NextDecade NASDAQ: NEXT executives used the company’s first-quarter 2026 investor update call to outline progress at its Rio Grande LNG project, highlight steps to prepare for commissioning and operations, and discuss how it is managing exposure to near-term LNG market margins while advancing expansion plans for additional liquefaction trains.
Rio Grande LNG construction: safety, schedule, and key milestones
Chairman and CEO Matt Schatzman said the company’s “first quarter was productive” and reiterated that one of NextDecade’s highest priorities remains progressing construction “safely, on budget, and ahead of schedule.” He reported a first-quarter total recordable incident rate (TRIR) of less than 0.1 and said the project remains within budget across all five trains under construction.
Schatzman said early electric commissioning for Train 1 is underway and that Phase 1 is tracking ahead of guaranteed substantial completion dates under the EPC contracts. He added that progress is also being made on Trains 4 and 5. As of March 2026, NextDecade reported the following overall construction completion levels:
- Trains 1 and 2: 67.8% complete
- Train 3: 44.2% complete
- Train 4: 10.6% complete
- Train 5: 6.8% complete
Within Phase 1, Schatzman said engineering and procurement for Trains 1 and 2 are “functionally complete,” with engineering just over 98% complete and procurement just over 94% complete. For Train 3, he said engineering is over 90% complete and procurement over 80% complete.
Operationally, he cited several on-site milestones, including installation of the main cryogenic heat exchanger for Train 1, ongoing work on civil works and equipment placement for Trains 2 and 3, progress on inner-tank welding for Tanks 1 and 2, and dredging that is “substantially complete” for the berth and turning basin. Schatzman also said channel deepening is nearing completion.
On pipeline infrastructure, he said the Bay Runner pipeline—being built by Whistler LLC, a joint venture between WhiteWater Midstream, Enbridge, and MPLX—has been under construction since last fall and is expected to reach in-service in the third quarter of 2026. Bay Runner is expected to serve as NextDecade’s “primary pipeline capacity into the terminal for trains 1 through 3,” he said.
NextDecade continues to expect first gas into the facility in the second half of 2026 and first LNG production from Train 1 in the first half of 2027, Schatzman said.
FERC approval for 24/7 work schedule and commissioning readiness
Schatzman said the Federal Energy Regulatory Commission (FERC) approved NextDecade’s request in early April to shift to a 24/7 construction schedule, calling it a change that “will not increase our EPC or total project costs.” During the Q&A, he described the 24/7 approach as “contemplated in the original EPC” and “already baked into the EPC,” with Bechtel having discretion over how it is used.
Schatzman also emphasized organizational readiness for commissioning and operations. He said NextDecade has been advancing hiring, systems implementations, and process development ahead of first LNG and now has more than 400 employees, with most based in Brownsville. He added that core enterprise platforms are beginning to go live, and the company has built internal integration capabilities to support data exchange and end-to-end processes.
Discussing the path to maintaining schedule momentum, Schatzman said the main driver is “execution,” adding that the company does not currently have concerns about equipment or supply chain. He also described commissioning as the next critical phase, with gas expected to be introduced later this year and the “cold side” work expected next year as compressors are tested and LNG production begins.
Early cargo marketing and LNG market exposure
Another 2026 priority is reducing near-term exposure to LNG market price fluctuations by selling projected early cargoes, Schatzman said. He noted that in February the company sold more than 175 TBTU of early volumes on an FOB basis with fixed liquefaction fees. The company expects those sales to achieve margins—calculated as the FOB sales price less expected costs of natural gas feedstock and fuel—of more than $3 per MMBtu. Schatzman said the sales reduced Phase 1 early LNG production exposed to market price fluctuations by 33%.
Interim CFO Mike Mott reiterated those points and said the company continues to project total early LNG production of approximately 3,800 TBTU, beginning with startup of Train 1 in 2027 and extending through first commercial delivery to long-term SPA customers under Train 5. That total includes about 1,275 TBTU of production in excess of currently contracted long-term SPAs, he said.
Mott said NextDecade expects cash flow from early volumes to be used primarily to pay down a portion of the FinCo and Super FinCo loans that support equity commitments for Trains 4 and 5. Under its early cash flow outlook, the company projects approximately $2 billion in NextDecade’s share of distributable cash flow at the Rio Grande LNG project level at an assumed $5 per MMBtu margin on volumes in excess of contracted SPAs, and approximately $1.2 billion at a $3 per MMBtu margin.
Schatzman said the company expects to sell additional early volumes as it gains visibility on production timing and further assurance from Bechtel. He also said market margins increased after the Iran conflict began.
