidity of the stock and maintaining a healthy balance sheet?
Dana Armstrong: Hey sorry. This is Dana. So I'll just reiterate what we said before. Obviously, growth is our priority. We have several projects. We've talked about these projects. In the last quarter call, you just -- we just highlighted a couple of other products in more specifics. We'll continue to maintain our best-in-class fleet, so CapEx on growth projects and CapEx for our existing fleet as well as the new additions. Obviously, we have all 347, come out 2026. That's our priority. And we will continue to maintain our dividend. We will look at potentially increasing that dividend when the time is right. Right now, our focus is on growth. As far as the share repurchase, we're very pleased with where we are there. We've executed $20 million of the $50 million that program runs until February 2026. And we'll continue to use it opportunistically when it makes sense for us based on share price and other factors.
Theresa Chen: Thank you very much.
Dana Armstrong: Thank you.
Operator: Thank you. Our next question comes from Wade Suki of Capital One. Wade, your line is now open.
Wade Suki: Hi. Good morning. And thank you for taking my questions. Would you mind giving us a sense -- I think you sort of answered it already, but what kind of vessel requirements might be required for maybe Alaska or some of the maybe projects that are further up in the queue to whatever extent you feel comfortable kind of discussing that.
Steven Kobos: Yes, thanks, Wade. You know, from our chart we shared last time, we showed some FSRU projects. Some are new building type projects. Some are going to have lower send-out, will likely be a conversion, and kind of TBD on the specific here. But we do recognize that not all of these projects require enormous send-outs. So we'll tailor the vessel for those circumstances. But we do intend to grow our fleet. That is part of this pipeline, and we will grow it in the right way. And I guess I can tell you, Wade, we continue to evaluate, excuse me, different ways to grow that fleet. I mean, it's a bit of an obsession right now.
Wade Suki: Understand. Thank you. Just industry-wide, do you know how many FSRUs are under construction today? And I guess if you ordered one today, when do you think delivery might be?
Steven Kobos: Now, Wade, there are two new buildings, I guess, under construction. Actually, ours is in fabrication and has steel cutting in October. In October, if you ask me, there'll be one that's had steel cutting. So maybe that's how I answer that. In terms of when you can get one, Wade, I know that, but I don't want to tell the world. So it's a while, it's a while, but we're happy with how we can grow this fleet.
Wade Suki: Awesome. Thank you. Appreciate that. One last one, if I could. I'd love to just hear just from a commercial sense, what the tenor is like, maybe more recently with the customers and maybe how that's changed here in the last few months, given all that's going on in the world.
Steven Kobos: So the tenor way, do you mean, I mean, you're not talking to our average remaining life of contracts, right? But what's your question go to?
Wade Suki: Really thinking about new projects. And I know following Ukraine and Russia and the gas price spike, we had a little bit of a pause. I'm just kind of curious if the sentiment or psychology to what extent that might have shifted here in the last few months, given gas prices, things like that, global energy prices, geopoliticals, all those other factors depending on the customer.
Steven Kobos: Yes, I'm going to hand this to Oliver. I'm going to make a couple of just big statements that are gospel for us, and that is the world understands that LNG is a critical fuel. The Global South sees LNG as affordable, as a critical fuel. The whole world sees it as affordable, as a suitable bridging fuel. And as your first question to us made clear, it remains a tight within the asset class to regasify LNG beyond the terminals that are out there right now. FSRUs are a tight asset class. So I'll leave it at that. But, Oliver, you're closer to the customer.
Oliver Simpson: Yes, no, no, I think that's exactly right. And I think what we've seen is the customers are on the back of the war in Ukraine. The customers are now coming back. There's LNG, there's a strong pipeline of LNG coming online in the coming years. So you're seeing LNG as an affordable fuel again. And we're seeing that the customers are coming to us and they're wanting that integrated solution with the LNG and what we can provide. So I think we feel strongly we have a great product to offer our customers. We're seeing demand for it. And I think in -- we're picking markets that have the fundamentals. So these are markets that need the LNG need for gas for a long time. So we're selective on where we're going, but we see that long-term need.
