Venture Global, Inc. (NYSE:VG) Q1 2026 Earnings Call Transcript

Venture Global, Inc. (NYSE:VG) Q1 2026 Earnings Call Transcript May 12, 2026

Venture Global, Inc. beats earnings expectations. Reported EPS is $0.19, expectations were $0.13.

Operator: Good morning, and welcome to the Venture Global, Inc.’s First Quarter 2026 Earnings Call. At this time, I would like to turn the conference call over to Ben Nolan, Senior Vice President, Investor Relations.

Benjamin Nolan: Thank you, Matt. Good morning, everyone, and welcome to Venture Global, Inc.’s First Quarter 2026 Earnings Call. I’m joined this morning by Mike Sable, Venture Global’s CEO, Executive Co-Chairman and Founder; Jack Thayer, our CFO; and other members of Venture Global’s senior management team. Before I begin, I would like to remind all listeners that our remarks, including answers to your questions may contain forward-looking statements and actual results could differ materially from what is described in these statements. I encourage you to refer to the disclaimers on our earnings presentation, which is available on the Investors section of our website. Additionally, we may include references to certain non-GAAP metrics such as consolidated adjusted EBITDA, which we may refer to simply as EBITDA during this call.

A reconciliation of these matrix to the most relevant GAAP measures can be found in the appendix of the earnings presentation posted on our website. Finally, the guidance in this presentation is effective as of today. Generally, we will not update guidance until the following quarter and will not update or affirm guidance other than through broadly disseminated pick disclosure. I’ll now turn the call over to Mike Sable.

Michael Sabel: Thank you, Ben. Good morning, everyone, and thank you for joining us today. We are pleased to share our first quarter 2026 results. I’ll begin the call with an overview of our key accomplishments and future plans. I will then make some remarks on the LNG industry before turning over the call to Jack, who will provide a more detailed review of our financial results as well as updated guidance for 2026. Following our prepared remarks, we will open the call to Q&A. Turning to Page 5 of the presentation. The unstoppable energy demonstrated since the founding of Venture Global has gained further momentum thus far in 2026, with the FID of CP2 Phase II. We are on track to be the largest LNG producer in North America by the end of 2027 with line of sight to over 100 million tonnes of annual production by 2030.

And Total assets were up by over $11 billion year-over-year to $56 billion at the end of the first quarter. We continue to be active in contracting our available capacity and now have more than 52 MTPA of long- and medium-term contracts totaling approximately $137 billion of revenue backlog. The business is running extremely well. and we remain on track for COD of [indiscernible] Phase 1 in the fourth quarter of this year. We are developing highly accretive bolt-on expansions, which we believe should come online in a fraction of the time LNG projects traditionally take while maintaining the highest safety standards in the industry as we’ve demonstrated at our current projects. On Page 6, I’ll highlight our performance in the first quarter. As you can see, despite the impact of winter storm burn and some spillover from market disruptions in late 2025, we were still able to grow revenue, income from operations, net income and EBITDA year-over-year.

We are also increasing our 2026 EBITDA guidance to $8.2 billion to $8.5 billion from $5.2 billion to $5.8 billion. which assumes liquefaction fees for the remainder of the year in line with the current forward curve. Jack will discuss these numbers in greater detail. Turning to Page 7. As you know, we completed the FID of Phase 2 of CP2 with an $8.6 billion project financing. Thus far, in Q2, our focus has been on simplifying our capital structure due to refinancing of a $1.6 billion redeemable preferred security at Calcasieu Pass Funding LLC held by Stonepeak with a more tax efficient and lower interest rate term loan B facility. We also raised $750 million of new Cache pass bonds to term out and repay the remaining balance of its construction loan.

These 2 transactions are particularly gratifying as they represent the repayment of all the original debt capital that enabled Venture Global to launch its first project. Operationally, we safely exported a new record of 130 cargoes in the first quarter. Commercial momentum has continued in 2026 with 5-year offtake agreements with [indiscernible] and Vitol and a 20-year offtake agreement with Hanwha Aerospace finalized in the first quarter. Furthermore, today, we are pleased to announce that the 5-year agreement with Vitol has been upsized from 1.5 MTPA to approximately 1.7 MTPA. And we have also finalized a new agreement with Total Energy’s for 0.85 MTPA for approximately 5 years. Moving to Page 8. As you can see, we expect production from our operational and commissioning facilities to be relatively stable over the course of 2026 with normal seasonality and potential variability from [indiscernible] commissioning process.

