NextDecade Corp 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements NextDecade Corporation and Subsidiaries Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 47 Consolidated Balance Sheets 49 Consolidated Statements of Operations 50 Consolidated Statements of Stockholders’ Equity and Convertible Preferred Stock 51 Consolidated Statements of Cash Flows 52 Notes to Consolidated Financial Statements 53 46 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders NextDecade Corporation Opinion on the financial statements We have audited the accompanying consolidated balance sheets of NextDecade Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity and convertible preferred stock, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred operating losses since its inception and management expects operating losses and negative cash flows to continue for the foreseeable future. These conditions, along with other matters as set forth in Note 1, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Consolidation of Rio Grande LNG Intermediate Holdings, LLC under the variable interest entity model As described further in note 2 to the financial statements, when the Company has a variable interest in another legal entity, management evaluates whether that legal entity is within the scope of the variable interest entity ("VIE") model and, if so, whether the Company is the primary beneficiary of the VIE. Management consolidates a VIE if the Company's involvement indicates that it is the primary beneficiary. The Company is the primary beneficiary of a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. We identified the consolidation of Rio Grande LNG Intermediate Holdings, LLC under the VIE model (“consolidation under the VIE model”) as a critical audit matter. 47 The principal considerations for our determination are (i) the significant judgment by management when determining whether the Company is the primary beneficiary of the VIE based on whether the Company has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures when evaluating audit evidence related to the purpose of the VIE, rights and obligations of the variable interest holders, mechanisms for the resolution of disputes among variable interest holders, and other executed agreements with the legal entity and its variable interest holders. Our audit procedures related to the consolidation under the VIE model included the following, among others: • We compared the rights of each party to underlying executed legal documents and discussed with management the purpose and design of the VIE. • We evaluated management's analysis of significant activities of the VIE such as capital decisions, financing decisions and operating decisions, and which variable interest holder has the power to direct such activities. In our evaluation, we considered the purpose and design of the entity, the composition of the board of directors and other legal rights of the parties, including the significance of the decision-making rights of each party in assessing which party has power to direct the activities that most significantly affect the economic performance of the VIE, as well as the substance of the arrangements. • We tested the initial determination of non-controlling interests in Rio Grande LNG Intermediate Holdings, LLC, and the allocation of subsequent profits and losses in Rio Grande LNG Intermediate Holdings, LLC for controlling and non-controlling interest holders based on what the holders of these interests may legally claim at the end of each reporting period. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2018. Houston, Texas March 11, 2024 48 NextDecade Corporation Consolidated Balance Sheets (in thousands, except per share data) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 38,241 $ 62,789 Restricted cash 256,237 — Derivative asset 17,958 — Prepaid expenses and other current assets 2,089 1,149 Total current assets 314,525 63,938 Property, plant and equipment, net 2,437,733 218,646 Operating lease right-of-use assets 170,827 1,474 Debt issuance costs 389,695 — Other non-current assets 11,021 28,372 Total assets $ 3,323,801 $ 312,430 Liabilities, Convertible Preferred Stock and Stockholders’ Equity Current liabilities: Accounts payable $ 243,129 $ 1,084 Accrued and other current liabilities 299,264 23,184 Common stock warrant liabilities 6,851 — Operating lease liabilities 3,143 1,093 Total current liabilities 552,387 25,361 Common stock warrant liabilities 1,818 6,790 Operating lease liabilities 145,962 465 Derivative liability 66,899 — Debt, net 1,816,301 — Other non-current liabilities — 23,000 Total liabilities 2,583,367 55,616 Commitments and contingencies (Note 16) Series A-C convertible preferred stock (Note 10) — 202,443 Stockholders’ equity: Common stock, $ 0.0001 par value, 480.0 million authorized: 256.5 million and 143.5 million outstanding, respectively 26 14 Treasury stock: 2.2 million and 1.0 million respectively, at cost ( 14,214 ) ( 4,587 ) Preferred stock, $ 0.0001 par value, 0.5 million authorized after designation of the convertible preferred stock: none outstanding — — Additional paid-in-capital 693,883 289,084 Accumulated deficit ( 391,772 ) ( 230,140 ) Total stockholders' equity 287,923 54,371 Non-controlling interest 452,511 — Total equity 740,434 54,371 Total liabilities, convertible preferred stock and stockholders’ equity $ 3,323,801 $ 312,430 The accompanying notes are an integral part of these consolidated financial statements. 49 NextDecade Corporation Consolidated Statements of Operations (in thousands, except per share data) Year Ended December 31, 2023 2022 Revenues $ — $ — Operating expenses: General and administrative expense 111,468 49,093 Development expense, net 4,891 4,101 Lease expense 6,141 1,119 Depreciation expense 168 162 Total operating expenses 122,668 54,475 Total operating loss ( 122,668 ) ( 54,475 ) Other income (expense): Loss on common stock warrant liabilities ( 1,879 ) ( 5,747 ) Derivative loss, net ( 44,803 ) — Interest expense, net of capitalized interest ( 50,285 ) — Loss on debt extinguishment ( 9,531 ) — Other income, net 7,526 151 Total other expense ( 98,972 ) ( 5,596 ) Net loss attributable to NextDecade Corporation ( 221,640 ) ( 60,071 ) Less: net loss attributable to non-controlling interest ( 59,379 ) — Less: preferred stock dividends 20,484 24,282 Net loss attributable to common stockholders $ ( 182,745 ) $ ( 84,353 ) Net loss per common share - basic & diluted $ ( 0.94 ) $ ( 0.65 ) Weighted average shares outstanding - basic & diluted 194,595 130,136 The accompanying notes are an integral part of these consolidated financial statements. 