Hello, and welcome to the Excelerate Energy First Quarter 2022 Earnings Conference Call. My name is Lauren, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Craig Hicks, Vice President, Investor Relations, to begin. Craig, please go ahead.

Thanks. Good morning, and welcome to Excelerate Energy's first quarter earnings conference call. On the call today, we have Excelerate's President and Chief Executive Officer, Steven Kobos; Chief Financial Officer, Dana Armstrong; and Chief Commercial Officer, Daniel Bustos. Yesterday afternoon, we released our first quarter earnings press release and posted a presentation on the Investor Relations page of our website. I would like to remind everyone that during the call today, we will be making forward-looking statements. Our actual results may differ materially from those expressed and implied in these forward-looking statements due to a variety of factors, and we undertake no obligation to update or revise them. During the call, we will also discuss some non-GAAP financial measures. We provided a reconciliation to the most directly comparable GAAP financial measures at the back of the presentation posted on our website. With that, it's my pleasure to pass the call over to our CEO, Steven Kobos.

Thanks, Craig. Welcome, everyone. We appreciate your interest in Excelerate Energy. I want to thank you all for joining us this morning for our first earnings call as a public company. Before we jump into the results for the quarter, I want to highlight a key aspect of Excelerate's business that remains core to our go-forward strategy. Since 2003, Excelerate has established a strong and proven reputation for providing flexible LNG solutions to markets and diverse environments around the globe. Although our business model today is much different than it was when we started out as a pure-play FSRU business, one thing has remained constant over the years, and that has been our desire to open and expand new markets by providing flexible access to LNG. We believe having access to LNG is essential to assisting countries in their decarbonization efforts while at the same time promoting economic growth and improving quality of life. Simply put, we are committed to changing the way the world accesses cleaner energy. It's an exciting time in our company's history, and frankly, it's an exciting time to be in the LNG industry. Thanks to the talented team at Excelerate, we've successfully executed our strategy and established substantial momentum in recent years. We've built a solid base business by focusing on operational excellence and providing our customers with the critical LNG regasification services that they need and expect from us. Our ability to deliver on our promises has gone a long way toward creating deeper inroads into our core markets that we believe offer us a real competitive advantage when vying for new opportunities. Looking ahead, we expect to build on our momentum by executing on the robust commercial opportunities that are now in front of us. As a premier LNG infrastructure provider, we are…

Thanks, Steven, and good morning, everyone. Overall, we're pleased with our first quarter results. As Steven mentioned, for the first quarter, we achieved adjusted EBITDAR of $71 million, up 12% as compared to the fourth quarter of last year, driven primarily by our first full quarter of gas sales at the Bahia terminal in Brazil, which commenced in December 2021, and the winter seasonal gas sales we delivered via our Northeast Gateway terminal. We generated operating income of $39 million and net income of $13 million in the first quarter, both up sequentially over the previous quarter. The sequential increase in operating income and net income was driven by the increased gas sales, along with a decrease and depreciation due to the end of our LNG carrier vessel lease in December of last year and lower restructuring costs related to the IPO in Q1 as compared to Q4 of last year. In comparison to the first quarter of 2021, our first quarter 2022 earnings were down year-over-year due to market headwinds related to recent geopolitical events, including the European energy crisis and the war in Ukraine. The flattening of the JKM versus TTF price spread resulted in fewer opportunities to sub-charter our available vessels and to deliver on spot LNG cargoes in the first quarter of this year. Now let's turn to an overview of our liquidity and capital resources. At the end of the first quarter, Excelerate had $83 million in cash and cash equivalents. Because the first quarter results we're presenting today occurred before our recent IPO, we think it would be helpful to provide you with additional information on our liquidity position post IPO. On April 18, we closed on our new $350 million revolving credit facility with a syndicate of banks led by JPMorgan. This revolving…

[Operator Instructions] Our first question comes from David Havens from SMBC.

I was hoping you can provide a little bit more perspective on what the European opportunity will look like for you. Specifically, do the majority of the projects include both the FSRU and terminals as well as gas sales opportunities? And then second to that, in terms of availability of FSRUs, you guys have kind of -- you've got a lot of your fleet now is on term commitments. Would you consider M&A? Or what kind of timeline would it take to perhaps acquire a newbuild?