Our contracted position for 2026 has increased markedly to 84% of the portfolio from the 69% reported on our fourth quarter 2021 earnings call in March. In addition, April 15 marked the 1-year anniversary of COD at Calcasieu Pass, and I’m pleased to say that we have now exported more than 150 contracted cargoes to our customers without missing a single scheduled cargo. Turning to Page 9. You can see the evolution and speed at which we are executing CP2 construction. We are now just under 10 months from FID and the progress being made is astonishing. CP2 is our largest project to date, and we are increasingly confident it will be the fastest to progress from FID to first LNG, not only for Venture Global, but in the history of the LNG industry.

that speed translates into returns as we expect, we should be able to earn back nearly all of our equity in the project with pre-COD cargoes with a return on invested capital over 30%. All 21,842 linear feet of the perimeter wall is now complete, making the facility water tight, which is extremely important as we accept delivery of valuable modules. We now have 12 liquefaction trains and 3 gas turbines for the power plant delivered to the site and on foundations and many more on their way. First, LNG is still tracking well for the second half of next year. On Page 10, we thought it would be helpful to present our production profile and EBITDA sensitivity for the next several years. As you can see, our production profile is growing quickly with CPT coming online and continues to grow as we begin adding the bolt-on expansions at CP2 and Placements.

In the past 2 years, we grew the number of cargoes exported by 166%. By 2028, we expect exported cargoes to grow by another 130% from current levels. While our portfolio of 52 MTPA of medium or long-term contracts is more than our nameplate capacity, it is just over 60% of the 85 MTPA we expect to have online by the end of 2029, providing an opportunity for further intermediate and long-term contracting. The cadence of new project start-up and the subsequent commissioning cargoes also means our near-term available for sale capacity is elevated over the next several years as we move each project towards COD matching well with the near-term global supply and demand market dynamics. As you can see on Page 11, while we continue to contract available cargoes on a short-, medium- and long-term basis, we have over 33 MTPA of available capacity to contract over the next several years with the addition of our first 2 bolt-ons, not including commissioning cargoes.

We expect to contract the majority of this capacity over the next several years on a blend of long-term contracts to support new project financing and medium-term contracts to optimize returns and flexibility. On Page 12, we depict the first 2 bolt-on expansions we expect to develop after CP2 Phase 2. We are updating our near-term development plan to include the full expansion of CP2, which is 12 trains or 10 MTPA. The Plaquemines expansion plans remain unchanged at around 6.4% MTPA with optionality that additional trains as market conditions dictate. We are working with regulators expedite the permitting of both facilities and are actively negotiating commercial agreements. We have already begun to order long lead equipment and we’ll look to move forward with the first CP2 and then Pokemon’s expansions by early and mid next year, respectively.

On Page 14, we address pertinent industry trends in we last reported approximately 20% of global LNG capacity has been offline in Qatar and Abu Dhabi as you. Roughly 13 million tons or 3% of global production is likely to remain offline for several years in the construction schedule of the planned advent of Qatar’s Ross [indiscernible] remains to be updated. As reflected by healthy LNG forward curves in January and February, we believe the LNG market was already well balanced prior to the March supply disruptions. So unsurprisingly, LNG prices have subsequently been higher, and the forward curve is lifted for several years into the future. Interestingly, U.S. LNG infrastructure, which only started production 10 years ago, has now grown to 19 Bcf feed gas per day.

Despite this unprecedented growth, domestic natural gas prices are almost exactly where they were 10 years ago. The U.S. has decades low cost natural gas reserves position in the country and Venture Global to continue to provide affordable and reliable LNG to the global market. I also think the current environment highlights the value of Henry Hub link prices versus oil link prices that are common in most other markets. not only as Henry Hub not moved higher with the rise of oil prices, but U.S. natural gas prices have fallen as production of gas associated with oil production has increased, examining current and future LNG production in the Middle East. While we do not know how long the straight-out closure will last, clearly, there is an immediate impact.

