Ladies and gentlemen, thank you for standing by and welcome to the NFE Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Alan Andreini. Please go ahead, sir.

Thank you, operator. I would like to welcome you all to the New Fortress Energy LLC fourth quarter and year end 2019 earnings call. Joining me here today are Wes Edens, our CEO and Chairman of the Board; Chris Guinta, our Chief Financial Officer; and Brannen McElmurray, our Chief Development Officer. Throughout the call, we are going to reference the earnings supplement that has been posted to the New Fortress Energy website. In addition, we will be discussing some non-GAAP financial measures during the call today. The reconciliation of those measures to the most directly comparable GAAP measures can be found in the earnings supplement. Now, before I turn the call over to Wes, I would like to point out that certain statements made today will be forward-looking statements, including regarding future earnings. These statements by their nature are uncertain and may differ materially from actual results. We encourage you to review the disclaimers in our press release and investor presentation regarding non-GAAP financial measures and forward-looking statements, and to review the risk factors contained in our quarterly report filed with the SEC. Now I would like to turn the call over to Wes.

Right. Thanks, Alan, and thanks everyone for calling in early this morning. We posted our presentation on the web page a few minutes ago and that's what we're going to refer to as we go through. So if you want to pull it up and follow along will be great. Start with Page 4, Q4 2019 highlights. Good news is there are a lot of highlights. Pretty much in every respective it was the best quarter that we've had since we’ve been a public company. We recorded positive operating margin in our assets for the first time. Chris will walk through that in some detail. But as I said last quarter, the transformation from a development company building stuff to an operating company running stuff and generating revenues is very much underway. Positive operating margin in the fourth quarter, substantially more in the first quarter, second quarter will be relatively full run on the assets that are under operation. And we're well on the path to be a very, very cash flow generative company. That's great. [Audio Gap] And then as we announced about 10 days ago, we signed an agreement to build a new terminal and associated power plant in Puerto Sandino, Nicaragua. So our fleet of terminals basically spans from three to five with a very substantial pipeline behind them. I'll talk about that in a second. Number four, LNG supply has been a big news item for us. The path of the company is we've been very focused on securing downstream distribution for our assets. That's been our focus. And as we get those assets online, then look to lock in long term supply with all the good news we have had on development side. It was the right time to step in and do that. LNG…

Thanks, Wes. Good morning and thank you all for joining us. I'm very excited to update you on what we've been doing over the past quarter. I'll refer you to Page 11. We've had a very productive quarter as Wes has mentioned earlier. Importantly, four assets for us account for 95% of our 2020 volume, and all those assets are in operation. So I'll kind of emphasize that all those assets are in operation. And that is a really significant milestone for us for really a number of reasons: number one, because we've shown that we can deliver on our commitments; number two is proof of concept for all the things that we're working on currently in the development pipeline. And then most importantly, it kind of gives us a game plan that we can replicate in other markets to be able to deliver our product really faster, cheaper and better. So it's really been an exciting 90 to 120 days for us. To run through those briefly: first, we have the Montego Bay terminal, and so as you recall, the Montego Bay terminal initially was supporting 120 megawatts combined cycle. That's now been expanded to 150 megawatts. So that facility now supplies over 400,000 gallons per day to industrial customers in our distribution business as well as power plants. The second asset that we will be referring to is the Old Harbour terminal, which supports 190 megawatts of the combined cycle owned by Marubeni and its partners. As Wes mentioned, that facility is running full out on natural gas. We underwrote it originally at 360,000 gallons a day. What we're seeing from an actual performance basis is something closer to 400,000 gallons per day, again, outperforming our expectations on in the facilities working beautifully. On the third asset, the…

