New York-listed New Fortress Energy plans to drive down its shipping costs under cost-cutting plans as it continues to grow its portfolio of projects.
Speaking in a first-quarter results call, chief financial officer Chris Guinta said the company is focused on saving $50m from three expense lines — selling, general and administrative expenses, interest and shipping costs.
He said the $85m of shipping costs come from the five vessels that New Fortress has on charter.
“We believe we can drive [that] substantially lower,” Guinta said.
New Fortress logged a first-quarter net loss of $60.1m — almost identical to its year-on-year figure but $21.7m higher than the $38.4m losses recorded in the last three months of 2019.
Excess cargoes
Company co-founder, chairman and chief executive Wes Edens admitted that New Fortress does have excess LNG supply at present, in Jamaica in particular, on the back of 20% lower demand caused by Covid-19 impacts.
He said this amounted to a couple of cargoes that the company will either sell outright or swap into its Puerto Rico operations.
New Fortress officials detailed that the company has shipped in four of its 13 contracted cargoes from Centrica to date this year, with a fifth to arrive next week and a further 12 are scheduled for delivery in 2021. But they added that lower-priced spot cargoes will bring down the average price of LNG for the company.
Edens, who revealed much of his time is consumed by thinking of ways to take advantage of the current low price gas, said New Fortress essentially remains 60% under supplied on LNG and that this will only grow in the short term.
“We have a big opportunity with the market where it is to do some good things on the price of gas,” he said.
Edens said New Fortress’ pipeline of new business remains “very robust”.
He mentioned upcoming projects in Mexico, where dredging will be completed next month allowing the company to bring in first vessels, and Nicaragua.
Canine companion
Edens, who admitted he was on the call alone with his dog, said travel limits around the world are “very challenging” but described having Zoom calls with energy ministers in other countries.
He said New Fortress remains focused on 10 regions and highlighted five circled locations on a world map as areas where active discussions were ongoing — but he did not name them directly. The presentation shows these as Mexico and Central America, the Caribbean, the north-west part of South America, parts of southern Africa and the southern states of India plus Sri Lanka.
Despite the travel restrictions, Edens said he expects to “sign material MOUs” in a couple of these geographical areas in the next few months.
“I’m quite optimistic about the second half of this year,” he said.
Edens said a move to hydrogen over the longer term remains a focus for the company, but that the Covid-19 pandemic had “taken it off the front page” for now in peoples’ perspectives.
He said the company’s goal is to have a project producing and using hydrogen in the production of power by the end of the year.
“Proof of concept is incredibly important,” he said.