And we believe it is likely to take some time for even the equipment that has not been damaged to return to full operational capacity. Lower production levels are only compounding the already historically low EU gas inventory levels, which were already near multiyear lows following cold winter temperatures. Depleted inventories will need to be rebuilt before next winter, likely increasing exposure to the forthcoming winter in compounding the challenge of constrained LNG production. Also, many traditionally price elastic markets like China, India and Pakistan have already made near-term demand adjustments and residual demand is increasingly inelastic. As a result, we believe the current backwardation in TTF and JKM Ford’s is unsustainable. Storage must be replenished and when our markets are likely to rally absent a near-term cessation of hostilities as market fundamentals take hold.

Beyond the immediate impact of the closure of the Strait of Hormuz and the 2 damaged Qatari liquefaction trains, the 49 million-ton Northfield expansion is already delayed and we expect could be delayed further by factors like supply chain disruptions and the availability of skilled labor as Qatar works to bring that facility back on schedule. Now I’ll turn it over to CFO, Jack Thayer, who will review the quarterly performance provide an overview of our project performance and discuss our updated financial guidance.

Jonathan Thayer: Thank you, Mike, and good morning to those on the line. I’ll be referring to the Venture Global, Inc. Form 10-Q for the quarter ended March 31, and 2026. The 10-Q is available on our website, and some of the key results are summarized on Page 16 of the presentation. During this call, I will highlight results I believe are salient to this audience. and I encourage you to review the entirety of our financial statements in detail. Beginning with revenue. Our top line was $4.6 billion for the first quarter of 2026, a $1.7 billion increase from the $2.9 billion during the equivalent period in 2025. This increase in revenue was driven by $3.1 billion from higher sales volumes, 48 TBtu in the first quarter of 2026 compared with 228 TBtu in the first quarter of 2025, which was partially offset by $1.4 billion from lower net LNG sales prices at our Plaquemines project and at Calasieu Pass due to the commencement of LNG sales under its post-COD SPAs. Our income from operations was $1.2 billion in the first quarter of 2026, a $71 million increase from $1.1 billion in the first quarter of 2025.

The shift was primarily driven by the higher sales volumes I previously mentioned, offset by lower LNG prices, net of the cost of feed gas. Our operating costs and G&A were largely changed year-over-year despite increased sales volumes and more venture global owned ships in operation. Our development costs were lower than the same period last year as we were able to capitalize more costs associated with CP2 and our pipeline and bolt-on expansions. Our net income attributable to common stockholders, which we will refer to as net income was $488 million for the first quarter of 2026, a $92 million increase from the $396 million in Q1 2025. Higher interest expense was offset by favorable changes in interest rate swaps and lower taxes due to higher stock option tax benefits.

Shifting to consolidated adjusted EBITDA, we earned $1.4 billion during the first quarter of 2026, a $26 million or 2% increase from $1.3 billion in Q1 2021. This increase in consolidated adjusted EBITDA was driven chiefly by higher sales volumes, largely offset by lower LNG sales prices, net of the cost to feed gas. Our EBITDA margin was 30% for the quarter despite challenging market conditions and is indicative of our substantial operating efficiencies and competitive operating advantage. I would also like to call out several additional financial updates. As Mike mentioned, we closed an $8.6 billion project financing as part of the final investment decision of the second phase of CPI which, in combination with the first phase, brings total project financing at CP2 to $20.7 billion, the largest stand-alone project financing ever completed.

Subsequent to the end of the quarter, Capture Pass Funding LLC raised $1.75 billion in the Term Loan B market to fully redeem the per equity interest of Stonepeak Bayou Holdings which should reduce our cost of anaesthesia expense by approximately $100 million per year and allow capital to flow more fluidly to the parent Aasiaat at month we issued $750 million of Calcasieu Pass notes which we used to fully repay the remaining balance of the Calcasieu Pass construction loan. Already in 2026, we’ve raised over $11 billion in support of our development and to refinance existing debt. As you see on Page 17, based on this cargo count, we are providing a consolidated adjusted EBITDA guidance range of $8.2 billion to $8.5 billion for 2026. This range assumes a liquefaction fee of $9.50 to $10.50 per MBtu for cargoes remaining to be sold in 2026 and is consistent with current TTF and JKM for price expectations.