Great. Thanks, Brannen. And it's wonderful to talk to you all this morning. First, on Page 16, let me take a quick moment to walk you through the financial results for Q4 2019. First and most importantly, as Wes has already highlighted, this was the best quarter in our history. Q4 was our first quarter with positive operating margin, and we're well on our way to over 475 million on committed volume alone. As you all know, and if it's a key driver of profitability, it’s consumption, and for Q4 2019, we averaged 538,000 gallons per day. This is an increase of over 200,000 gallons from Q3, largely due to the Old Harbour plant coming online and ramping over the course of the quarter. During the month of April, with Old Harbour and Jamalco and Puerto Rico ramping, we should be over 2 million gallons a day of consumption. As additional volumes are sold, there's an exponential effect on margins, which we expect to be above 30% on a normalized basis as asset utilization increases and legacy expensive gas purchases are concerned. Regarding SG&A, we had expenses for the quarter of about $13 million, which included $5 million of stock-based compensation, and about $3 million of non-recurring development costs. We do expect that the go-forward annualized SG&A for the company will be around $80 million, excluding non-cash compensation expense and non-capitalizable development expenses. Flipping to Page 17. This outlines some of the key characteristics of our Apollo debt facility and shows the strength of our balance sheet, which fully funds all of our committed projects. In January, we closed on a 3-year $800 million term loan facility. This financing accomplished many of the key objectives we've discussed on these calls in the past. We added $300 million of new capital…

Great. And just to wrap up before we open the lines for questions, flip to page number 22 and let’s talk about Zero. We're introducing Zero. Zero is a new division for New Fortress. Zero carbon. Zero emissions. All good. It's an audacious goal of ours to be a zero emissions company 10 years from now, audacious that our planet and humanity can't afford for us not to be ambitious about this. Our path to getting there is green hydrogen. Why green hydrogen? Hydrogen is the most abundant element in the planet, 90% of all the elements in the universe is hydrogen. So it's a very abundant element. It doesn't exist naturally by itself. But it is just in a lot of forms that can be converted from their current form into hydrogen with the application of a little bit of energy. The path to getting there and we'll talk about this in just a second, is to use renewable energy. And I'll say why I think that that makes so much sense. The costs of productions are falling rapidly and makes this a more and more achievable goal. So look at page number 23. The schematic on the top of it is a good picture of how an electrolyzer actually works. This is a very, very simple thing. Imagine a fish tank where you had two electrodes that came in, one was positive, one was negative, you run electricity through it. It breaks the molecule into pieces. The bubbles are one side end up being hydrogen, the other side end up being oxygen. This is the process that’s developed over 100 years ago. It's used daily in the space station, it’s used daily in nuclear submarine. So it's not a space age technology at this point at all. What…

Ladies and gentlemen, please stand by. Your NFE fourth quarter and full year earnings conference call will begin momentarily. Thanks for your patience. And please stand by. [Operator Instructions]

Yes, you're coming in loud and clear. Everyone can hear you now.

Operator, can you open up the call to questions.

Yes. We can. Our first question comes from Jon Chappell with Evercore ISI. You may proceed with your question.

Actually two questions for Wes and Chris. But actually, first Wes, the last thing you said before you cut out was a substantial threat, so I feel you kind of left us there with a cliff-hanger. Maybe you could just finish your thoughts on a substantial threat?

We're talking about Zero, our new initiative to produce from zero emission power through hydrogen. And so I don't really know where it cut off. I think one of the oil companies cut off our line.

Probably. I'll just move on. The first thing I want to talk about was Slide 19. Chris, the slide on the potential upside from buying at the current spot price relative to the number that's in your model and ours. And if you tie that to the chart on the bottom left of Chart 18. And it just seems that LNG prices aren't going to go any lower than they are today. And I understand that there is a desire to wait until these facilities come online and kind of lock it in once you have the demand, but you do have line of sight as you've laid out with the facilities that are either about to start off in San Juan or the Nicaraguan and Mexico. So what's kind of holding you back from just locking in the rest of the chart? It seems like there's no better time than now. And because you have that line of sight on demand, take advantage of that opportunity in locking that upside today.