Thanks, David. Appreciate it. I'm always going to remember this, our first question as a public company, so thanks for doing that. Europe is presenting a lot of opportunities, and you can look at it just through what we've got out in front of you or in front of the world right now. So the Finland deal is more like our traditional business model but we find it attractive. Now we will continue to look, and we've told the Finns that we're interested in exploring further downstream opportunities both within Finland and within the Baltic Sea region. So just as we have in other projects, we're going to get that -- secure that first and then look what the other opportunities are that we can find downstream in that market. The flip side of that though would be the Albania Vlora project that we've been working for some time. We're -- we've been quite clear. We like the appeal of the base deal, the gas sales, the power plant, the power generation, but quite obviously, as I mentioned in my comments, we're looking at that also as a great entree point for gas sales into Europe. So I would say in short, we're looking at the full spectrum of opportunities within Europe, and we're always going to try to find a way to sell gas downstream into a market. Pivoting to your -- the second question we've had as a public company, David, what are we thinking about tonnage. We're not going to take anything off the table as we seek the best way to grow this fleet. We are looking at new buildings. We have a full set of conversion kit in a warehouse that we've had for some number of years, looking for the right conversion candidate, and we won't rule out any other mechanism of expanding tonnage.

Our next question comes from Marc Solecitto from Barclays.

So maybe just to start, and Steven, you kind of touched on this earlier, but with the recent FSRU announcements we've seen out of Europe and tightening supply of available ships in the market today, has that at all affected the competitive dynamics for some of the integrated projects you're pursuing in other markets?

Marc, thanks for the question. As I mentioned, what we're seeing is people advancing the pace of the decision-making in the rest of the world because they have their own needs. They're not going to be left out. I would say it's no secret that the approval in principle for the Payra project we received out of the Prime Minister's Office in Bangladesh -- and that's a key milestone in their statutory regime of the Quick Enhancement of Electricity and Energy Supply Act of 2010. We've been working on that project for a number of years. That announcement came out within 48 hours of Russia cutting off gas to Poland and Bulgaria. So I think just anecdotally, that's an example of the spillover effect on the pace of decision-making that you'll see around the world.

That's helpful. And then on the potential MLNG expansion, could you maybe provide some context around the opportunity there? I know the press release mentioned potential supply deals for up to 1.5 million tons, but just wondering if there would be any incremental capital costs associated with the expansion. And then also, I just want to confirm, would you be earning a fixed dollar margin on the additional LNG sales volumes? Or would you be recovering the economics under a terminal use agreement similar to the existing framework there?

Marc, that is a great question, and we have with us today, Daniel Bustos, our Chief Commercial Officer. I'm going to hand that one to Daniel.

Thank you, Steven. Marc, on the MLNG expansion, what we're going to offer is something that you're going to see on our deals. Our goal is to earn, secure capacity payments, extra payments for the expansion of the terminal. Expansion of the terminal is going to imply bringing a bigger vessel. And yes, we're going to have some modest capital outlays for some life extension works on the fixed infrastructure. Those extra activities are going to be covered by incremental capacity payments. On top of that, we expect to make a predictable margin on the LNG sales. So similar to what you will see in our projects, we always seek to secure capacity payments for our capital involved and then emerging on the LNG sales.

Our next question comes from Cameron Lochridge from Stephens Inc.

So I was hoping we could start -- I was hoping we could go back to the Finland announcement and just start there. Can you provide any color on what the rate structure may look like there relative to your existing contract book?

Cameron, we don't -- we have not -- don't comment on individual day rates across our competitive landscape with the other vessels. Dana, you might speak to how we could think of that in terms of EBITDA uplift.

Yes. On an annual run rate basis, it's about an extra $40 million of EBITDA that we're projecting. We expect to start in the fourth quarter. So we expect 2023, it will be about a $40 million EBITDA outlook on our Exemplar vessel.

Okay. Great, great. That's very helpful. That's what I was looking for. I guess flipping, I think you have a vessel in Israel that is set to roll off contract at the end of this year. Under that scenario, if my math is right, you would be back to 8 contracted vessels once that Israel vessel rolls off, 8 contracted vessels in 2023. Is that the right number to think about as far as what you're targeting for long-term agreements in '23? Or should we expect to see maybe 1 or 2 others announced as we progress through this year?

Thanks, Cameron. Again, I'll hand that one over to Daniel.

Cameron, our goal is for Excelsior to be employed in Albania. So after Israel, it's going to go to traditional dry dock. We're going to do some enhancements specific for Albania. And since Albania will be a long-term deal, the vessel should be considered employed on the long term.

[Operator Instructions] Our next question comes from Devin McDermott from Morgan Stanley.