Wade Suki: Fantastic. Thank you so much. Appreciate you have a great day.
Oliver Simpson: Thank you.
Operator: Thank you so much. Our next question comes from Mike Scialla of Stephens. Mike, your line is now open.
Mike Scialla: Thanks. Good morning, everybody. Just trying to characterize the two projects that you announced here. You said last quarter that 10 of the 12 were kind of in that $50 million to $400 million range, somewhere two, I guess, Piran, one of them was longer term and above that range. Is it fair to characterize these two as kind of towards the higher end of that range and longer term? Just trying to get a sense of how they fit into the pipeline.
Steven Kobos: Yeah, I'll take that one. Thanks, Mike. Yes, I think they're in -- certainly in that range. I think, obviously, each project has its own fundamentals. But as we said in the case of Vietnam, we're extremely bullish on the need for LNG in that country. And the project is -- it's an integrated project, providing gas to customers downstream. So that is -- we expect to be there for many years. I think Alaska, it's similar to different fundamentals, but also there's a need for LNG in the region. And again, we're looking at this from an integrated point of view. So it's view on this.
Mike Scialla: Okay. Thanks. And I guess looking at the remaining projects in the pipeline, what would cause you to I guess, unveil those. Is it getting a term sheet like you have in Vietnam or something else that would be required before you could talk about them?
Steven Kobos: Yeah, Mike, this is Stephen. We want to be as transparent with you guys as possible, short of inviting you guys to travel around the world and sit at conference room tables with us or walk around the side. So we want to be as transparent as we can. But we think it's important, as we said last time, we'll come to you guys when we've got tangible proof points. We want as much transparency as we can. We want to show you as much consistency as possible. These just happen to be unfolding. It's all a horserace and these horses happen to be ahead at this point in time. And we wanted to -- we also thought they were good in showing the whole range of opportunities that we're looking at geographically. We had hinted last time that we were looking at the Americas that might have been too thank a bread crumb. So we wanted to make clear that we are looking all over the globe, and that includes USA when it's appropriate. So we just thought they were interesting proof points, and we were advancing them coming into the quarter in a way that felt like it was comfortable to talk about it. And we'll try to continue that...
Mike Scialla: Sounds good. Thank you.
Operator: Thank you very much. [Operator Instructions] Our next question comes from Bobby Brooks of Northland Capital Markets. Bobby, your line is now open.
Bobby Brooks: Hey, good morning, guys. Thank you for taking my question. I just want to start off with the reliquification technology that you guys are integrating to your current FSRUs. I was really – it's a really interesting way to uplift revenue generation on your current footprint. So what I was curious to hear about is, first, how quickly can that technology be added to your current FSRU footprint? And then secondly, once that is added, how quickly can you see a financial benefit? Is that something where you need to go back to the customer and renegotiate the contract? Or is that something that is that couple of already baked into those new contracts? And maybe if you can just give a sense of how incremental the financial benefit would be, that would be appreciated.
Steven Kobos: Hey, Bobby, good to hear from you. Listen, I'll take the last point. In general, yes, we're going to have some communication with the customer. It's a great benefit, but we're not in the business of giving things away for free. So it's a nice piece of kit. We think the customers, it will pay for itself for a customer, many customers easy within a year. So we think they'll value it, and we think they're going to fly off the shelf. David, can talk about timing on it. We're excited, man. This is going to lower emissions of our fleet. Of course, we're excited about it.
David Liner: Yes. Just to build on that, in terms of time line, so the lead time for this equipment is about 18 months. And we want to buy this equipment or we have bought this equipment now so that it will be ready and available to deploy as soon as our customers decide they want to employ. And as Steven said, we know that there's strong demand for it. And by buying it now, that enables us to save our customers from having to make a decision two years in advance that they want this technology. So we're cutting the implementation time down from a couple of years down to a series of months to be able to deploy this from the time a customer says, yes, we're ready to go. So yes, roughly 18 months from now, as early as 2026, we could be able to deploy the technology to an existing vessel or something coming into the fleet as well.
