New Fortress Energy Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Certain information contained in the following discussion and analysis, including information with respect to our plans, strategy, projections and expected timeline for our business and related financing, includes forward-looking statements. Forward-looking statements are estimates based upon current information and involve a number of risks and uncertainties. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. You should read “Risk Factors” and “Cautionary Statement on Forward-Looking Statements” elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) and under similar headings in the Annual Report on Form 10-K for the year ended December 31, 2021 (our “Annual Report”) for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. The following information should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report. Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). This information is intended to provide investors with an understanding of our past performance and our current financial condition and is not necessarily indicative of our future performance. Please refer to “—Factors Impacting Comparability of Our Financial Results” for further discussion. Unless otherwise indicated, dollar amounts are presented in thousands. Unless the context otherwise requires, references to “Company,” “NFE,” “we,” “our,” “us” or like terms refer to (i) prior to our conversion from a limited liability company to a corporation, New Fortress Energy LLC and its subsidiaries and (ii) following the conversion from a limited liability company to a corporation, New Fortress Energy Inc. and its subsidiaries. Unless the context otherwise requires, references to “Company,” “NFE,” “we,” “our,” “us” or like terms refer to (i) prior to the completion of Mergers, New Fortress Energy Inc. and its subsidiaries, excluding Hygo Energy Transition Ltd. (“Hygo”) and its subsidiaries and Golar LNG Partners LP (“GMLP”) and its subsidiaries, and (ii) after completion of the Mergers, New Fortress Energy Inc. and its subsidiaries, including Hygo and its subsidiaries and GMLP and its subsidiaries. Overview We are a global energy infrastructure company founded to help address energy poverty and accelerate the world’s transition to reliable, affordable, and clean energy. We own and operate natural gas and liquefied natural gas ("LNG") infrastructure, and an integrated fleet of ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. Our near-term mission is to provide modern infrastructure solutions to create cleaner, reliable energy while generating a positive economic impact worldwide. Our long-term mission is to become one of the world’s leading carbon emission-free independent power providing companies. We discuss this important goal in more detail in our Annual Report, “Items 1 and 2: Business and Properties” under “Sustainability—Toward a Carbon-Free Future.” On April 15, 2021, we completed the acquisitions of Hygo (the "Hygo Merger" and GMLP (the "GMLP Merger,"and collectively with the Hygo Merger, the “Mergers”) As a result of the Hygo Merger, we acquired a 50% interest in a 1.5GW power plant in Sergipe, Brazil (the “Sergipe Power Plant”) and its operating FSRU terminal in Sergipe, Brazil (the “Sergipe Facility”), as well as a terminal and power plant under development in the State of Pará, Brazil (the “Barcarena Facility” and "Barcarena Power Plant," respectively), a terminal under development on the southern coast of Brazil (the “Santa Catarina Facility”) and the Nanook , a newbuild FSRU moored and in service at the Sergipe Facility. As a result of the Mergers, we acquired a fleet of six other FSRUs, six LNG carriers and an interest in a floating liquefaction vessel, the Hilli Episeyo (the “Hilli”), each of which are expected to help support our existing facilities and international project pipeline. Acquired FSRUs are operating in Brazil, Indonesia and Jordan under time charters, and uncontracted vessels are available for short term employment in the spot market. Subsequent to the completion of the Mergers, our chief operating decision maker makes resource allocation decisions and assesses performance on the basis of two operating segments, Terminals and Infrastructure and Ships. Our Terminals and Infrastructure segment includes the entire production and delivery chain from natural gas procurement and liquefaction to logistics, shipping, facilities and conversion or development of natural gas-fired power generation. We currently source LNG from long-term supply agreements with third-party suppliers and from our own liquefaction facility in Miami, Florida. Leased vessels as well as the cost to operate our vessels that are utilized in our terminal or logistics operations are included in this segment. We centrally manage our LNG supply and the deployment of our vessels utilized in our terminal or logistics operations, which allows us to optimally manage our LNG supply and 38 Table of Contents acquired and leased fleet. The Terminals and Infrastructure segment includes all terminal operations in Jamaica, Puerto Rico, Mexico and Brazil, including our interest in the Sergipe Power Plant. Our Ships segment includes all vessels acquired in the Mergers which are leased to customers under long-term or spot arrangements, including the 25-year charter of Nanook with