On average, a fixed liquefaction fees over the remainder of 2026, increase or decrease by $1 per MMBtu. We expect our consolidated adjusted EBITDA range to adjust accordingly $300 million to $350 million, reflecting our accelerated pace of contracting and our 84% contracted position. As a reminder, our exposure stated on our 2025 year-end call was $575 million to $625 million for every dollar move in TTF prices. and our updated forecast reflects a material reduction in EBITDA sensitivity since our last call. Lastly, before turning the call back to Mike to take your questions. On Page 18, we walk through our capital allocation priorities. With respect to our near-term objectives, the numbers speak for themselves, and our model clearly generates the highest returns in the LNG industry.

As such, we believe the best use of our capital is continuing to invest in future growth. through our bolt-on expansions and adjacent infrastructure. As cash flows from CP2 begin to materialize in a meaningful way next year, we also expect to begin reducing leverage and hope to see our debt across the capital structure shift to investment grade. We’ve already begun making progress on debt repayment as total debt outstanding at Calcasieu Pass and Plaquemines have been reduced by more than $900 million. And since January, we have repaid over $500 million of the bridge loan at CP2. The last of our short-term objectives is to continue to simplify our capital structure, which we have already made progress towards in Q2 through the redemption of our Stonepeak preferred security and the repayment of the Cactus Pass construction loan.

Longer term, we expect our portfolio of high-return bolt-on opportunities to continue to be a compelling home for future investment. Although the scale of incremental investment is likely to shrink relative to our escalating cash flows. Thus, leaving more capital available for other uses. In particular, we expect to retire and refinance higher capital, higher cost capital, advance mature or are [indiscernible]. Additionally, we anticipate growing our dividend and potentially repurchasing shares as other means of driving shareholder value and returns. I’ll now turn the call back over to Mike.

Michael Sabel: Thank you, Jack. At this point, we’d like to open up the call for Q&A.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Manav Gupta with UBS.

Manav Gupta: Firstly, congrats on a guidance raise, excellent execution. I wanted to get a little more understanding on the new 2 contracts that you have signed both with Vital and Total Energies, Help us understand how those things came together. And given that you are such a low-cost producer, do we expect that you will continue to get more orders given cost advantage you have versus your global peers?

Michael Sabel: Starting with the second half first. We are very active in both the long medium and short-term contracting conversations and expect to progress on all 3 and have very, very good line of sight on the contracting that we want to do in — to support the bolt-on expansion and also to continue to term out our future portfolio. We’re super excited about our 5-year deals. Those are a length in the term that we planned on and I talked about, as you know, for several years. But we — as we talked about in earlier calls, reached the — finally reached the point, the transition point between placements progressing and CP2 progressing and comfort in the production capacity of both, in particular, Plaquemines first that allows us to do the 5-year deals now.

Those initially will be serviced primarily by Plaquemines. And then as CP2 comes online next year, initially with commissioning cargoes will shift over to start selling commissioning cargoes out of CP2 ramp-up. This is particularly important because it allows us to, in today’s market blend out, term out those — that future production has a big impact on kind of blending the risk with much higher pricing than 20-year pricing. We’re achieving roughly double our long-term contract prices a little bit better.

Manav Gupta: Perfect. My quick follow-up here is, you mentioned in the opening comments, global gas prices are rising. U.S. gas prices are actually under pressure, which is what we call the VG advantage. And the way we look at it, there are like 8 Bcf of pipes connecting the Permian to the Gulf Coast. There’s a lot of gas which we have moved from the Permian towards the Gulf Coast? And do you think this further widens the VG advantage where you are already low cost, but you’ve become even lower cost as this gas starts to land on the Gulf Coast?

Michael Sabel: We hope so. We hope so, Manav. The — I think I’d focus you particularly on the physical infrastructure and interconnects that we put in place are interconnecting. The Permian gas has particularly high nitrogen content, which is not good for liquefaction facilities and LNG tankers. And to accommodate for that, we designed, configured have built, and it’s now arriving at our site at CP2, very, very large-scale nitrogen removal units, among the biggest in the country that allow us to extract the full gas stream that we can draw from the Waha. And the combination of our 90-mile CPX lateral for CP2, our interconnects with the completed pipe Black Fin that takes us to Katy and then the transportation agreements that physically connect us direct with Waha.

We can uniquely absorb a massive amount of gas all the way from Waha to CP2 and extract the nitrogen and use it directly into our facility. So we’re excited when CPT turns on next year to begin enjoying the flows of Waha gas.

Manav Gupta: Congrats on all the positive developments.