Bobby Brooks: Got it. And have you -- you said that you've already bought these the items? Is it -- have you bought – have you bought enough for all 10 led in FSRUs because that's what you guys don’t do in 2026 or you not only bought it for half or any color on that?
Steven Kobos: I mean, Bobby, we placed -- we've done our engineering. We've done our design work. We've done the work to ensure that it's plug-and-play across the different class of vessels within our fleet. But we've placed our initial orders. We expect as we get further customer traction, we will continue this. We're not aware of any other FSRU that has one of the tips on it out there in the world. And David's team does obsess about our fleet being best-in-class, and we are determined to keep it best-in-class. And you can look over time for us to put it across the fleet. There are -- I don't want to get into the sausage making. There are two or three vessels that are used in a way that maybe it's not as useful as it is for the way that most of our customers use their vessels. So it's kind of -- it shouldn't be surprising how people use these assets vary. But I'd say, over the long run, I'd look to put it on, I don't know, 6 or 7 of the fleet probably.
Bobby Brooks: Got it. And then so the opportunity set for [indiscernible] is vast going forward, just with these growth opportunities and new projects. And you guys had roughly $960 million dry powder out of that, sort of, you guys are producing $50 million to $60 million of quarterly free cash flow. And then finally, layer in your expertise in history in importing LNG. So you clearly are well-positioned to capitalize on those -- on the best opportunities in front of you. What I'm trying to get a sense of is, what are the concerning factors for you going forward? Do you see the $960 million of that dry powder as a limit in terms of what you'd be comfortable putting towards growth or maybe something else? It just really seems like the sky is the limit here for you guys.
Steven Kobos: First of all, Bobby, I'd like for you to write a copy for Craig. I think that's true. I do feel -- no, I feel like all seriousness, there is an enormous TAM out here. It is enormous. We don't need all of it. We don't want all of it. We kind of picky. We do think there are a lot of markets with the great fundamentals that we're looking for. And I think what you've seen from our proof points today, just a reminder, we are carefully looking all over the world for the right market, the right chance to advance our business model, not just chasing some projects on where whose dispatch doesn't make sense. So I do think, over time, we are incredibly well-positioned with the tools, including our dry powder that we have to bring to bear. So I think the TAM is so big that we're going to be able to kill it while still being selective.
Bobby Brooks: Got it. So -- and then just maybe last one for me, just kind of a clarifying point. It seems like just reading through how you guys talked about the PMLP, the Vietnamese -- the North Vietnam is LNG import terminal that you guys just talked about. Is that -- are you guys going to be -- would you be selling gas to actually those industrial factories in the market? Or would you be selling it to utilities? I just kind of wanted to get some clarity on that, like who would be the customers off taking the gas?
Oliver Simpson: Yes. I'll take that one, Bobby. I think we don't want to get into too much details on the commercials here. But essentially, we -- the idea, as I mentioned, some integrated terminal where we will be providing the LNG to that terminal and the terminal company that we're in that -- we're partnering will be selling gas and LNG out of the terminal to local customers, local industries. Overtime, we'll see exactly how far downstream we are, but we do see that there is demand for the product from the terminal. I'll sort of leave it at that.
Bobby Brooks: Got it. Yes. So healthy amount of demand, not for utilities, but probably more those industrial players there. Thank you very much and congratulations on another -- passing quarter.
Steven Kobos: Thanks.
Operator: Our next question comes from Praneeth Satish from Wells Fargo (NYSE:WFC). Your line is now open.
Praneeth Satish: Great. Thanks. Good morning. On Piran, do the political changes in the region and potential prime ministerial candidates? Does that have any bearing on support for this project? And then just broadly, where does Piran stack now versus some of the other opportunities you're looking at here with Vietnam, Alaska and all those other projects in the backlog?