50 NextDecade Corporation Consolidated Statement of Stockholders’ Equity and Convertible Preferred Stock (in thousands) Year Ended December 31, 2023 2022 Total stockholders' equity, beginning balances $ 54,371 $ 19,892 Common stock: Beginning balances 14 12 Issuance of common stock 6 2 Preferred stock conversion 6 — Ending balances 26 14 Treasury Stock: Beginning balance ( 4,587 ) ( 1,315 ) Shares repurchased related to share-based compensation ( 9,627 ) ( 3,272 ) Ending balance ( 14,214 ) ( 4,587 ) Additional paid-in-capital: Beginning balances 289,084 191,264 Share-based compensation 26,600 7,472 Issuance of common stock, net 254,394 111,066 Sale of equity in subsidiary ( 78,579 ) — Exercise of common stock warrants — 3,564 Preferred stock dividends ( 20,484 ) ( 24,282 ) Preferred stock conversion 222,868 — Ending balances 693,883 289,084 Accumulated deficit: Beginning balances ( 230,140 ) ( 170,069 ) Subsidiary deconsolidation due to sale 629 — Net loss ( 162,261 ) ( 60,071 ) Ending balances ( 391,772 ) ( 230,140 ) Total stockholders' equity 287,923 54,371 Non-controlling interest: Beginning balance — — Sale of equity in subsidiary 511,890 — Net loss ( 59,379 ) — Ending balance 452,511 — Total equity, ending balances $ 740,434 $ 54,371 Preferred Stock, Series A-C: Beginning balance $ 202,443 $ 168,400 Preferred stock dividends 20,431 24,207 Preferred stock conversion ( 222,874 ) — Issuance of preferred stock — 9,836 Ending balance $ — $ 202,443 The accompanying notes are an integral part of these consolidated financial statements. 51 NextDecade Corporation Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 Operating activities: Net loss attributable to NextDecade Corporation $ ( 221,640 ) $ ( 60,071 ) Adjustment to reconcile net loss to net cash used in operating activities Depreciation 168 162 Share-based compensation expense 26,553 7,472 Loss on common stock warrant liabilities 1,879 5,747 Derivative loss, net 44,803 — Net cash provided by settlement of derivative instruments 4,138 — Amortization of right-of-use assets 2,980 756 Gain on sale of assets ( 5,712 ) — Amortization of debt issuance costs 41,390 — Loss on debt extinguishment 9,531 — Interest expense 26,432 — Amortization of other non-current assets — 354 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 940 ) ( 314 ) Accounts payable 4,057 684 Operating lease liabilities ( 179 ) ( 678 ) Accrued expenses and other liabilities ( 7,080 ) 5,812 Net cash used in operating activities ( 73,620 ) ( 40,076 ) Investing activities: Acquisition of property, plant and equipment ( 1,737,636 ) ( 33,753 ) Acquisition of other non-current assets ( 15,164 ) ( 7,135 ) Net cash used in investing activities ( 1,752,800 ) ( 40,888 ) Financing activities: Proceeds from debt issuance 2,083,000 — Proceeds from sale of equity in subsidiaries 457,659 — Proceeds from sale of preferred stock — 10,500 Proceeds from sale of common stock 254,400 115,000 Repayment of debt ( 233,000 ) — Debt and equity issuance costs ( 494,270 ) ( 3,952 ) Preferred stock dividends ( 53 ) ( 75 ) Shares repurchased related to share-based compensation ( 9,627 ) ( 3,272 ) Net cash provided by financing activities 2,058,109 118,201 Net increase in cash, cash equivalents and restricted cash 231,689 37,237 Cash, cash equivalents and restricted cash – beginning of period 62,789 25,552 Cash, cash equivalents and restricted cash – end of period $ 294,478 $ 62,789 Balance per Consolidated Balance Sheet: December 31, 2023 Cash and cash equivalents $ 38,241 Restricted cash 256,237 Total cash, cash equivalents and restricted cash $ 294,478 The accompanying notes are an integral part of these consolidated financial statements. 52 NextDecade Corporation Notes to Consolidated Financial Statements Note 1 — Background and Basis of Presentation NextDecade Corporation (“we” or the “Company”) is primarily engaged in construction and development activities related to the liquefaction of natural gas and sale of liquefied natural gas (“LNG”) and the capture and storage of CO 2 emissions. We are constructing and developing a natural gas liquefaction and export facility located in the Rio Grande Valley in Brownsville, Texas (the “Rio Grande LNG Facility”), which currently has three liquefaction trains and related infrastructure under construction (“Phase 1”). Construction commenced on Phase 1 of the Rio Grande LNG Facility in July 2023, following a positive final investment decision (“FID”) and the closing of project financing by our subsidiary, Rio Grande LNG, LLC (“Rio Grande”). The Rio Grande LNG Facility has received Federal Energy Regulatory Commission approval and Department of Energy FTA and non-FTA authorizations for the construction of up to five liquefaction trains and LNG exports totaling 27 million tonnes per annum (“MTPA”). We are also developing liquefaction trains 4 and 5 at the Rio Grande LNG Facility, a planned carbon capture and storage (“CCS”) project at the Rio Grande LNG Facility, and other potential CCS projects that would be located at third-party industrial source facilities. Basis of Presentation Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on the Company's financial position, results of operations or cash flows. The Company has incurred operating losses since its inception and management expects operating losses and negative cash flows to continue until the commencement of operations at the Rio Grande LNG Facility and, as a result, the Company will require additional capital to fund its operations and execute its business plan. As of December 31, 2023, the Company had $ 38.2 million in cash and cash equivalents, which may not be sufficient to fund the Company's planned operations and development activities for future phases of the Rio Grande LNG Facility and CCS projects through one year after the date the consolidated financial statements are issued. Accordingly, there is substantial doubt about the Company's ability to continue as a going concern. The analysis used to determine the Company's ability to continue as a going concern does not include cash sources outside of the Company's direct control that management expects to be available within the next twelve months. The Company plans to alleviate the going concern issue by obtaining sufficient funding through additional equity, equity-based or debt instruments, or any other means, and by managing certain operating and overhead costs. The Company's ability to raise additional capital in the equity and debt markets, should the Company choose to do so, is dependent on a number of factors, including, but not limited to, the market demand for the Company's equity or debt securities, which itself is subject to a number of business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are satisfactory to the Company. In the event the Company is unable to obtain sufficient additional funding, there can be no assurance that it will be able to continue as a going concern. These consolidated financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event the Company can no longer continue as a going concern. Note 2 — Summary of Significant Accounting Policies Variable Interest Entities (“VIEs”) The Company makes a determination at the inception of each arrangement whether an entity in which the Company has made an investment, sold equity in a subsidiary or in which it has other variable interests is considered a VIE. Generally, an entity is a VIE if either (1) the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, (2) the entity's investors lack any characteristics of a controlling financial interest or (3) the entity was established with non-substantive voting rights. The Company consolidates VIEs when it is deemed to be the primary beneficiary. The primary beneficiary of a VIE is generally the party that has the power to make decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits that in either case, could be potentially significant