Operator: Your next question comes from the line of John Mackay with Goldman Sachs.

John Mackay: I want to [ send ] the macro. Mike, you made a couple of comments suggesting effectively, you’d expect global gas prices to be higher than they are right now on the back of this disruption. I’d be curious just to hear a little bit more on your view of maybe why they aren’t higher. Is it — are we seeing demand destruction? Is it a view in the market that resolution is coming sooner than it will be. Maybe just walk us through a little bit of that and what you’re hearing from your customers?

Jonathan Thayer: No, I mean, it’s a great question and obviously, the markets are very complex because it’s a combination of all the different markets and participants in the markets that create it, and they all have different levels of storage, different requirements to be gas into their customers, different regulatory restrictions and how they pass along cost and price. Obviously, different politics, different exposure to the Middle East Gas. So I think one of the things that might surprise people in this market or maybe not, is that when it’s volatile like this and particularly around uncertainty of when conflicts that impact price might suddenly end or escalate. You see a lot of pause in purchasing decisions for — in the short and medium term.

And that means you’re not getting the purchasing activity that could drive prices up and the psychology is the customer hoping that suddenly, it will end and prices will drop. And so they don’t want to precipitously in their opinion, move to make purchases. However, a lot of the markets are pressured by very, very historically low storage levels, and so they will have to buy to fill up those storage levels. And so there’s pent-up buying that has to happen to build those storage levels that will probably be spread out well into next year. And so there’s really an uplift that’s going to last going to last for a while. And this fundamentally is not an LNG issue. This is just a geography and portfolio exposure issue. Notwithstanding that, as you can see from our deal announcements of the 5-year deals and the progress that we made contracting short term that lifted our portfolio sales to 84% for this year.

Michael Sabel: We were able to do a good job. Our teams did a great job methodically marketing into this environment. There’s still quite a bit to go for the market to really normalize.

John Mackay: I appreciate all the thoughts there. Second quick one for me. you guys pulled forward slightly the formal time line for CP2 still screens a little conservative versus some of the progress you’ve talked about on kind of site work. So maybe just walk us through any level of conservatism in there? And maybe what milestones you’re watching on your side to be able to tighten up or maybe even pull forward that time line a little bit?

Michael Sabel: So things are going extremely well knocking wood at CP2. We still are — we’re $12 billion plus into construction activity at CP2, but we’re still only 10 months from FID. And so we want to wait a little while and get a little further along before we refine what our CP2 projections are for first LNG, but it’s going stream well, we are extremely pleased with progress. The — in terms of milestones that we look for, we have a — because of the standardization of our projects, we have pretty good views of how far we are away from certain milestones, in particular, first LNG production based on the status of what’s on foundations. And as we described, we have 12 LNG trains currently on foundations. It’s a great achievement of the team even to have foundations at this point, by the way.

And we have a few blocks of LNG trains are coming over every other week. So it’s progressing well. the power plant. We already have some turbines foundations. Our [indiscernible] are progressing very well at our Morgan City facility. Those are coming over nicely. I think we’re waiting to see some more of the large components of pretreatment and power to arrive. So that the integration teams can get in there and start doing the interconnects for those. We feel good about the tanks, the jetty is moving along super well as well. So we feel good. We just want a little bit more time before we refine it.

Operator: Your next question comes from the line of Jeremy Tonet with JPMorgan Securities.

Jeremy Tonet: Jeremy. Just wanted to circle on capital allocation, if I could. Clearly, a lot of — a lot more cash coming through the door today expected than recently. And just wondering I guess, as you think about capital allocation and leverage, in particular, just Wondering about the thoughts about maybe at some point in the future, hitting investment grade across all the OpCos? Or would that make sense at some point down the road for the holdco? Just want to get a sense for how leverage fits into the picture relative to other capital allocation priorities?

Jonathan Thayer: Sure. We — our expectation and our plan is to be investment grade at all levels. And we think we have a nice path to get there in not too long. Our view is we approach in a few months COD of Placements first phase that given the scale of production there and the earnings coverage that comes from the total production that Plaquemines should be, it’s up to the rating agency, obviously, but Plaquemines should be investment grade when we take COD of Phase 1, which is on schedule, Phase is on schedule as well for spring of next year. And so if we don’t get there by this winter, we would hope and expect by spring to be investment-grade at Blackman. And we think that the increase in earnings that we’re achieving this year and next year, relative to the scale of our parent debt, which is $11 billion of high yield there should accelerate us getting to investment grade.