Steven Kobos: Thanks, Praneeth. I'll take that one. It's Steven. I would say what I'll tell you about Piran, I'll tell you about the market is nothing really changes about the need for natural gas in Bangladesh. The supply-demand balances, the decline curve and their historic onshore production all those fundamentals are there. So the need remains. But at this point, we're less than a week into a change in government. We don't have the caretaker governments lineup, filled out yet. So clearly, when you are -- any time you're dealing with a counterparty who's a state energy company like Petrobangla, they're going to need a remit from a government to proceed with it. We will continue doing some of -- and it'll take a little while. We will continue with some of the efforts that were ongoing this year. Some of the Metocean, we've got a Metocean buy out there. We're doing all kinds of things to assess what the needs are. We're going to keep doing that because we need to because this will -- but things will ebb and flow on that pipeline. Everything doesn't proceed at a uniform pace. That's why you want and why we have a robust overall pipeline. But let's not forget, Irish one of 12. That's why we came to you all last quarter, one of 12 projects in our pipe. That's why we are trying to give you all more color, more detail, more proof points, just so you guys have better visibility into what's really going on here at our conference rooms day to day. So I think it's obvious that there would be some slowdown because we don't even have a government yet. Fundamentals are still there. I think there's a great opportunity in country for an American Energy company to keep providing ever more energy for the people of Bangladesh. So I like our prospects long term.
Praneeth Satish: Okay. Now that makes sense. And then I guess, maybe how are you weighing at this point, organic investments versus M&A? Clearly, you've got a robust pipeline here of organic growth opportunities. So how are you kind of thinking about the balance between the two? And do you think there's more of a bias now on organic investments over M&A? Just curious for your thoughts.
Steven Kobos: Praneeth, I don't want to make light of it, but we like the deals that we'll make. And we like fundamentals, and we don't really care how they get served up. We know what we like to do -- we know we're a critical part of the energy transition. We know LNG is affordable. We know LNG needs to find a home. We know most of the world and most of the big players are focused on liquefaction and building their supply portfolios. We are the ones opening markets and finding a way to take that LNG and get it where it needs to go. So, you know that's what the need is. How -- what tool you use to bring us to the table and fit into that value chain, we're going to be agnostic to.
Praneeth Satish: Got it. Thank you.
Operator: Our next question comes from Zack Van Everen of TPH. Zack, your line is now open.
Zack Van Everen: Hey. Good morning, guys. Thanks for taking my question. Just going back to Alaska. I note you guys are in advanced discussions. I guess what's the time line and your guys' size where you put kind of paper there? What are you looking at as far as getting over that hurdle for that project?
Steven Kobos: Yes. I'll pass that to Oliver, Zack, because I'm impatient. I always want yesterday, but I'll let the folks actually facing the customer to speak to that.
Oliver Simpson: Yes. I think, look, the time line -- we announced the project with a time line start up of 2028. We think that, that's achievable for the project. So obviously, I think you can back out of the sort of a rough idea of what sort of time line we'd be looking to get into definitive contracts. It's obviously -- there's a process we've got to go through in the region. I don't think we're going to speak to a specific time line here, but we'll keep working with our partners, and we're confident we can move this along fairly quickly.
Steven Kobos: The decline curve for the Cook Inlet with domestic production it is a real thing moving at a real pace though, right? And that's going to drive the need on the timing for papering those approvals to everything else because there is going to be a need for full this bridge or it's going to have to happen.
Zack Van Everen: Got you. No, that makes sense. I appreciate that. And then between the two projects, I know on the Cook Inlet project, you note that some of it will have or the gas sales will have take-or-pay style applications for Vietnam and Alaska is the majority of these terminals plan to be take-or-pay? Or will you open up some marketing or commodity exposure with these?
Oliver Simpson: I think the -- what we're looking at on these types of projects is to get the right level of anchor customers that support the project. We're always interested in trying to see upside opportunities. But I don't think we'll be -- we're not looking to take commodity risks in these markets. So they're going to be underpinned by the customers that allow us to take FID, and then we'll be looking different markets. We'll have different growth prospects, but we'll be looking to take those opportunities on the growth side.