Congrats on the strong results this quarter. The first question I wanted to ask is going back to MLNG and Payra. It's great to see the continued progress there and the approval in principle. I was wondering if you could just walk us through procedurally from here, the remaining steps to move these projects from advanced development to in execution. So what are the remaining steps we're looking for?

Devin, that's very helpful. I'll start -- I'm going to start with just lining out why we think or why I stated on the call that we have high expectation of Payra moving to execution and frankly both of those, the MLNG expansion as well. Approval in principle does mean something with respect to the statutory regime that we referenced before. We've been competing out, providing our proposals on the method and manner of technical solution for the need for the Payra project. We've been in a competitive process with other companies, urging different competitive solutions that's been in front of committees all across the Bangladesh government, evaluating those technical expertise. So the first thing, I guess, I want to emphasize is that approval in principle, under that rigorous technical assessment that the government of Bangladesh has, does mean something. It is a key milestone. It does originate from the Prime Minister's Office. So with that, we have -- as we said, are going to be continuing with -- we've been doing already offshore surveys looking at pipeline routes. But Daniel, why don't you lay out -- I mentioned a couple of the other points earlier, how we see this unfolding from now, but I did want to highlight approval in principle doesn't mean yes, maybe approval in principle is a key milestone in a formal statutory process.

Sure, Steven. This kind of process that the Bangladesh government has established probably is a good way to see them. It's similar to one -- you have the defense departments of governments procuring large contracts. You go through a technical process, you get selected, and now we're going to go in more detail with the government in parallel to try to advance as soon as possible. What we're going to do in parallel is we're advancing on the process for engineering, design and permitting. We're going to start negotiating a gas sales agreement with the Bangladesh government. The Payra project is going to be one where we're going to be selling natural gas, but we need to agree with them the final pipeline route, for example, for the project where the gas is going to be delivered between Payra and Khulna, all these power plants that we're going to serve. So what you're going to see is a parallel process. We're going to be refining the technical characteristics of the project. We're going to refine the pricing. It's a direct negotiation that we're having with the Bangladesh government, and we're going to negotiate the agreement. In the following quarters, we're going to be providing that progress, but it's going to be running in parallel.

Got it. Very helpful overview. I wanted to shift over to gas supply and the strategy there. So these are 2 fairly sizable projects. And I was wondering if you could talk to the strategy and also market environment around securing long-term gas supply and, as part of that, address whether or not the current pricing environment is having any impact on customer demand for gas.

Well, I guess I'll take that last point first, Devin, and that is these projects with Payra, 25 years, MLNG taking it out to another 15, these are governments and people taking a long-view horizon of what needs are and how to satisfy those needs. We also see longer term, LNG looks more affordable. You see people having appetite to enter into rather long-term commitments that aren't that far off from what we have historically seen in terms of what people are willing to do. We've been talking for some time -- I can't get into specifics, with a number of suppliers. And I can tell you that there is appetite for the length of term that we're bringing to the table, especially with the credibility that we have for delivering into Bangladesh that we've established. So we're going to continue to advance those in parallel with the discussions with the Bangladesh government in those negotiations.

Got it. Makes a lot of sense. Congrats again on the solid results.

Thanks, Devin.

We currently have no further questions. So I will now hand back to the management team for any closing remarks. We currently have a question that's just come in from David Havens from SMBC.

I just want to follow up real quickly. With the Exemplar going up to Finland, are we going to see Argentina coming back to market next year for the seasonal demand that they may have?

David, excellent question. I can't speak for the Argentinean government on what that is. We expect though that if there is an ask for the government of Argentina for IEASA for seasonal service in Bahia Blanca for next southern winter, we'll evaluate it, and we suspect that we'll have an asset that we could look at that if it's something that's appealing.

Okay. There are no further questions. So I'll now hand you back over to Steven Kobos for closing remarks.

Thanks, everyone. We're going to call that a wrap on our very first earnings call. I'm just glad to have all of you guys present and participating in this. We look forward to doing this every quarter. We look forward to giving you predictable material updates as we've done today, and we hope this is the start of a long conversation. We're excited about where Excelerate Energy is positioned. We're excited about market tailwinds that we see right now, and we're excited to continue -- we're excited that people recognize the value of flexible LNG infrastructure to promote energy security and energy reliability across the globe. And we believe we are well positioned to advance on that opportunity set this presents. So thank you all for participating today, and we look forward to next time.

This concludes today's conference call. Thank you for joining. You may now disconnect.