to the VIE. If the Company is not deemed to be the primary beneficiary of a VIE, the Company accounts for the investment or other variable interests in a VIE in accordance with other applicable GAAP. 53 NextDecade Corporation Notes to Consolidated Financial Statements Non-controlling interests When the Company consolidates an entity, 100% of the assets, liabilities, revenues and expenses of the entity are included in the Company's Consolidated Financial Statements. For those consolidated entities in which the Company owns less than 100%, the Company records a non-controlling interest as a component of equity in the Consolidated Balance Sheets, which represent the third party ownership in the net assets of the respective consolidated subsidiary. Additionally, the portion of the net income or loss attributable to the non-controlling interest is reported as net loss attributable to non-controlling interest on the Consolidated Statements of Operations. Changes in the Company's ownership interests in an entity that do not result in deconsolidation are generally recognized within equity. Use of Estimates The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Management evaluates its estimates and related assumptions regularly, including those related to the value of property, plant and equipment, income taxes including valuation allowances for net deferred tax assets, share-based compensation and fair value measurements. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates. Concentrations of Credit Risk Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents. We maintain cash and cash equivalent balances with a single financial institution, which may at times be in excess of federally insured levels. We have not incurred losses related to these cash and cash equivalent balances to date. Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Restricted Cash Restricted cash consists of funds that are contractually or legally restricted to usage or withdrawal and have been presented separately from cash and cash equivalents on our Consolidated Balance Sheets. Property, Plant and Equipment Generally, we begin to capitalize the costs of our development projects once construction of the individual project is probable. This assessment includes the following criteria: • funding for design and permitting has been identified and is expected in the near-term; • key vendors for development activities have been identified, and we expect to engage them at commercially reasonable terms; • we have committed to commencing development activities; • regulatory approval is probable; • construction financing is expected to be available at the time of a FID; • prospective customers have been identified and the FID is probable; and • receipt of customary local tax incentives, as needed for project viability, is probable. Prior to meeting the criteria above, costs associated with a project are expensed as incurred. Expenditures for normal repairs and maintenance are expensed as incurred. When assets are retired or disposed, the cost and accumulated depreciation are eliminated from the accounts and any gain or loss is reflected in our Consolidated Statements of Operations. Property, plant and equipment is carried at historical cost and depreciated using the straight-line method over their estimated useful lives. Leasehold improvements are depreciated over the lesser of the economic life of the leasehold improvement or the term of the lease, without regard to extension or renewal rights. 54 NextDecade Corporation Notes to Consolidated Financial Statements Management tests property, plant and equipment for impairment whenever events or changes in circumstances have indicated that the carrying amount of property, plant and equipment might not be recoverable. Assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets for purposes of assessing recoverability. Recoverability generally is determined by comparing the carrying value of the asset to the expected undiscounted future cash flows of the asset. If the carrying value of the asset is not recoverable, the amount of impairment loss is measured as the excess, if any, of the carrying value of the asset over its estimated fair value. Derivative Instruments The Company uses derivative instruments to hedge its exposure to cash flow variability from interest rate risk. Derivative instruments are recorded at fair value and included in the Consolidated Balance Sheets as current or non-current assets or liabilities depending on the derivative position and the expected timing of settlement. Leases The Company determines if a contractual arrangement represents or contains a lease at inception. Operating leases with lease terms greater than twelve months are included in Operating lease right-of-use assets and Operating lease liabilities in the Consolidated Balance Sheets. Operating lease right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. The Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The right-of-use assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has lease arrangements that include both lease and non-lease components. The Company accounts for non-lease components separately from the lease component. Warrants The Company determines the accounting classification of warrants that are issued, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with Accounting Standards Codification (“ASC”) 480 Distinguishing Liabilities from Equity (“ASC 480”), and then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the issuer to settle the warrants or the underlying shares by paying cash or other assets, or must or may require settlement by issuing a variable number of shares. If warrants do not meet liability classification under ASC 480, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash or a variable number of shares are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the warrants are indexed to our common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable GAAP. After all relevant assessments are made, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded in the statements of operations as a gain or loss. Equity classified warrants are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date. Debt Our debt consists of long-term secured debt securities and credit agreements with banks and other lenders. Debt issuances are placed directly by us or through securities dealers, underwriters, or lead arrangers and are held by institutional investors, banks and other lenders. Debt is recorded on our Consolidated Balance Sheets at outstanding principal value, net of unamortized debt issuance costs related to term notes and loans. Debt issuance costs consist primarily of arrangement fees, professional fees, legal fees and in certain cases, commitment fees. If debt issuance costs are incurred in connection with a line of credit arrangement or on undrawn funds, the debt issuance costs are presented as an asset on our Consolidated Balance Sheets. Discounts, premiums and debt issuance costs directly related to the issuance of debt are amortized over the life of the debt and are recorded in interest expense, net of capitalized interest using the effective interest method. 