Zack Van Everen: Perfect. Thank you, guys, so much.
Operator: [Operator Instructions] Our next question comes from Craig Shere of Tuohy Brothers. Craig, your line is now open.
Craig Shere: Good morning. Congratulations on the good quarter. I want to dig a little deeper in the way to FSRU capacity question. Maybe you could speak to availability of shipyard slots, the timing differences between new build and conversion, how you think about conversion? Because you've talked about it for maybe a couple of years or more, but up until now, you've only done new builds. And then on top of that, FSRU capacity is critical. Obviously, that's not the only thing you do, but that's critical. But what are your thoughts about the need for more long-term LNG supply beyond your venture global contract?
Steven Kobos: Craig, you've put the most questions into one question than anybody I know, man. I mean -- I will take some of your six questions and then I'll pass it around the table. We -- I mean, we've talked -- you don't know how long we've talked about Vietnam. We talked and looked for opportunities for a very long time. We have talked about conversions for years. We will pull the trigger on that depending upon the project. We are bullish on the asset class of FSRUs. And by the way, we love being able to geek out, design bespoke new buildings that we know what we need, okay? We think 347 is going to be the best-in-class asset of float. We want more of those two. Conversions are -- it's a significant project, and it's got its own execution risks just like every other major project, but the reality is there will be some that are suitable for it. I can't tell you what the sequencing will be on when we move to access a conversion candidate versus a new building. I mean, as soon as we can give you visibility to that, we will because it's a key element of transparency. What I tried to tell you guys is just not faltering on our view on this. Our view on the TAM, our view on being able to get LNG into these countries, our view on how valuable this asset class is, our view on how sticky that infrastructure will remain in Europe, by the way. We're pretty consistent on everything we say all around that. And from that, you can no doubt divine our intentions, Craig. But you also have some questions about the portfolio. I'm going to -- I think that was your fifth or sixth question, Craig, So I'm going to toss five and six seven.
David Liner: All right. Yes. Thanks, Steven. Thanks, Craig. I think the sort of the proof points to get today for booking that and NVLT, great opportunities for us to expand the LNG portfolio. We've talked about the LNG portfolio. I think we had some great successes last year with our inaugural sort of long-term deals there. We're now -- we've got volumes we're able to bring solutions to our customers now with the LNG when we go into these markets. And we're going to grow that portfolio as the projects come online. So it's a bouncing act between growing the supply as the demand is there. As I mentioned earlier, we see there's a lot of LNG coming online. We've got some great relationships, great partnerships out there. So I think what we're doing opening these markets, we're going to have plenty of opportunities to grow that portfolio.
Craig Shere: Great. Just to clarify on the timing difference between new build and conversion, as we think about backing into project specific time lines.
David Liner: Okay. I can certainly take that one, Craig, David Liner here. There is a difference in execution time, a new build on the order of 3 3.5 years -- can be a little bit shorter than that. Conversion times are generally less than that, but there is the execution risk that goes with a conversion, as Steven mentioned before. And that's always something that we're always managing those when we're looking at a prospective project, you have to understand that execution time line and the capacity of the vessel that you want to employ before you want to pull the trigger on a conversion or a new build. Of course, a new build is generally going to be a much higher capacity vessel than a conversion. They're going to be more appropriate for a smaller send-out type project. So it just depends on which project you're...
Steven Kobos: Conversion would be -- yes, conversion would be more appropriate for a smaller center.
David Liner: Or a smaller center, yes. I hope that helps Craig.
Craig Shere: Thank you. It does. Thank you.
Operator: We currently have no further questions. So I would like to hand back to Steven Kobos closing remarks.
Steven Kobos: Listen, I really appreciate the conversation that we have today with Dana and Oliver and David and May, and it's always a pleasure to get with you guys. The questions we got about our strategy in Vietnam, what we're doing in Alaska and our overall value creation strategy. We will continue to be transparent with you guys. We will continue to do what we say we will do. And with that, thanks very much for your time.
Operator: This concludes today's call. Thank you, everyone, for joining. You may now disconnect.
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