The earnings coverage the speed at which we’re growing earning assets on our balance sheet. We’re passing $56 billion in the first quarter of assets. And when turns online next year. We activate another 17 million, 18-plus million tons of long-term contracts. So we think we’re on a very good path and our objective is to be investment-grade at at all levels. And we currently amortize a significant amount of our debt, which is scheduled at a project level. And as we have maturities beginning in ’28 and ’29, our current thinking is that we’ll begin to retire some of that debt. So on the back of our balance sheet and earning assets dramatically increasing and our earnings increasing, we also expect to begin to retire the debt. We can fund all the growth that we’ve described.

We can reduce debt. And as Jack described, we will have capital available if we want you to buy back stock as well.

Jeremy Tonet: Got it. That’s very helpful. And just want to pivot here, I guess, to customer conversations and maybe at a different angle. Just wondering how that has changed with maybe the types of counterparties over time. When we saw the Total agreement this morning that wouldn’t necessarily have been the first counterparty we would have thought of there. So just wondering, I guess, how conversations or relationships with various customers have evolved over time?

Michael Sabel: Well, we’ve been in the last year plus, we’ve signed the most long-term contracts in the world, I think. And our contracting conversations continue to increase. We’re unique in the market as a producer to be able to offer short-and long-term contracts and that improves that improves our commercial progress, being able to offer a middle term contract in a long-term contract or some 2-year strips of cargoes along with a 20-year contract. That’s something that’s unique to us in the market, and that’s going to be the case for the next 5 years. I think we’re probably going to be the largest available chunk of liquefaction capacity in the next few years. And as we continue to reliably execute and reliably deliver. As we pointed out, we didn’t miss a single scheduled cargo since COD of Calcasieu Pass, and we’re viewed as a very reliable, high-quality executor of our businesses, and that has expanded the conversations.

We’ve — in the contracts we’ve been signing with very, very conservative experienced offtakers like Tokyo Gas, for example, in Japan.

Operator: Your next question comes from the line of Jean Salisbury with Bank of America.

Jean Ann Salisbury: I think as you correctly forecasted on your last call and talked about in earlier remarks, Waha gas price in the Permian has blown out pretty spectacularly in the last few months. Can you remind us of BG’s exposure to that spread now like this year and whether that played any part in the increased guidance for the year?

Michael Sabel: It really doesn’t show up for us until we turn on CP2 and then than our transportation and pipes and Nitrogen movie unit come into play, that’s really the material exposure we have. there’s gas that comes over now, but the big impact is when we turn on.

Jean Ann Salisbury: That’s very clear. And then the CP2 bolt-on extension, it looks like it’s now scoped at 10 MTA. I think it used to be 6.4 MTA. What were the drivers of the bigger size? And I guess, more broadly, the scoping of the bolt-ons plan has moved around a little bit over the last few quarters. Can you talk about the drivers of that? And once you make the regulatory filing, does that lock in the size and scope of the bolt-ons?

Michael Sabel: So the change that made the bolt-on for CP2. And if you look at that page, I can’t remember what page number it is. It has a schematic of it. The only change we made there is we shifted from trains to 12 trains and it’s inside the wall. And I think it’s Slide 12 in the deck. As you can see, we increased that in a pretreatment plant and a little — and a few extra turbines in the power plant. That’s the decision to increase the size is just our demand is so strong in our team success in selling 3 million tons and growing of our 5-year deals really makes that growth much more comfortable for us. and we expect more middle and long-term deals as well. The Plaquemines bolt-on and there’s a schematic on the right side of that same Page 12 as well for Plaquemines for now is staying the same with 8 trains.

And that’s a simple fast expansion for us. The — and we’re very comfortable that we’ll have the contracts that we want to rightsize the construction loans. Keep in mind that those bolt-ons will turn on much faster than what we build today. which is massively accretive for us and also makes the financing more attractive. We are permitting. We filed, as you know, for the Plaquemines expansion. We filed for multiple bolt-ons at Plaquemines. And what we’re showing here is the first phase of the bolt-ons. If if the market demand and contracting picks up more, then we have the ability to very comfortably just drop in a few more trains next to the 8 that you see there. and really fully take advantage of the incremental modular approach that we have that is going to lower the overall construction costs and our ownership point of the liquefaction capacity and is super accretive to margins.