55 NextDecade Corporation Notes to Consolidated Financial Statements We classify debt as current or non-current on our Consolidated Balance Sheets based on contractual maturity; however, long-term debt extinguished after the balance sheet date but before the financial statements are issued would be classified based on facts and circumstances existing as of the balance sheet date. Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation techniques used to measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability. Hierarchy Level 3 inputs are inputs that are not observable in the market. In determining fair value, we use observable market data when available, or models that incorporate observable market data. In addition to market information, we incorporate transaction-specific details that, in management’s judgment, market participants would take into account in measuring fair value. We maximize the use of observable inputs and minimize our use of unobservable inputs in arriving at fair value estimates. Recurring fair-value measurements are performed for derivatives and common stock warrant liabilities as disclosed in Note 5 — Derivatives and Note 10 — Preferred Stock and Common Stock Warrants, respectively. The carrying amount of cash and cash equivalents and accounts payable reported on the Consolidated Balance Sheets approximates fair value due to their short-term maturities. Treasury Stock Treasury stock is recorded at cost. Issuance of treasury stock is accounted for on a weighted average cost basis. Differences between the cost of treasury stock and the re-issuance proceeds are charged to additional paid-in capital. Net Earnings (Loss) Per Share Net earnings (loss) per share (“EPS”) is computed in accordance with GAAP. Basic EPS excludes dilution and is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS reflects potential dilution and is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if the potential common shares had been issued and were dilutive. The dilutive effect of unvested stock and warrants is calculated using the treasury-stock method and the dilutive effect of convertible securities is calculated using the if-converted method. Basic and diluted EPS for all periods presented are the same since the effect of our potentially dilutive securities are anti-dilutive to our net loss per share, as disclosed in Note 13 — Net Loss Per Share. Share-based Compensation We recognize share-based compensation at fair value on the date of grant. The fair value is recognized as expense (net of any capitalization) over the requisite service period. For equity-classified share-based compensation awards, compensation cost is recognized based on the grant-date fair value using the quoted market price of our common stock and not subsequently remeasured. The fair value is recognized as expense, net of any capitalization, using the straight-line basis for awards that vest based on service conditions and using the graded-vesting attribution method for awards that vest based on performance conditions. We estimate the service periods for performance awards utilizing a probability assessment based on when we expect to achieve the performance conditions. For liability classified share-based compensation awards, compensation cost is initially recognized on the grant date using estimated payout levels. Compensation cost is subsequently adjusted quarterly to reflect the updated estimated payout levels based on the changes in our stock price. We account for forfeitures as they occur. Income Taxes Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the tax basis of assets and liabilities and their reported amounts in the Consolidated Financial Statements. Deferred tax assets and liabilities are included in the Consolidated Financial Statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the current period’s provision for income taxes. A valuation allowance is recorded to reduce the carrying value of our net deferred tax assets when it is more likely than not that a portion or all of the deferred tax assets will expire before realization of the benefit or future deductibility is not probable. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the tax position. 56 NextDecade Corporation Notes to Consolidated Financial Statements Segments The Company's chief operating decision maker allocates resources and assesses financial performance on a consolidated basis. As such, for purposes of financial reporting under GAAP during the years ended December 31, 2023 and 2022, the Company operated as a single operating segment. Smaller Reporting Company Under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company qualifies as a “smaller reporting company” because it had less than $100.0 million in revenue during the year ended December 31, 2023 and the value of its common stock held by non-affiliates as of the end of its most recently completed second fiscal quarter was less than $700.0 million. For as long as the Company remains a smaller reporting company, it may take advantage of certain exemptions from the SEC’s reporting requirements that are otherwise applicable to public companies that are not smaller reporting companies. Note 3 — Sale of Equity Interests in Rio Bravo In March 2020 the Company sold its’ equity interests in Rio Bravo Pipeline Company, LLC (“Rio Bravo”) to a third party for approximately $ 19.4 million. Under the terms of the agreement, if the Company or its affiliate failed to issue a full notice to proceed to its’ EPC contractor prior to December 31, 2024, the purchaser had the right to sell the equity interests back to the Company and the Company had the right to repurchase the equity interests from Buyer. Of the transaction price of approximately $ 19.4 million, $ 15.0 million was received by the Company in March 2020 and the remaining approximate $ 4.4 million was received in July 2023 upon Rio Grande’s issuance of the full notice to proceed to its’ EPC contractor. Accordingly, the assets of Rio Bravo have been de-recognized in the consolidated balance sheet as of December 31, 2023. Note 4 — Property, Plant and Equipment Property, plant and equipment consisted of the following (in thousands): December 31, 2023 2022 Rio Grande LNG Facility (not placed in service) $ 2,431,389 $ 197,144 Rio Bravo pipeline (not placed in service) — 21,017 Corporate and other 7,518 1,491 Total property, plant and equipment, at cost 2,438,907 219,652 Less: accumulated depreciation ( 1,174 ) ( 1,006 ) Total property, plant and equipment, net $ 2,437,733 $ 218,646 Note 5 — Derivatives In July 2023, Rio Grande entered into interest rate swaps agreements (the “Swaps”) to protect against interest rate volatility by hedging a portion of the floating-rate interest payments associated with the credit facilities described in Note 9 — Debt . As of December 31, 2023, Rio Grande has the following Swaps outstanding (in thousands): Initial Notional Amount Maximum Notional Amount Maturity Weighted Average Fixed Interest Rate Paid Variable Interest Rate Received $ 123,000 $ 8,500,000 July 12, 2030 3.4 % USD - SOFR The Swaps are not designated as cash flow hedging instruments, and changes in fair value are recorded within our Consolidated Statements of Operations. The Company values the Swaps using an income-based approach based on observable inputs to the valuation model including interest rate curves, risk adjusted discount rates, credit spreads and other relevant data. The fair value of the Swaps is approximately $ 48.9 million as of December 31, 2023, and is classified as Level 2 in the fair value hierarchy. 