CELSE. The Company’s investment in Hilli LLC, owner and operator of the Hilli , is also included in the Ships segment. Over time, we expect to utilize these vessels in our own terminal operations as charter agreements for these vessels expire. Our Current Operations – Terminals and Infrastructure Our management team has successfully employed our strategy to secure long-term contracts with significant customers in Jamaica and Puerto Rico, including Jamaica Public Service Company Limited (“JPS”), the sole public utility in Jamaica, South Jamaica Power Company Limited (“SJPC”), an affiliate of JPS, Jamalco, a bauxite mining and alumina producer in Jamaica, and the Puerto Rico Electric Power Authority (“PREPA”), each of which is described in more detail below. Our assets built to service these significant customers have been designed with capacity to service other customers. We currently procure our LNG either by purchasing from a supplier or by manufacturing it in our liquefaction facility in Dade County, Florida ("Miami Facility"). Our long-term goal is to develop the infrastructure necessary to supply our existing and future customers with LNG produced primarily at our own facilities, including Fast LNG and our expanded delivery logistics chain in Northern Pennsylvania (the “Pennsylvania Facility”) in addition to supplying our customers through long-term LNG contracts. Montego Bay Facility The Montego Bay Facility serves as our supply hub for the north side of Jamaica, providing natural gas to JPS to fuel the 145MW Bogue Power Plant in Montego Bay, Jamaica. Our Montego Bay Facility commenced commercial operations in October 2016 and is capable of processing up to 61,000 MMBtu of LNG per day and features approximately 7,000 cubic meters of onsite storage. The Montego Bay Facility also consists of an ISO loading facility that can transport LNG to numerous on-island industrial users. Old Harbour Facility The Old Harbour Facility is an offshore facility consisting of an FSRU that is capable of processing up to 750,000 MMBtus of LNG per day. The Old Harbour Facility commenced commercial operations in June 2019 and supplies natural gas to the 190MW Old Harbour power plant (“Old Harbour Power Plant”) operated by SJPC. The Old Harbour Facility is also supplying natural gas to our dual-fired combined heat and power facility in Clarendon, Jamaica (“CHP Plant”). The CHP Plant supplies electricity to JPS under a long-term PPA. The CHP Plant also provides steam to Jamalco under a long-term take-or-pay SSA. In March 2020, the CHP Plant commenced commercial operation under both the PPA and the SSA and began supplying power and steam to JPS and Jamalco, respectively. In August 2020, we began to deliver gas to Jamalco to utilize in their gas-fired boilers. San Juan Facility Our San Juan Facility became fully operational in the third quarter of 2020. It is designed as a landed micro-fuel handling facility located in the Port of San Juan, Puerto Rico. The San Juan Facility has multiple truck loading bays to provide LNG to on-island industrial users. The San Juan Facility is near the PREPA San Juan Power Plant and serves as our supply hub for the PREPA San Juan Power Plant and other industrial end-user customers in Puerto Rico. We have delivered natural gas to PREPA’s power plant under the Fuel Sale and Purchase Agreement with PREPA since April 2020. Sergipe Power Plant and Sergipe Facility As part of the Hygo Merger, we acquired a 50% interest in Centrais Elétricas de Sergipe Participações S.A. (“CELSEPAR”), which owns Centrais Elétricas de Sergipe S.A. ("CELSE"), the owner and operator of the Sergipe Power Plant. The Sergipe Power Plant, a 1.5GW combined cycle power plant, receives natural gas from the Sergipe Facility through a dedicated 8-kilometer pipeline. The Sergipe Power Plant is one of the largest natural gas-fired thermal power stations in Latin America and was built to provide electricity on demand throughout the Brazilian electric integrated system, particularly during dry seasons when hydropower is unable to meet the growing demand for electricity in the country. CELSE has executed multiple PPAs pursuant to which the Sergipe Power Plant is delivering power to 26 committed offtakers for a period of 25 years. In any period in which power is not being produced pursuant to the PPAs, we are able to sell merchant power into the electricity grid at spot prices, subject to local regulatory approval. 39 Table of Contents We also own expansion rights with respect to the Sergipe Power Plant, which are owned by Centrais Elétricas Barra dos Coqueiros S.A. (“CEBARRA”), a joint venture with Ebrasil Energia Ltda. (“Ebrasil”), an affiliate of Eletricidade do Brasil S.A. , of which we own a 75% interest. These rights include 190 acres of land and regulatory permits for two new power generation projects of 1.7GW in the aggregate. CEBARRA has obtained all permits and other rights necessary to participate in future government power auctions. The Sergipe Facility is capable of processing up to 790,000 MMBtu per day and storing up to 170,000 cubic meters of LNG and supplies approximately 230,000 MMBtu per day (30% of the Sergipe Facility’s maximum regasification capacity) of natural gas to the Sergipe Power Plant, at full dispatch. In June 2022, we announced the sale of the Sergipe Facility and our interest in the Sergipe Power