Yes. Here's how we think about it. So the spot market is a long-term market. So the contract that we signed at the end of January was -- Henry Hub times 115% plus about $2.5. So roughly $4.5 is the current price given Henry Hub at $1.80 was the spot price last night. So that's a long term contract that runs for eight years, nine years. And it will obviously move around as Henry Hub moves around. But that's a good reflection of where the long term numbers are. The short term basis right now is the market is very oversupply. So spot price is about $2.5. So it's a pretty healthy gap one versus the other. One of the characteristics of this commodity is relatively hard to store, right? So unlike that was running white branch, which needs to be a part of. If you didn't like the price of wheat, you just stick it in the elevator wait until the prices went up, and then sell your wheat when you wanted to. This is the commodity where you can't -- you can't really shut off the production of it, and so it just supplies. And when you get an oversupply, the prices go down a lot. Prices on a spot basis are down roughly 70% year-over-year. And so to the extent that we can use cargos in the short term is very valuable to us. And that's why Brannen and the development team and what their work is so important because they’re getting those assets turned on, they can then utilize it. If we generate a lot more business, which we're working hard to do in the short term, you'll see some extraordinary margins, as Chris said, as we go through it. But the general approach that we take on gas is as assets go from developing to operating, we then look to lock and supply. We got a lot of that going on right now, the path for more of that is very, very robust. And then, I think you'll see a lot of this data. This is just a good snapshot on Page 19 that shows you that we've got a lot of unpurchased supply in the short line. So that's a big opportunity for us, even bigger on long run. And we're thinking about different ways to take advantage of the market dislocation on a daily basis. It's a remarkable position to be in through no fault of our own. But it's something we think has got a lot of upside even off of our baseload numbers.

Okay. And just to be clear, I think you mentioned in the last call that there was like 10 potential kind of bids in for you to cover that short. Are they all in that fixed rate nature that Henry Hub plus times and then plus like you laid out? Or are there any that are kind of fixed rate over an extended period of time?

Not fixed rate. I mean there is -- the evolution of the LNG market is started off as being oil-based. So everything was Brent-based indices and that has really gotten dislocated to a very significant extent. Henry Hub is relevant to us here in the United States. Henry Hub is somewhat much relevant if you're in Africa or in Southeast Asia, right? So, there's different ways of buying it obviously. We think that it is decoupled to a significant extent from oil. And I think it's going to remain be decoupled. And I think we do have opportunities to buy stuff on a long-term fixed rate basis as well. We've had talked about doing it ourselves, but I think that there's -- you'll see now with these assets coming on, a lot more activity and volumes from us. And I think we'll have some good news in terms of ways that we can buy it to take advantage of it.

Just one last quick one for Chris, if I may. You talked about the callability of the new loan, which I think is very important. And just thinking about the timing of potentially refinancing that and going to a more typical corporate debt structure, is it just a function of bringing the new downstream facilities and the gallons online? Or do the banks want to see more of a covering of the short then on the LNG supply side before they kind of match up supply demand and move forward with that?

Hey, Jon. Yes. The answer is much more of the former than the latter. I mean, it's simply a matter of once the operating assets are show in cash flow, we will go and refinance this. We've had internal meetings about this, external meetings. So the process is underway as we're speaking.

Thank you. Our next question comes from Ben Nolan with Stifel. You may proceed with your question.

Hi. This is Frank Galanti on for Ben. So, obviously, a big part of the business model is to build the terminal in various locations on some merits and then sell small scale to improve incremental operating margins. With that in mind, I just wanted to ask how small scale sales were going in Puerto Rico and in Mexico?

Small scale sales are great. We need to have the terminals on before we can actually sign up the customers and actually delivers to them. But we have a very robust group. We've just brought a new Head of Logistics that we think is going to be a big boon for us. And so, I think you're going to see our small scale volumes go up fairly dramatically. And so, while we're focused on your behalf, on both the analysts and the investors on, the big numbers, because those are the big numbers that are turning on. We have a very, very specific and robust focus on the small scale customers because we think not only is that good economics for us, but it's really good news for them. If they actually can cut their fuel bills dramatically, if they cut their emissions dramatically. And so, we think that would be a big, big part of our business in the coming months and quarters.

Great. Thanks. And then, do you guys have five terminals, operational or in progress, and then, eight in discussion. I just wanted to see if there was any update on any, I guess, specifically on the Dominican Republic and Ireland in Angola, if there was any, I guess, both moving forward in those projects, I would be curious to hear about them.