57 NextDecade Corporation Notes to Consolidated Financial Statements Note 6 — Leases The Company commenced the Rio Grande LNG Facility site lease on July 12, 2023 and it has an initial term of 30 years. The Company has the option to renew and extend the term of the lease for up to two consecutive renewal periods of ten years each, but as the Company is not reasonably certain that those options will be exercised, none are recognized as part of our right of use assets and lease liabilities. The Company has also entered into an office space lease which expires on December 31, 2035, and does not include any options for renewal. For the years ended December 31, 2023 and 2022, our operating lease costs were $ 6.1 million and $ 1.1 million, respectively. Maturity of operating lease liabilities as of December 31, 2023 are as follows (in thousands, except lease term and discount rate): 2024 $ 8,029 2025 7,615 2026 9,522 2027 9,565 2028 9,609 Thereafter 199,241 Total undiscounted lease payments 243,581 Discount to present value ( 94,476 ) Present value of lease liabilities $ 149,105 Weighted average remaining lease term - years 27.9 Weighted average discount rate - percent 4.0 Other information related to our operating leases is as follows (in thousands): Year Ended December 31, 2023 2022 Operating cash flows for amounts paid included in the measurement of operating lease liabilities $ 3,122 $ 678 Noncash right-of-use assets recorded for new operating lease liabilities during the period 147,727 1,640 Note 7 — Other Non-Current Assets Other non-current assets consisted of the following (in thousands): December 31, 2023 2022 Contributions in aid of construction (1) $ 7,534 $ — Permitting costs (2) — 8,575 Rio Grande Site Lease initial direct costs (3) — 19,612 Deposits and other 3,487 185 Total other non-current assets $ 11,021 $ 28,372 (1) Contributions in aid of construction relate to amounts paid to third parties to begin construction of utilities required for the Rio Grande LNG Facility. (2) Permitting costs were reclassified to property, plant and equipment in July 2023 with the positive final investment decision on Phase 1 of the Rio Grande LNG Facility. (3) Rio Grande Site Lease initial direct costs were reclassified to operating lease right-of-use asset in July 2023 upon commencement of the Rio Grande site lease. 58 NextDecade Corporation Notes to Consolidated Financial Statements Note 8 — Accrued and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2023 2022 Rio Grande LNG Facility costs $ 268,821 $ 12,046 Accrued interest 20,392 — Employee compensation expense 9,270 6,650 Other accrued liabilities 781 4,488 Total accrued and other current liabilities $ 299,264 $ 23,184 Note 9 — Debt Debt consisted of the following (in thousands): December 31, 2023 Senior Secured Notes and Loans: 6.67 % Senior Secured Notes due 2033 $ 700,000 6.72 % Senior Secured Loans due 2033 356,000 7.11 % Senior Secured Loans due 2047 251,000 Total Senior Secured Notes and Loans 1,307,000 Credit Facilities: CD Credit Facility 484,000 TCF Credit Facility 59,000 Total debt 1,850,000 Unamortized debt issuance costs ( 33,699 ) Total non-current debt, net of unamortized debt issuance costs $ 1,816,301 Senior Secured Notes and Loans The 6.67 % Senior Secured Notes (the “Senior Secured Notes”), 6.72 % Senior Secured Loans (the “ 6.72 % Senior Secured Loans”) and 7.11 % Senior Secured Loans (the “ 7.11 % Senior Secured Loans” and, together with the 6.72 % Senior Secured Loans, the “Senior Secured Loans”) are senior secured obligations of Rio Grande, ranking senior in right of payment to any and all of Rio Grande’s future indebtedness that is subordinated to the Senior Secured Notes and the Senior Secured Loans, and equal in right of payment with Rio Grande’s other existing and future indebtedness that is senior and secured by the same collateral securing the Senior Secured Notes and Senior Secured Loans. The Senior Secured Notes and Senior Secured Loans are secured on a first-priority basis by a security interest in all of the membership interests in Rio Grande and substantially all of Rio Grande’s assets, pari passu with the CD Credit Agreement and the loans made under the TCF Credit Facility. Debt Maturities Years Ending December 31, Principal Payments 2024 - 2028 $ — Thereafter 1,850,000 Total $ 1,850,000 59 NextDecade Corporation Notes to Consolidated Financial Statements Credit Facilities Below is a summary of our committed credit facilities as of December 31, 2023 (in thousands): CD Senior Working Capital Facility (1) CD Credit Facility (1) TCF Credit Facility (2) Total facility size $ 500,000 $ 9,730,000 $ 800,000 Less: Outstanding balance — 484,000 59,000 Letters of credit issued 47,662 — — Available commitment $ 452,338 $ 9,246,000 $ 741,000 Priority ranking Senior secured Senior secured Senior secured Interest rate on outstanding balance SOFR plus margin of 2.25 % SOFR plus margin of 2.25 % SOFR plus margin of 2.25 % Commitment fees on undrawn balance 0.68 % 0.68 % 0.68 % Maturity date July 12, 2030 July 12, 2030 July 12, 2030 (1) The obligations of Rio Grande under the CD Senior Working Capital Facility and CD Credit Facility are secured by substantially all of the assets of Rio Grande as well as a pledge of all of the membership interests in Rio Grande on a first-priority basis, pari passu with the Senior Secured Notes, the Senior Secured Loans and the loans made under the TCF Credit Facility. (2) The obligations of Rio Grande under the TCF Credit Agreement are secured by substantially all of the assets of Rio Grande as well as a pledge of all of the membership interests in Rio Grande on a first-priority basis, pari passu with the Senior Secured Notes, the Senior Secured Loans and the loans made under the CD Credit Agreement. Total Energies Holdings SAS (“Total Holdings”) provides contingent credit support to the lenders under the TCF Credit Agreement to pay past due amounts owing from Rio Grande under the agreement upon demand. Restrictive Debt Covenants The CD Credit Facility and the TCF Credit Facility (collectively, the “Facilities”) include certain covenants and events of default that are supplemental to the covenants and events of default set forth in the P1 Common Terms Agreement and that are customary for project financing facilities of this type, including a requirement that interest rates for a minimum of 75 % of the projected principal amount of Senior Secured Debt outstanding be hedged or have fixed interest rates. In addition, certain covenants and events of default in the Facilities are more restrictive than the corresponding covenants and events of default in the P1 Common Terms Agreement, including covenants limiting Rio Grande’s ability to incur additional indebtedness, make certain investments or pay dividends (which are subject to customary conditions set out in the Facilities and certain related financing documents) or distributions on equity interests or subordinated indebtedness or purchase, redeem, or retire equity interests, sell or transfer assets, incur