Our OpEx per ton will continue to go down as we add this expansion. So we get operational leverage that’s material as well on top of it. So we continue to have a very attractive permitting environment. And our 2 focus is here on these brownfield sites.

Operator: Your next question comes from the line of Chris Robertson with Deutsche Bank.

Christopher Robertson: Mike, in the past, you guys have talked about lessons learned in terms of the construction and commissioning process and about applying those lessons to the future facilities. But I just want to focus more on the operational side here because it’s pretty clear that things are going extremely well from an operational perspective at Plaquemine. Can you talk about any operational lessons learned here? Anything gleaned from the data collection efforts that you then apply at CP2 or of future facilities?

Michael Sabel: Jack, do you want to talk to that one?

Jonathan Thayer: Sure. So Chris, I think what we’ve spoken to and assumed for some time is that our unique design has a high fixed, low variable cost model. And as we’ve increased the capacity from our facilities, we’ve been the beneficiary of lowering that cost per unit or cost per MMBtu, whereby at Calcasieu Pass, we see that leverage taking production per MMBtu from, call it, $0.45 to $0.50 at full capacity, that will be south of $0.40 per MMBtu. And where we particularly see the leverage is at Plaquemines, where on a nameplate basis, we’re at roughly $0.44 per MMBtu and at full capacity, we’re in below $0.30 per MMBtu area. The benefit of these bolt-on expansions that we’re doing as well as we increase the scale of CP2 and build out plaque wins further is, there is even further incremental leverage not just on per seat basis just because of the volumes created but also you’re running the same fleet across all of our facilities, there are significant benefits in operating leverage that we get from a fleet-wide approach that’s really in its nascency.

And we continue to use our continuous improvement programs to drive that even further. So we’re very excited about our operational excellence. You see it in the safety record that we have, but you’re also seeing our competitive advantage really show up in our cost of production from MMBtu.

Michael Sabel: On the data side of your question, we are super — remain super excited about it. We — as you’ve heard us describe before, we’re somewhere between 800,000 plus and 1 million data collection points between our 2 facilities. We use AI tools, both to optimize production. But we actually have — we were able to acquire so much data we use tools to identify the most valuable data to stream and so we can manage our data storage cost. But I think that our data acquisition is likely as valuable or more valuable than the rest of the business. because it’s what’s enabled us to grow our production capacity from Calcasieu pass where we’re for the moment a little bit above nameplate capacity to where we are with Plaquemines and where we’re excited to be for CP2, the value of that extra 40-plus percent production capacity because it’s largely funded by the contracts that we signed for the nameplate capacity has higher margins and higher value for us.

So it’s all driven by our data science team, process engineers on that team and was integrated into our control rooms and to our design changes and execution not CP2 and the bolt-ons. It’s incredible, incredible value for us. And the value is increasing from that data. With the — we’re — I think we’re over 900 total cargoes now. And the value of the — or the magnitude of the data that we stream every 10 seconds on our facilities is immense and it allows us to run very sophisticated models and simulations and experiments on operational improvements and optimizations that have resulted in the output that you’re seeing today.

Operator: Your next question comes from the line of Michael Blum with Wells Fargo.

Michael Blum: I wanted to go to your comments around Slide 11, which was your contracting strategy. I’ll just kind of ask all my questions at once. Has your approach to contracting changed here at all in light of the Middle East conflict in conversations for long-term and medium-term capacity agreements have the conflict or just a higher forward curve had any impact on pricing discussions for long and medium-term contracts? And if not, do you think they will as the full impact of the closure kind of gets reflected in forward curves.

Michael Sabel: So it’s a very interesting question. So I would say our contracting strategy hasn’t changed because of it. But I think the customers’ views are changing and will continue to change. I think that the long-term contract price is available in the market, not just from us, but the market in general, are so attractive relative to the middle and short-term contract pricing that over time, you’re going to see more of a pivot to the long-term contracts. In our opinion, the long-term contract prices in the market away from us, many of them are below replacement cost for in construction. And I think that the customers have a sense of that and know how attractive those prices are. And just to remind $2 handle liquefaction fee as a supply of fuel in Europe coming out of the power plant is it’s, give or take, $0.06 per watt of electricity.