Yeah. We don't really provide any updates on the prospective ones for competitive reasons and others. I mean, all I can tell you is that volume of inquiry that we have gotten is very substantial. On the West Coast, the rest of this week, I'm Africa, all of next week when there's a tremendous backlog of things that we think are very actionable. And the people tend to lack imagination. So you can talk about doing things, but as things really turn on, they can see them with their own eyes it changes dramatically. I think -- our site in Puerto Rico is going to be -- Puerto Rico is a great tourism destination. I think our site down there is going to be one of the big attractions in the coming months because it's an amazing asset. I encourage everyone on the phone, if you want to take a look at it. We think it's turned out to be a spectacular representation of what can be done in a very short period of time that is really transformational. And so, as this stuff happens, I think you'll see more and more and more of this. I was talking with our guys in Asia, late last night. There's a lot of people talking about building these gigawatt-power, gigawatt-and-a-half power in these what are somewhat fantasy projects, in my view, because countries that have a couple of gigawatts of power, in total, you talk about building a 1,000 megawatts of power on top of that that's just not really actionable. 200 to 300 or 400 megawatts of power is something, which is much more reasonable for them. It’s just something that their systems and their infrastructure can support and allows them to increment into a better energy profile than where they are right now. That's what I think you're going to see a lot of. And the terminals are the catalysts for that. So being able to both do the marine and terminal side as well as the power stuff and do it all in a very efficient, very, very short time frame, and most importantly, paying for everything ourselves we think gives us a tremendous profile as we look at these different opportunities.

Thank you. Our next question comes from Greg Lewis with BTIG. You may proceed with your question.

Wes, if you could – could you touch a little bit more on the zero? I mean, that's clearly interesting. It seems like that's where the world should be heading to. I imagine this isn't the first time. It's been kind of put out there at least with potential customers and terminals and areas where you're looking to go build the business. What's been sort of the thought or the feedback for some of those potential future customers about this decision?

Well, this is actually our initiation for it. So we -- all the stuff hit the website last night. We spent a lot of time here. We've built up a team of scientists and professionals to look at a lot of different transactions that are out there. And this is really a call to action on our part is that he want, obviously, to have economically robust and viable business providing power to people that don't have it, so that's a big part of it. And I want to be a great citizen of the planet, and I want to be a part of the zero emissions team. And I've looked at a lot of different technologies. We visited a lot of different companies. I’ve become convinced that hydrogen is actually really the answer to it. It happens to be coincidentally entirely usable with our infrastructure. So simply if you could had -- if you had hydrogen right now and you can burn it in your turbine, you'd be burning a fuel that is not going to produce any Co2, right? So you can burn it or you can put it back into the opposite an electrolyzer as a fuel cell. So basically, think -- take hydrogen combined with air, it produces two things, it produces electricity and it produces water. So the zero emission part of it as well. I think what you're going to see in the short term is a huge transformation of the transportation businesses. We -- in our previous life, we invested in well over $30 billion equity value transportation. So I feel like I've got a pretty solid view of the transportation world really looks like. Two thirds of the oil burned in the world is burned for transportation. If you ended up with $7.50 a kilogram equivalent dollar kilogram, hydrogen was 750 MMBTU equivalents to fuel, that's 50% of the cost of diesel. And I think that that's a game changing thing that can happen a lot faster than what people think. On the electricity side, it's a little bit more complex because the prices need to be lower and longer, et cetera. But I think this is clearly going to happen. We want to be a part of that. We want to actually take and try our infrastructure out on this and try it out now. I mean, it's a do it kind of a profile. I mean as I ski with a friend of mine, he is a famous skier, he's like, we are talking or we skiing. It’s like don't talk about it. I don't want to talk about buying carbon credits and doing things that may be positive on the margin, but that's not doing it. That's not a transformational thing. That's not going to actually fix the planet. I think that this is a real path so something we're very passionate about.

Thank you. Our next question comes from Devin Ryan with JMP Securities. You may proceed with your question.

I guess first one here for Wes. You're about a year from the IPO, and it sounds like you're essentially living on an airplane, and you're in the process of getting the story out and educating the market. And Wes, you also spoke about kind of the opportunity versus the challenge of blazing somewhat of a new path. And so just trying to think about it as you guys gain more critical mass and really proof of concept where this will be a critical year. Can you talk a bit about kind of the sale process if you will, kind of where you are in that? And do you feel like the cadence of new contract or terminal opportunities is going to accelerate materially to feel like you're kind of setting the path for what could potentially be a meaningful acceleration?

