Ongoing global events have me convinced that liquified natural gas (LNG) could be the world’s most important energy source for years – possibly decades – to come. That’s why for a more aggressive play for 2024, I’ve chosen New Fortress Energy (NFE), notes Tim Plaehn, editor of The Dividend Hunter.
The LNG infrastructure system allows the cost-effective transport of clean-burning natural gas from regions of plentiful supply to more populous countries with limited energy sources. NFE is positioned to benefit as a rapidly growing company focused on developing and operating downstream LNG infrastructure assets, including LNG regassification and power generation.
New Fortress Energy operates primarily as a seller of natural gas, delivered to its global network of LNG gasification terminals. At the end of 2021, New Fortress Energy had 11 regasification terminals, up from five a year earlier. Now, the company shows 14 facilities either operating or under development. Gas transport ships totaled 20, up from five.
These assets provide LNG midstream and downstream services. New Fortress Energy will soon complete the cycle with its first LNG upstream investment. New Fortress Energy operates on long-term contracts to deliver LNG-based natural gas to customers served by the transport and terminals network. The contracts make New Fortress the exclusive gas supplier to its contracted customers.
On March 31, 2022, the company filed to build its second Fast LNG offshore plant, off the coast of Louisiana. Later, a third FLNG project was added off the coast of Mexico.
The company has invested a lot of capital over the last few years to get to the point where the company is now very profitable, and additional capital investment will grow those profits.
Long-term LNG supply contracts provide a stable revenue base. The Fast LNG facilities will produce low-cost LNG to supply those contracts and can ramp up production to take advantage of price spikes. All in all, New Fortress Energy is poised to continue to grow as LNG becomes the dominant form of global energy.