So it’s incredibly attractive pricing. And you’re never going to get fired for delivering $0.06 [indiscernible] electricity. And so I think we’re seeing more of that. That’s also showing up in the demand for 5-year deals, 5-year contracts that I think is the market adjusting from what maybe before would have been more 1- and 2-year deals. We’re seeing more 5-year deals. We love the blend and price between the 20-year contract and the short-term contracts that contract price right in the middle is, we think, a great value. It’s double the long-term contract basis and is a nice blend to the, give or take, 50 million tons, 49.5 million tons of 20-year contract haven’t. So we’re going to continue to blend in those middle terms just because we led with all our 20-year deals blending in those middle term, higher prices, we think is is really a really attractive combination with all the commissioning cargoes we produce it by physical requirement or to [indiscernible] term contracts.

Operator: Your next question comes from the line of Brandon Bingham with Scotiabank.

Brandon Bingham: Just one quick one from me. The production profile slides, I think, are very helpful. I was just kind of curious if you could unpack kind of what’s baked into the ranges there as we move forward through 2029. Obviously, CP2 timing is a big factor. But just curious, things like excess capacity or other performance-driven factors, just what’s in there beyond project timing. From a total production capacity standpoint, we’re really matching on a projected basis, the performance levels of Plaquemines that we’ve been achieving. Well, we haven’t turned it on yet, but I’m hopeful we do better than that at CP2 because we engineered in some fairly significant improvements in throughput capacities into CP2 compared to Plaquemine and from lessons learned and from our data that we were just talking about.

And but we’re really extrapolating from placements. The schedules also that we’re layering that production capacity in matching what we did at Plaquemines as well. And so we’re just layering on the ramp-up in production based on what we’ve already achieved or already executed with the same people. So we feel good about achieving that outside really mostly of just FM-type events of achieving these levels. And it’s — we’re proud as a team that we’re on a path to double to double where we are today. We’re roughly loading 43 ships a month today. And by 2029, early we think that will be in the 90s per month. And on top of the — and I referenced it in my comments on top of the significant growth we’ve achieved in the last 2 years. In the next 2 years, we’re going to double again.

And that’s really just based on what’s in construction and development with our bolt-ons.

Operator: Your next question comes from the line of Sunil Sibal with Seaport Global.

Unknown Analyst: So on the CapEx front, obviously, you reiterated 2026 CapEx of $12 billion to $13 billion. And you talked about expanding FID in 2027. So I was curious, how should we think about the cadence on the CapEx, especially considering your IG plans for the — of the complex?

Jonathan Thayer: So the CapEx is just the drawdown of the financings that are already in place for CP2. So it’s not incremental is not already in the financing. And again, just remind financing that’s covered by our long-term contracts. And so as you know, the long-term offtake contracts that we have give us the coverage ratios that the rating agencies required to reach investment grade on those projects. And so those long-term offtake agreements amortize the debt, provide the interest coverage on the debt. operating expense and some profit on the — just on the long-term contracts. And then, of course, we have significant additional capacity above it that — and I’m doing quotes the almost free capacity because it’s — the cost of the facility are funded by that construction capital. So that CapEx is covered as part of the financings.

Unknown Analyst: Understood. And then there’s been some discussion on the call about long-term SPAs and the market expectations. So I was curious and based on the discussions you’re having with customers. When do you think we see a significant improvement in the long-term SPA pricing considering all that is happening on the macro front?

Michael Sabel: So construction cost for the market in general mostly away from us, but in general, continue to go up. And so there is a lot of pressure on construction costs in the market. We manage it the ways we’ve talked about before, we order, obviously very early and manufacture a lot and are repeating what we’ve done before. Our strategy has been to maintain our prices as we see improvements, we pass those on to customers in our long-term pricing. We have very, very significant room for expansion. And so our plan is to continue to maintain the lowest long-term contract prices in the market and continue to grow market there. and to continue to pass the reliable low price execution to the market that creates demand improves demand over time. And so we our strategy is not to go raise prices on the long-term contracts.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Mike Sabel for closing remarks.

Michael Sabel: Well, thank you, everybody, for your time this morning. We really appreciate. We really appreciate it, and we look forward to speaking with many of you in coming days and weeks, and hope everyone has a great day. Thank you. Bye.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.