Yeah. I mean, I think, look, we went public last year January 31. It’s been a year. Just a little over a year since we've done. I think, when you look back at what we had forecasted would happen, it’s pretty much all happen in pretty much the same timeframe we’ve done. So I feel good about having delivered on what it is. I think the company's profile changes dramatically once you go to cash flow. So the positive margin, even though it’s most modest in the fourth quarter, is a big milestone for us. The first quarter will be substantially increased from that. And as Chris said, we're kind of roll on to the races for the rest of it. The pipeline has accelerated dramatically. And again, this is proof of concept of getting things built. So we’ve gone from Jamaica to Puerto Rico, to Mexico, to Nicaragua, and there's a very long list of other countries behind that. And it is a case of doing two things. One is going out and finding new opportunities and building when you actually commit on it, and two is then spending time with investors, educating them on the story. I'm going to make that a big part of my mission here in the next three to six months is get out and introduce people to it. We don't need capital or we're self-funded, which is a great profile to be in. I think we can build this into a very, very significant company. That's our mission about it and do a lot of good along the way. And so it's just a matter of doing both those things. It does require a lot of travel the whole -- the Coronavirus and the health issues worldwide are serious forms. And that's something that obviously impacts that. My own travel profile hasn't changed a great deal. So, as I said, I'll be gone the rest of this week. I'll be in Africa most of next week. We've got a lot of different places to go. And I think that this is going to be an extraordinary year for us.

And maybe just a follow-up here to dig in a little bit more on Slide 7, the math on the terminals and kind of the operating margin goals. I'm just curious -- is the first terminal as profitable as the 20th in that 25% to 35% range? Or is this more of an illustrative model kind of an average of a fully scaled terminal platform? So I'm assuming it's going to be even more opportunities of, call it, economies of scale. So I'm just trying to get some perspective on any words of magnitude there kind of the first versus call it the 20th terminal?

Yeah. The profitability really is driven by the aggregation demand you end up in markets, right? So you start in a place, and Brannen said it well, once we find an opportunity, it's got 200 or 300 megawatts of the power as a proxy for that. That's enough volume to catalyze the building of a terminal. We're building that power and generate a really attractive return to start with. In the infrastructure business, if you want to lose all your money, you build the infrastructure for one purpose and don't use it, right? The toll road that never gets driven on as an example of that. If you want to make all the money, you build it for one purpose and you use it for two or three or four. And that's exactly what we're seeing in Jamaica. We're going to see that, I think in spades in Puerto Rico, in Mexico, et cetera, et cetera. So that's the profitability of it is as you get larger, you get more profitable. And that's kind of the Bernoulli's principle of math is applied here, so the bigger get faster, and that's exactly what I think we're going to see. And I think, we definitely see a lot of competition in terms of people being willing to do one element of it, provide shipping to sell LNG to build infrastructure, to build power. But we don't really see of people that can do comprehensively. They have the credibility of doing so and have the balance sheet and the capital to do so. So it's a competitive world, but I really like our competitive position. And every day that we turn on more and more volumes, we've become more and more competitive with it. So that's a good place to be. So we just have to execute now.

Thank you. Our next question comes from Craig Shere with Tuohy Brothers. You may proceed with your question.

On the zero initiative with the project target in the next 12 months, can you comment on the CapEx cost and margin involved in that with the initial economics be lower than the LNG infrastructure? And is this an all or none proposition either you're doing hydrogen or you're doing LNG? Or can you really do a blend through your facilities and the burn at the power plants?

Yeah. The answer to second question is absolutely. And that's really the way it's going to happen. It's not going to be – you’re not going to wake up one day and say let's turn everything off gas and turn on the hydrogen. That's just not practical nor is that actually that all the plan. There's a utility in England. I'm going to trying go see here sometime in the next couple of weeks. They’re talking about building an industrial scale, electrolyzer and then injecting up to 25% of that into their system, again, using their pipelines and gas plants as it is. That's a good, I think, process for how you might see it. We think that there is a lot of different technologies that could apply, and that's the open tent. We want people to come in. And if you've got something you think makes sense, give Jake a call, send us an email, we'd love to take a look at it. And as with anything in a new and developing market, you're going to kiss a lot of frogs, right? There's going to be a lot of things we're going to look at that won't make sense economically. I'm personally prepared to invest capital in this. I think it's a good investment by the firm to invest capital on this, and it's a process. And I think 10 years is a short period of time to try and become an emission-free company. But I think that the world needs a short period of time. I think that honestly, when I see people talk about like, carbon goals in 2050 and 2040, I'm like -- I'm too old to wait for 2040 and 2050. I just don't think. And I think the world's not really in a place for that's a reasonable timeframe. So I do think this is going to happen a lot faster than what people think. I think you will see it happened in the transportation businesses more quickly, whether it's trucks or its cars or its ships, those kinds of things, but I think power is not that far behind it. So we want to find a project or to, the raw economics, we can talk about it on paper, but let's go do it. Let's see what it actually is. We'll actually like then have a real baseline to kind of start from, and then try and improve on that to get to a place where it really makes sense.