Plant to Eneva S.A. See "Recent Developments" Miami Facility Our Miami Facility began operations in April 2016. This facility has liquefaction capacity of approximately 8,300 MMBtu of LNG per day and enables us to produce LNG for sales directly to industrial end-users in southern Florida, including Florida East Coast Railway via our train loading facility, and other customers throughout the Caribbean using ISO containers. Our Current Operations – Ships Our Ships segment includes six FSRUs and five LNG carriers, which are leased to customers under long-term or spot arrangements, including a 25-year charter of Nanook with CELSE. As these charter arrangements expire, we expect to use these vessels in our terminal operations and reflect such vessels in our Terminals and Infrastructure segment. One acquired LNG carrier and one acquired FSRU are utilized in our terminal operations, and the results of operations of these vessels are reflected in the Terminals and Infrastructure segment. In July 2022, we announced a financing transaction with an affiliate of Apollo Global Management, Inc. collateralized by our vessels. See "Recent Developments" The Company’s investment in Hilli LLC, owner and operator of the Hilli , is also included in the Ships segment. Hilli Corp, a wholly owned subsidiary of Hilli LLC, has a Liquefication Tolling Agreement (“LTA”) with Perenco Cameroon S.A. and Société Nationale des Hydrocarbures under which the Hilli provides liquefaction services through July 2026. Under the LTA, Hilli Corp receives a monthly tolling fee, consisting of a fixed element of hire and incremental tolling fees based on the price of Brent crude oil. Our Development Projects La Paz Facility In July 2021, we began commercial operations at the Port of Pichilingue in Baja California Sur, Mexico (the “La Paz Facility”). The La Paz Facility is expected to supply approximately 22,300 MMBtu of LNG per day to our 100MW of power supplied by gas-fired modular power units (the “La Paz Power Plant”) following the start of operations. Natural gas supply to the La Paz Power Plant may be increased to approximately 29,000 MMBtu of LNG per day for up to 135MW of power. We are exploring a potential sale of the La Paz Power Plant; we do not plan to recognize a loss on the sale. Puerto Sandino Facility We are developing an offshore facility consisting of an FSRU and associated infrastructure, including mooring and offshore pipelines, in Puerto Sandino, Nicaragua (the “Puerto Sandino Facility”). We have entered into a 25-year PPA with Nicaragua’s electricity distribution companies, and we expect to utilize approximately 57,500 MMBtu of LNG per day to provide natural gas to the Puerto Sandino Power Plant in connection with the 25-year power purchase agreement. Barcarena Facility The Barcarena Facility will consist of an FSRU and associated infrastructure, including mooring and offshore and onshore pipelines. The Barcarena Facility will be capable of processing up to 790,000 MMBtu per day and storing up to 170,000 cubic meters of LNG. The Barcarena Facility is expected to supply gas to third-party industrial and power customers as well as a new 605MW combined cycle thermal power plant to be located in Pará, Brazil which we own (the “Barcarena Power Plant”), which is supported by multiple 25-year power purchase agreement to supply electricity to the national electricity grid. The power project is scheduled to deliver power to nine committed offtakers for 25 years beginning in 2025. 40 Table of Contents Santa Catarina Facility The Santa Catarina Facility will be located on the southern coast of Brazil and will consist of an FSRU with a processing capacity of approximately 570,000 MMBtus per day and LNG storage capacity of up to 170,000 cubic meters. We are also developing a 33-kilometer, 20-inch pipeline that will connect the Santa Catarina Facility to the existing inland Transportadora Brasileira Gasoduto Bolivia-Brasil S.A. (“TBG”) pipeline via an interconnection point in Garuva. The Santa Catarina Facility and associated pipeline are expected to have a total addressable market of 15 million cubic meters per day. Sri Lanka Facility We may develop an offshore LNG receiving, storage and regasification terminal to supply the Kerawalapitya Power Complex, in Colombo, Sri Lanka, where 310 MW of power is operational today and an additional 700 MW is scheduled to be built. Ireland Facility We intend to develop and operate an LNG facility (the “Ireland Facility”) and power plant on the Shannon Estuary, near Tarbert, Ireland. We are in the process of obtaining final planning permission from An Bord Pleanála (“ABP”) in Ireland, and we intend to begin construction of the Ireland Facility after we have obtained the necessary consents and secured contracts with downstream customers with volumes sufficient to support the development. Fast LNG We are currently developing a series of modular floating liquefaction facilities to provide a source of low-cost supply of LNG for our growing customer base. The “Fast LNG” design pairs advancements in modular, midsize liquefaction technology with jack up rigs, semi-submersible rigs or similar marine floating infrastructure to enable a much lower cost and faster deployment schedule than today’s floating liquefaction vessels. Semi-permanently moored FSU(s) will serve as LNG storage alongside the floating liquefaction