liens, dissolve, liquidate, consolidate, merge, sell, or lease all or substantially all of Rio Grande’s assets or enter into certain LNG sales contracts. The Facilities include a requirement for Rio Grande to maintain a historical debt service coverage ratio of at least 1.10 :1.00 at the end of each fiscal quarter starting from the initial principal payment date, a default of which may be cured with equity contributions. The Senior Secured Notes and Senior Secured Loans contain customary terms and events of default and certain covenants that, among other things, limit Rio Grande’s ability to incur additional indebtedness, make certain investments or pay dividends or distributions on equity interests or subordinated indebtedness or purchase, redeem, or retire equity interests, sell or transfer assets, incur liens, dissolve, liquidate, consolidate, merge, or sell or lease all or substantially all of Rio Grande’s assets. The Senior Secured Notes and Senior Secured Loans further require Rio Grande to submit certain reports and information and maintain certain LNG offtake agreements. With respect to certain events, including a change of control event and receipt of certain proceeds from asset sales, events of loss or liquidated damages, the Senior Secured Notes and Senior Secured Loans require Rio Grande to make an offer to repurchase or offer to prepay, respectively, at 101 % (with respect to a change of control event) or par (with respect to each other event). The Senior Secured Notes Senior and Secured Loans covenants are subject to a number of important limitations and exceptions, including the terms and covenants contained in the P1 Common Terms Agreement. 60 NextDecade Corporation Notes to Consolidated Financial Statements The Senior Secured Notes require Rio Grande to maintain a debt service coverage ratio of at least 1.10 :1.00 at the end of each fiscal quarter starting from the initial principal payment date. The Senior Secured Loans require Rio Grande to maintain a debt service coverage ratio of at least 1.10 :1.00 at the end of each fiscal quarter starting from the first quarterly payment date to occur on or after the date that is ninety days following the project completion date. As of December 31, 2023, Rio Grande was in compliance with all covenants related to its respective debt agreements. Debt Extinguishment On December 28, 2023, the Company repaid $ 233.0 million of the outstanding principal balance of the CD Credit Facility. As a result of the repayment, the Company recognized an approximate $ 9.5 million loss on extinguishment for the year ended December 31, 2023. Interest Expense Total interest expense, net of capitalized interest, consisted of the following (in thousands): Year Ended December 31, 2023 Interest cost of non-current debt Interest per contractual rate $ 43,268 Amortization of debt issuance costs 41,390 Total interest cost 84,658 Capitalized interest ( 34,373 ) Total interest expense, net of capitalized interest $ 50,285 Fair Value Disclosures The following table shows the carrying amount and estimated fair value of our debt (in thousands): December 31, 2023 Carrying Value Fair Value Senior Secured Notes $ 700,000 $ 743,593 Senior Secured Loans 607,000 632,998 The fair value of the Company's Senior Secured Notes and Senior Secured Loans was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates on debt issued by parties with comparable credit ratings. The fair value of the Company’s CD Credit Facility and TCF Credit Facility approximates its' carrying amount due to its variable interest rate, which approximates a market interest rate. Note 10 — Preferred Stock and Common Stock Warrants Preferred Stock As of December 31, 2022, the Company had outstanding 82,948 shares of Series A Convertible Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”), 79,239 shares of Series B Convertible Preferred Stock, par value $ 0.0001 per share (the “Series B Preferred Stock”) and 59,366 shares of Series C Convertible Preferred Stock, par value $ 0.0001 per share (the “Series C Preferred Stock” and, together with the Series A Preferred Stock and the Series B Preferred Stock, the “Convertible Preferred Stock”). The shares of Convertible Preferred Stock bore dividends at a rate of 12 % per annum, which were cumulative and accrued daily from the respective dates of issuance on the $ 1,000 stated value per share. Such dividends were payable quarterly and may be paid in cash or in-kind. During the year ended December 31, 2023 and 2022, the Company paid-in-kind $ 20.5 million and $ 24.3 million of dividends, respectively, to the holders of the Convertible Preferred Stock. On July 26, 2023, the Convertible Preferred Stock was converted into 59,542,066 shares of common stock. 61 NextDecade Corporation Notes to Consolidated Financial Statements Common Stock Warrants The Company issued warrants exercisable to purchase Company common stock in connection with its issuances of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (collectively, the “Common Stock Warrants”). The Company revalues the Common Stock Warrants at each balance sheet date and are included in Level 3 of the fair value hierarchy. The assumptions used in the Monte Carlo simulation model to estimate the fair value of the Common Stock Warrants are as follows: December 31, 2023 2022 Stock price $ 4.77 $ 4.94 Exercise price $ 0.01 $ 0.01 Risk-free rate 4.7 % 4.6 % Volatility 78.4 % 52.5 % Term (years) 0.5 1.5 The following table shows a reconciliation of changes in the fair value of the Common Stock Warrants which are classified as Level 3 in the fair value hierarchy (in thousands): December 31, 2023 2022 Beginning balance $ 6,790 $ 3,963 Increase in fair value 1,879 5,747 Exercise — ( 3,564 ) Issuance — 644 Ending balance $ 8,669 $ 6,790 Note 11 — Variable Interest Entity Intermediate Holdings and its wholly owned subsidiaries, including Rio Grande, have been formed to undertake Phase 1 of the construction and operation of the Rio Grande LNG Facility. The Company is not obligated to fund losses of Intermediate Holdings, however, the Company's capital account, which would be considered in allocating the net assets of Intermediate Holdings were it to be liquidated, continues to share in losses of Intermediate Holdings. Further, Rio Grande has granted the Company decision-making rights regarding the construction of Phase 1 of the Rio Grande LNG Facility and key aspects of its operation, which may only be terminated by equity holders for cause, via agreements with NextDecade LLC. Due to the foregoing, the Company determined that it holds a variable interest in Rio Grande through Intermediate Holdings and is its primary beneficiary, and therefore consolidates Intermediate Holdings in these Consolidated Financial Statements. The following table presents the summarized assets and liabilities (in thousands) of Intermediate Holdings, which are included in the Company's Consolidated Balance Sheets. The assets in the table below may only be used to settle the obligations of Rio Grande. In addition, there is no recourse to us for the consolidated VIE’s liabilities. The assets and liabilities in the table below include assets and liabilities of Intermediate Holdings and its subsidiaries only and exclude intercompany balances between Intermediate Holdings and NextDecade, which are eliminated in the Consolidated Financial Statements of NextDecade. 