Understood. Is a good analogy just like biomass and coal-fired?

I think, in order for something to be really interesting from my perspective, it has to be very scalable. And hydrogen has the potential to be very scalable, exists in a lot of different forms in nature. We see in a lot of different proposals on people think that they can produce mass hydrogen on doing stuff that seems crazy on paper at $0.50 or $0.75 or whatever. Just the raw amount just to kind of walk you through it. If you had $0.2 power and you have an electrolyzer that had 100% efficiency, that would create $0.80 a kilowatt hydrogen, right, so to give you context versus the dollar. None of the electrolyzers are 100%. Baseload power, $0.02 is obviously a lot to go, but it's not an unattainable one. And so just based on electrolyzer math, you can get pretty close to it, if you hit this. And there's -- there are people all over the world that wake up every day, they're trying to figure out a cheaper way to do it. It's like I said, we've seen the concentrated solar power guys. Those guys claimed that they can produce it at prices that are similar to that. We saw a proposal from a firm and said, take a depleted oil field, pump oxygen into it, light it on fire, it pretty mass-produces hydrogen, which doesn't sound that crazy when you actually kind of go through the science of it, that maybe to produce a lot of hydrogen. I think there'll be a lot of people out there that would want to do it. As I said, I don't want to be the mad scientist trying to figure that out. I want to basically be the commercializer of it. I think that's our t role. And being able to take and put it into our systems, in part, I think is a great accompaniment to that and, of course, to provide capital and be a part of that. And that’s where we want to go.

Understood. Real quick, the $2.50 figure you said in addition to the Henry Hub plus, that $2.50 includes both the fixed liquefaction as well as the shipping. Is that correct?

It does. It does. There's obviously -- it's a really good question because there is lots of quotation conventions that needed to be clarified and people do it. But if you can think on long term basis, $4.5, $4.75, that's very much in the cards. We're using $5.50, because we've got some old contracts and this is a good number. Spot prices are materially less than that. So the faster brand can turn stuff on, the faster we can get new opportunities that he can then turn on, the more we are going to be able to take advantage of the spot rates that are out there. So ...

And Wes, in another question you mentioned the possibility of low costs, long term fixed rate. Can you remind us what your downstream contract mix is in terms of Henry Hub plus versus fixed?

It's almost all Henry Hub. We've got some modest amount of fixed rate stuff, we have some modest stuff that’s done, but the bulk of it is really index. So we're not really exposed on that side. And as I said through no fault of our own prices have come down dramatically. And obviously, the whole China situation, those guys use a big chunk of the world’s LNG. So there's been a lot of issues around that as well. So ...

And very last question. Wes, you mentioned about self-funding. By our math, the Nicaragua project is like the largest thing you've ever done, and may consume the bulk of the liquidity that you got from the $800 million terminal financing. When you think about whether it's VR, Angola, Ireland or maybe the other five or what have you projects that haven't been disclosed that you're in discussion on or maybe some add-on project in Puerto Rico to solve their problem after the earthquake. When you think about financing all this, do you think you're going to need to tap the markets again? Or you're going to be free cash flow and combine that with a little more project finance? How do you see this going forward?