Expansion to Trains 6–8 and a shifting macro backdrop
Schatzman said NextDecade is advancing development and permitting for Trains 6 through 8 as part of its goal to increase Rio Grande LNG capacity up to 60 million tons per annum. He said Bechtel is performing a front-end engineering and design (FEED) study for Train 6 and a third berth, and the company expects to file a formal FERC application for Train 6 before the end of the second quarter.
On permitting, Schatzman said the current administration’s emphasis on U.S. energy dominance and a determination related to expanding LNG capacity under the Defense Production Act could support U.S. LNG development. He also pointed to legal precedents—including a D.C. Circuit reversal in the company’s case in March 2025 and the Supreme Court’s Seven County case later last year—as factors that could limit permit challenges in court.
Schatzman said NextDecade believes it is possible to receive a FERC permit for Train 6 as early as mid-2027, potentially enabling a final investment decision in the second half of 2027 and allowing Train 6 to come online as early as 2032. He added that early commercialization for Train 6 has begun and that the company is seeing strong demand from potential long-term customers.
Schatzman also discussed LNG market dynamics following the Iran conflict, including the closure of the Strait of Hormuz in March and April and associated LNG supply disruptions. He cited estimates that damaged trains at Ras Laffan totaling almost 13 million tons per annum could require three to five years to repair and said expansion capacity in Qatar could be delayed by up to one year based on estimates.
Balance sheet priorities, Train 6 financing, and reaffirmed guidance
Mott said NextDecade’s 2026 financial priorities include managing project-level debt and opportunistically refinancing bank credit facilities into debt securities. He said the company has over $9 billion of credit facility commitments for Phase One, about $3.8 billion for Train 4, and roughly $3.6 billion for Train 5. Since Phase One FID, NextDecade has refinanced more than $1.85 billion of Phase One bank debt, he said.
For Train 6, Mott said the company is evaluating equity financing options because the targeted FID timing precedes meaningful operating cash flows that could fund equity needs. He said NextDecade expects to contract a high percentage of Train 6 capacity, potentially supporting project-level bank facilities covering up to approximately 75% of total project costs. He also said management believes the FinCo bank facility used to fund a portion of equity commitments for Trains 4 and 5 remains “a very attractive source of capital,” and that additional FinCo capacity could be available for Train 6.
On leverage, Mott reaffirmed a steady-state target of 3 to 3.5 times NextDecade-level debt to Adjusted EBITDA. He said that in the $5 per MMBtu early-volume margin scenario, the company expects NextDecade-level debt to fall within that target range as it moves into steady-state operations. In a $3 per MMBtu scenario, Mott said the company would consider additional balance sheet optimization, including potentially contracting an incremental 2 million tons per annum under long-term SPAs across Trains 4 and 5 to increase contracting levels and maximize project-level debt.
NextDecade reaffirmed both its early volume and cash flow guidance and its steady-state outlook. In its base case scenario, assuming $5 per MMBtu market margins for early volumes and during steady state, Mott said the company projects annual distributable cash flow of approximately $500 million following DFCD for Train 5 SPAs and prior to an economic interest flip for Trains 4 and 5 in the mid-2030s. After the flip, Mott said NextDecade projects annual distributable cash flow of approximately $800 million. In an additional pricing scenario—assuming $3 per MMBtu margins on early volumes, $5 per MMBtu margins on steady-state volumes, and an incremental 2 MTPA of long-term SPAs across Trains 4 and 5—Mott said the company projects approximately $400 million annually pre-flip and approximately $500 million annually post-flip.
In Q&A, Schatzman said NextDecade has five LNG vessels under charter, including three long-term charters for its Guangdong DES deal and two sub-chartered vessels, and expects to charter more ships, particularly on a short-term basis for Phase 1 volumes above already sold firm volumes. He said the company “will likely run a DES-type business for our excess cargoes,” adding that delivered capability “provides additional flexibility and optionality and should increase the value.”
About NextDecade NASDAQ: NEXT
NextDecade Corporation is a Houston‐based liquefied natural gas (LNG) and decarbonization company focused on the development, engineering, construction and operation of large‐scale LNG export facilities. The company's core mission is to deliver cleaner energy solutions to global customers while integrating carbon capture and sequestration technologies to reduce greenhouse gas emissions. NextDecade's projects are designed to leverage abundant U.S. natural gas supplies to meet growing worldwide demand for low‐carbon fuel.
NextDecade's flagship project, Rio Grande LNG, is located at the Port of Brownsville in southern Texas.
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