62 NextDecade Corporation Notes to Consolidated Financial Statements December 31, 2023 2022 Assets Current assets Cash $ 256,237 $ — Current derivative asset 17,958 — Prepaid expenses and other current assets 108 24 Total current assets 274,303 24 Property, plant and equipment, net 2,428,583 194,289 Operating lease right-of-use assets, net 157,053 — Debt issuance costs, net of amortization 389,695 — Non-current derivative assets — — Other non-current assets 9,374 28,187 Total assets $ 3,259,008 $ 222,500 Liabilities Current liabilities Accounts payable $ 238,582 $ 108 Accrued liabilities and other current liabilities 288,779 15,457 Current operating lease liabilities 2,554 — Total current liabilities 529,915 15,565 Non-current operating lease liabilities 131,901 — Non-current derivative liability 66,899 — Non-current debt, net of unamortized debt issuance costs 1,816,301 — Total liabilities $ 2,545,016 $ 15,565 Note 12 — Stockholders' Equity Common Stock Purchase Agreements On February 3, 2023, the Company entered into a common stock purchase agreement (the “Stock Purchase Agreement”) for a private placement with HGC NEXT INV LLC and Ninteenth Investment Company LLC, pursuant to which the Company sold an aggregate of 5.8 million shares of the Company common stock for aggregate proceeds of $ 35.0 million. On June 13, 2023, the Company entered into a common stock purchase agreement for three private placements with Global LNG North America Corp., an affiliate of TotalEnergies SE pursuant to which we agreed to sell an aggregate of 17.5 % of the Company's common stock outstanding by the closing of third private placement. In aggregate, the Company sold approximately 44.9 million shares for aggregate proceeds of approximately $ 219.4 million. The details of the three private placements are as follows: • Approximately 8.0 million shares were sold for proceeds of $ 40.0 million on June 14, 2023. • Approximately 22.1 million shares were sold for proceeds of $ 110.0 million on July 26, 2023. • Approximately 14.8 million shares were sold for proceeds of $ 69.4 million on September 8, 2023. 63 NextDecade Corporation Notes to Consolidated Financial Statements Note 13 — Net Loss Per Share Potentially dilutive securities not included in the diluted net loss per share computations because their effect would have been anti-dilutive were as follows (in thousands): Year Ended December 31, 2023 2022 Unvested stock and stock units (1) 4,842 1,904 Convertible preferred stock — 46,533 Common Stock Warrants 1,548 1,382 Total potentially dilutive common shares 6,390 49,819 ____________________________ (1) Includes the impact of unvested shares containing performance conditions to the extent that the underlying performance conditions are satisfied based on actual results as of the respective dates. Note 14 — Share-based Compensation We have granted shares of Company common stock, restricted Company common stock and restricted stock units to employees, consultants and non-employee directors under our 2017 Omnibus Incentive Plan. Total share-based compensation consisted of the following (in thousands): Year Ended December 31, 2023 2022 Share-based compensation expense: Equity awards $ 26,039 $ 7,472 Liability awards 514 — Total share-based compensation expense 26,553 7,472 The total unrecognized compensation costs at December 31, 2023 relating to equity-classified awards were $ 52.5 million, which is expected to be recognized over a weighted average period of 1.8 years. Restricted Stock Awards Restricted stock awards are awards of Company common stock that are subject to restrictions on transfer and to a risk of forfeiture if the recipient’s employment with the Company is terminated prior to the lapse of the restrictions. Restricted stock awards vest based on service conditions and/or performance conditions. The amortization of the value of restricted stock grants is accounted for as a charge to compensation expense, or capitalized, depending on the nature of the services provided by the employee, with a corresponding increase to additional-paid-in-capital over the requisite service period. Grants of restricted stock to employees, non-employees and non-employee directors that vest based on service and/or performance conditions are measured at the closing quoted market price of our common stock on the grant date. The table below provides a summary of our restricted stock awards outstanding as of December 31, 2023 and changes during the year ended December 31, 2023 (in thousands, except for per share information): Shares Weighted Average Grant Date Fair Value Per Share Non-vested at January 1, 2023 1,083 $ 7.51 Granted 107 5.99 Vested ( 1,161 ) 8.55 Forfeited ( 16 ) 6.39 Non-vested at December 31, 2023 13 $ 2.24 64 NextDecade Corporation Notes to Consolidated Financial Statements Restricted Stock Units and Performance Stock Units Restricted stock units are stock awards that vest over a service period of one , two , or three years and entitle the holder to receive shares of our common stock upon vesting, subject to restrictions on transfer and to a risk of forfeiture if the recipient terminates employment with us prior to the lapse of the restrictions. Certain performance stock units provide for cliff vesting after a period of three years with payouts based upon market conditions achieved over the defined performance period compared to pre-established performance targets. The settlement amounts of the awards are based on market conditions consisting of total shareholder return (“TSR”) and relative total shareholder return (“RTSR”) of our common stock. Where applicable, the compensation for performance stock units containing market conditions of TSR and RTSR are based on a fair value using a Monte Carlo simulation as of the grant date, which utilizes level 3 inputs such as projected stock volatility and projected risk-free rates and remains constant through the vesting period. The number of shares that may be earned at the end of the vesting period ranges from 0 % up to 100 % of the target award amount. Both restricted stock units and performance stock units will be settled in Company common stock (on a one-for-one basis) and are classified as equity awards. The table below provides a summary of our restricted stock units outstanding as of December 31, 2023 and changes during the year ended December 31, 2023 (in thousands, except for per share information): Shares Weighted Average Grant Date Fair Value Per Share Non-vested at January 1, 2023 10,304 4.82 Granted 5,680 5.72 Vested ( 2,782 ) 7.82 Forfeited ( 403 ) 5.06 Non-vested at December 31, 2023 12,799 $ 4.72 Note 15 — Income Taxes The reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows: Year Ended December 31, 2023 2022 U.S. federal statutory rate, beginning of year 21 % 21 % Non-controlling interest ( 6 ) — Officers' compensation ( 2 ) ( 1 ) Other — ( 1 ) Valuation allowance ( 13 ) ( 19 ) Effective tax rate as reported — % — % — % 65 NextDecade Corporation Notes to Consolidated Financial Statements Significant components of our deferred tax assets and liabilities at December 31, 2023 and 2022 are as follows (in thousands): December 31, 2023 2022 Deferred tax