Well, I think let's just talk about leverage on this. And so, use the $450 million number that Chris has said that that’s what our stuff is up and running. Take off $80 million, that’s $370 million, multiply it times 15, that's $5.5 billion in assets value. Right now we have about a billion dollars in debt against it. So just from a standing start, a billion against $5.5 billion doesn't sound that highly leverage. In fact, it's not that highly leverage. And so I think we have absolutely ability to incrementally tap debt markets to fund stuff and, of course $450 million of free cash flow is a lot of free cash flow. So the combination of those two things, modest amounts and incremental debt as well as just the free cash flow from the business, we think is going to be self-funding. If we tag one of the bigger opportunities and there's a couple out there that are very, very significant, then it might be something we would come back and revisit. But I'm a biggest shareholder. We're very focused on not diluting shareholders. But as I say, it's not -- if it's accretive, it's not dilutive. If there is really an opportunity we thought make so much commercial sense that we wanted to go raise capital to do it, we would do so. In our filings, you'll see we're a one year old company. So we're going to file a shelf so we can actually access the capital markets if it makes sense. That's not a sign that we intend to do that. And as I said that, in fact, we -- the opposite is true. We don't intend to do that. But there's a long list of things that are out there. A couple of them are very material if we need to do it. We think it would make sense, and we think the investors will support that. But I think in the ordinary course, we think we can actually absolutely self-fund through incremental debt and free cash flow.

Thank you. [Operator Instructions] Our next question comes from Hillary Cacanando with Odeon Capital. You may proceed with your question.

Just on Nicaragua with 85% on take-or-pay, could you talk about how the remaining 15% of the contract is structured? And also just -- do you have an FSRU picked out for the project and what's the required capacity would be with the FSRU?

Chris?

Yeah. So the Nicaragua contract is 85% of the 300 megawatts that are installed. The remaining capacity can be caused by them as the grid needs. The country is dramatically under electrified at this moment. So we would expect this best to exceed 85%. That's the model take-or-pay. And so that's what we've assumed in our base case numbers. The FSRU that we will use to service the Nicaragua terminal will be just offshore and very similar design to Old Harbour. That FSRU will have to a send off capacity well in excess of the gallons required to service 300 megawatts. So certainly, as you see expansion in that market, you could have additional volumes consumed. The other thing I would mention is a strategic location. The FSRU for Nicaragua can serve as regional storage for our Pacific operations. So there are synergies that we would expect to see by servicing the La Paz terminal is from storage in Nicaragua in addition to the potential material bunkering opportunities as you're very close to the Pacific side of the Panama Canal.

And also, could you just talk a little bit about your plans for Pennsylvania and other potential liquefiers? Just, I guess, with what's going on in the LNG supply market right now, has your plan changed at all or your view about the upstream build-out?

I mean, obviously, the price is going down. 70% is a good thing for us. And so in the short term, we're not actively building on Pennsylvania. We've done the work out there, we've got a fully permitted facility, we have a rail permit, so we have the pieces in place to do so. And we think that long term, there is going to be very significant benefits from doing that both in Pennsylvania as well as another parts of the United States. In the short term, our focus is on the development assets, cash flow, building the companies as we’re talking about it. But I think it's an amazing era and having the quiver to have access to that part of the world. We think it’s obviously a gas abundant part of the world. We think that actually having the platform that we have in place is valuable, and that's something we will keep in the quiver. When it makes sense, we'll pursue it.

And just one more question. So you clearly have a first-mover advantage in these markets. But could you just a little bit about the competitive landscape with Golar having a similar business model in Brazil through the strategic project? Just wanted to find out if you are seeing any other players looking to get into the downstream market with the similar model

Yeah. I think, there's a lot of competition in the world. I think what Golar guys have done in the Brazil is terrific. And I think they're following a very similar path and they've tried to lock down a big long-term deal on a power plant and they're now looking to expand on the small scale stuff. And that's our playbook that we've used. So I think that obviously we think that makes a lot of sense. Good news is it's a pretty big world. There's a billion people who don't have electricity. There's 3, 4 billion people that can't afford electricity. It is a gigantic world that is out there. And what we have not seen on a daily basis is people that are willing to do are willing to do from end-to-end and pay for everything. And so, I'm not complacent about the competition. I feel about it -- less concerned about it today than I did a year ago. So I know how hard it is and actually make all this happen. It's pretty simple to talk about. It's pretty simple to lay it on paper and show you the economics. It requires a very, very capable group of people and a lot of focus. And we're fortunate to have both of those things. And so I like our position for sure. But it's a complex competitive world. There's no doubt about it.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Alan Andreini for any further remarks.

Thank you all for participating on today's call. If you have any follow-up questions, please feel free to reach out to me, Josh Kane or Jake Suski. Our contact information is on our Q4 press release. Finally, we look forward to updating you after Q1. Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may not disconnect.