infrastructure, which can be deployed anywhere there is abundant and stranded natural gas. Other Projects We are in active discussions to develop projects in multiple regions around the world that may have significant demand for additional power, LNG and natural gas, although there can be no assurance that these discussions will result in additional contracts or that we will be able to achieve our target pricing or margins. In particular, we are currently in discussions with Petróleos Mexicanos (“Pemex”) to form a long-term strategic partnership to develop the Lakach deepwater natural gas field for Pemex to supply natural gas to Mexico's onshore domestic market and for NFE to produce LNG for export to global markets. If the parties form a partnership, NFE expects to invest in the continued development of the Lakach field over a two-year period by completing seven offshore wells and to deploy a 1.4 MTPA Fast LNG unit to liquefy the majority of the produced natural gas. Remaining natural gas and associated condensate volumes are expected to be utilized by Pemex in Mexico's onshore domestic market. Recent Developments Sergipe Sale On May 31, 2022, LNG Power Limited (“LNG Power”), an indirect subsidiary of NFE and direct owner of the CELSEPAR investment, and certain Ebrasil sellers as owners of CELSEPAR (together with LNG Power, the “Sergipe Sellers”), Eneva S.A., as purchaser ("Eneva") and Eletricidade do Brasil S.A. -- Ebrasil , entered into a Share Purchase Agreement (“SPA”) pursuant to which Eneva has agreed to acquire all of the outstanding shares of CELSEPAR and CEBARRA for a purchase price of R$ 6.10 billion in cash (approximately $ 1.17 billion using the exchange rate as of June 30, 2022 ) (the “Sergipe Sale”). The purchase price payable by Eneva accrues interest at a rate of CDI + 1% from the December 31, 2021 until the date of the Closing (as defined below) and is subject to certain customary adjustments, including for the amount of any leakage that has occurred from December 31, 2021 to the date of the Closing, including (a) making distributions or payments to or for the benefit of Sergipe Sellers and their affiliates and assuming or incurring liabilities for the benefit of Sergipe Sellers or their affiliates, and (b) certain fees and expenses incurred by CELSEPAR and CEBARRA in connection with the Sergipe Sale. LNG Power also entered into a foreign currency forward associated to mitigate foreign currency risk to the expected proceeds from the transaction and will settle at the same time as Closing. 41 Table of Contents Under the SPA, the closing of the Sergipe Sale (the “Closing”) will occur on the later of (a) October 3, 2022 and (b) the 10th business day after all conditions to Closing have been satisfied or waived , or as otherwise agreed to among the parties . The conditions to Closing include receipt of all required regulatory approvals, receipt of certain specified material third-party consents and the approval of the Sergipe Sale by Eneva’s shareholders. The Sergipe Sale may be terminated under certain circumstances, including, among others, (a) by either Eneva or Sergipe Sellers if Closing has not occurred on or before the date that is 270 days from the execution date of the SPA, (b) automatically if the Sergipe Sale is not approved by Eneva’s shareholders. The SPA further provides that, (i) upon termination of the SPA under certain circumstances, Eneva will be required to pay the Sergipe Sellers a reverse termination fee equal to R$300 million and (ii) upon termination of the SPA under certain other circumstances, the Sergipe Sellers will be required to pay Eneva a termination fee equal to R$250 million. In connection with the Sergipe Sale, we have recognized an other than temporary impairment of the investment in CELSEPAR of $345,447, and this loss has been recognized in loss (income) from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss). Upon closing, we expect to recognize transaction costs associated with the sale of CELSEPAR. The assets of CEBARRA primarily consist of construction in progress, and in conjunction with the Sergipe Sale, the assets of CEBARRA meet the criteria to be represented as held for sale and stated at fair value. These assets were reviewed for impairment upon classification to held for sale, and the Company recognized an impairment loss of $48,109 in Asset impairment expense in the condensed consolidated statements of operations and comprehensive income (loss). Vessel Financing Transaction On July 2, 2022, certain affiliates of NFE (collectively, the “Vessel Sellers”) and a separate affiliate of NFE acting as contributor (the “Contributor”, together with the Vessel Sellers, the “NFE Vessel Group”) entered into an Equity Purchase and Contribution Agreement (the “Purchase Agreement”) with AP Neptune Holdings Ltd. (“Purchaser”), which is affiliated with certain funds or investment vehicles managed by affiliates of Apollo Global Management, Inc. (the “Purchaser Group”), pursuant to which (1) the Contributor and the Purchaser formed a joint venture (the “JV”), (2) the Vessel Sellers agreed to sell to the Purchaser eight vessels, (3) the Purchaser will contribute the eight vessels to the JV and (4) the Contributor will contribute three additional vessels to the JV. In connection with the transaction, the Nanook SPV facility, Penguin SPV facility, Celsius