assets Net operating loss carryforwards and credits $ 54,839 $ 36,835 Investment in Intermediate Holdings 31,782 — Property, plant and equipment — 749 Operating lease liabilities 2,972 187 Other 4,996 3,179 Less: valuation allowance ( 91,465 ) ( 36,642 ) Total deferred tax assets 3,124 4,308 Deferred tax liabilities Operating lease right-of-use assets ( 2,809 ) ( 4,308 ) Other ( 315 ) — Total deferred tax liabilities ( 3,124 ) ( 4,308 ) Net deferred tax assets (liabilities) $ — $ — The federal deferred tax assets presented above do not include the state tax benefits as our net deferred state tax assets are offset with a full valuation allowance. At December 31, 2023, we had federal net operating loss (“NOL”) carryforwards of approximately $ 260.7 million. Approximately $ 26.1 million of these NOL carryforwards will expire between 2034 and 2038. Due to our history of NOLs, current year NOLs and significant risk factors related to our ability to generate taxable income, we have established a valuation allowance to offset our deferred tax assets as of December 31, 2023 and 2022. We will continue to evaluate our ability to release the valuation allowance in the future. Due to our full valuation allowance, we have not recorded a provision for federal or state income taxes during the years ended December 31, 2023 or 2022. Deferred tax assets and deferred tax liabilities are classified as non-current in our Consolidated Balance Sheets. The Tax Reform Act of 1986 (as amended) contains provisions that limit the utilization of NOL and tax credit carryforwards if there has been a change in ownership as described in Section 382 of the Internal Revenue Code (“Section 382”). Substantial changes in the Company's ownership have occurred that may limit or reduce the amount of NOL carryforwards that the Company could utilize in the future to offset taxable income. The Company has not completed a detailed Section 382 study at this time to determine what impact, if any, that ownership changes may have had on its NOL carryforwards. In each period since its inception, the Company has recorded a valuation allowance for the full amount of its deferred tax assets, as the realization of the deferred tax asset is uncertain. As a result, the Company has not recognized any federal or state income tax benefit in its Consolidated Statement of Operations. We remain subject to periodic audits and reviews by taxing authorities; however, we did not have any open income tax audits as of December 31, 2023. The federal tax returns for the years beginning 2019 remain open for examination. Note 16 — Commitments and Contingencies Legal Proceedings From time to time the Company may be subject to various claims and legal actions that arise in the ordinary course of business. As of December 31, 2023, management is not aware of any claims or legal actions that, separately or in the aggregate, are likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows, although the Company cannot guarantee that a material adverse effect will not occur. 66 NextDecade Corporation Notes to Consolidated Financial Statements Note 17 — Supplemental Cash Flows The following table provides supplemental disclosure of cash flow information (in thousands): Year Ended December 31, 2023 2022 Cash paid for interest, net of amounts capitalized $ 23,365 $ — Non-cash investing activities: Accounts payable for acquisition of property, plant and equipment $ 238,105 $ 162 Accrued liabilities for acquisition of property, plant and equipment 268,821 12,046 Accrued liabilities for acquisition of other non-current assets — 279 Non-cash financing activities: Paid-in-kind dividends on Convertible Preferred Stock $ 20,431 $ 24,207 Accrued liabilities for debt and equity issuance costs 764 — Note 18 — Subsequent Events NextDecade LLC Revolver On January 4, 2024, NextDecade LLC entered into a Credit and Guaranty Agreement by and among NextDecade LLC, as borrower, Rio Grande LNG Super Holdings, LLC and Rio Grande LNG Intermediate Super Holdings, LLC, as subsidiary guarantors, MUFG Bank, Ltd., as the administrative agent (the “Administrative Agent”), Wilmington Trust, National Association, as the collateral agent (the “Collateral Agent”), MUFG Bank, Ltd., as coordinating lead arranger and bookrunner and the financial institutions party thereto as lenders. The Credit and Guarantee Agreement provides for the following facilities: • a revolving loan facility (the “Revolving Loans”) in an amount up to $ 50 million available to NextDecade LLC to be used for (a) general corporate purposes and working capital requirements of NextDecade LLC and its subsidiaries, including development costs related to the fourth liquefaction train and related common facilities at the Rio Grande LNG Facility, and (b) certain permitted payments on behalf of the Company and its subsidiaries; and • an interest loan facility (the “Interest Loans” and together with the Revolving Loans, the “Loans”) in an amount up to $ 12.5 million available to NextDecade LLC to pay interest obligations, fees, and expenses due and payable under the Credit Agreement and the other finance documents. The principal amount of the Loans must be repaid on the maturity date, which is the earlier of (a) the second anniversary of the Closing Date or such later anniversary of the Closing Date as may be determined by a unanimous decision of the lenders following a written request from NextDecade LLC and (b) ten business days after the date a final investment decision is taken by the board of directors of the Company in respect of the development of the fourth liquefaction train and related common facilities at the Rio Grande LNG Facility. NextDecade LLC may extend the maturity to the date that is ninety days after the date in clause (b) if it delivers written notice to the lenders specifying in reasonable detail its expected source of liquidity to repay all outstanding obligations under the Credit Agreement and the other finance documents on the last day of the requested ninety-day extension. NextDecade LLC may make borrowings based on SOFR plus the applicable margin ( 4.50 %) or the base rate plus the applicable margin ( 3.50 %). NextDecade LLC will pay commitment fees on the undrawn amount of the loan commitments. Additional Rio Grande Senior Notes On February 9, 2024, Rio Grande issued and sold $ 190 million aggregate principal amount of 6.85 % Senior Secured Notes due 2047 (the “ 6.85 % Senior Notes”) pursuant to an indenture between Rio Grande and Wilmington Trust, National Association, as Trustee (the “Indenture”). The issuance and sale of the 6.85 % resulted in a reduction in the commitments under Rio Grande's existing term loan facilities for Phase 1 from approximately $ 10.5 billion to approximately $ 10.3 billion. The 6.85 % Senior Notes will be amortized over a period of approximately 18 years beginning in mid-2029, with a final maturity in June 2047, and will accrue interest from February 9, 2024 at a rate equal to 6.85 % per annum on the outstanding principal amount, with such interest payable semi-annually, in cash in arrears, on June 30 and December 30 of each year, beginning on June 30, 2024. 67 NextDecade Corporation Notes to Consolidated Financial Statements Item 9. Changes in and Disagreements with Accountants None.