SPV facility and Vessel Term Loan Facility are expected to be extinguished. The cash purchase price for the transaction is subject to customary purchase price adjustments, and after giving effect to the repayment of existing debt, we expect to receive net cash proceeds of approximately $1.1 billion (the "Vessel Financing Transaction"). In connection with the transaction, certain of our affiliates will enter into long-term time charter agreements for a period up to 20 years in respect of ten of the eleven vessels, the terms of which will commence upon the expiration of each vessel's existing charter. The Purchase Agreement contains customary representations, warranties and covenants by each of the NFE Vessel Group, the Contributor and the Purchaser Group. Closing of the transactions contemplated by the Purchase Agreement is subject to customary conditions, including the absence of a material adverse effect, but is not subject to any regulatory or financing condition or contingency. Closing is expected to occur in the third quarter of 2022. The Purchase Agreement contains termination rights for each of the NFE Vessel Group and the Purchaser Group, including for the material uncured breach of either the NFE Vessel Group or the Purchaser Group and for the failure to consummate the transactions by December 30, 2022. Upon termination of the Purchase Agreement under specified circumstances, the Purchaser Group would owe to the NFE Vessel Group a termination fee of approximately $80 million. Cargo Sales Since August 2021, LNG prices have increased materially, and global events, such as Russia’s invasion of Ukraine, have generated further energy pricing volatility. We have supply commitments to secure LNG volumes equal to approximately 100% of our expected needs for our Montego Bay Facility, Old Harbour Facility, San Juan Facility, La Paz Facility and Puerto Sandino Facility for the next six years. Due to this significant increase in market pricing of LNG, we have optimized our supply portfolio to sell a portion of these cargos in the market, and these sales have positively impacted our results for the first half of 2022. COVID-19 Pandemic 42 Table of Contents We continue to closely monitor the impact of the novel coronavirus (“COVID-19”) pandemic on all aspects of our operations and development projects, including our marine operations acquired in the Mergers. Customers in our Terminals and Infrastructure segment primarily operate under long-term contracts, many of which contain fixed minimum volumes that must be purchased on a “take-or-pay” basis. We continue to invoice our customers for fixed minimum volumes even in cases when our customer’s consumption has decreased. We have not changed our payment terms with these customers, and there has not been deterioration in the timing or volume of collections. Many of the vessels acquired in the Mergers operate under long-term contracts with fixed payments. We are required to have adequate crewing aboard our vessels to fulfill the obligations under our contracts, and we have implemented safety measures to ensure that we have healthy qualified officers and crew. We monitor local or international transport or quarantine restrictions limiting the ability to transfer crew members off vessels or bring a new crew on board, and restrictions in availability of supplies needed on board due to disruptions to third-party suppliers or transportation alternatives, and we have not experienced significant disruptions in our operations due to these measures or restrictions. Based on the essential nature of the services we provide to support power generation facilities, our operations and development projects have not currently been significantly impacted by responses to the COVID-19 pandemic. We remain committed to prioritizing the health and well-being of our employees, customers, suppliers and other partners. We have implemented policies to screen employees, contractors, and vendors for COVID-19 symptoms upon entering our development projects, operations and office facilities. From the beginning of 2020 to June 30, 2022, we have incurred approximately $2.4 million to date for safety measures introduced into our operations and other responses to the COVID-19 pandemic. We are actively monitoring the spread of the pandemic and the actions that governments and regulatory agencies are taking to fight the spread. We have not experienced significant disruptions in development projects, charter or terminal operations from the COVID-19 pandemic; however, there are important uncertainties including the scope, severity and duration of the pandemic and resurgences of COVID-19 variants, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures. We do not currently expect these factors to have a significant impact on our results of operations, liquidity or financial position, or our development budgets or timelines. Other Matters On June 18, 2020, we received an order from the Federal Energy Regulatory Commission ("FERC") which asked for an explanation as to why our San Juan Facility is not subject to FERC’s jurisdiction under section 3 of the NGA. Because we do not believe that the San Juan Facility is jurisdictional, we provided our reply to FERC on July 20, 2020 and requested that FERC act expeditiously. On March 19, 2021, FERC issued an order that the San Juan Facility does fall under FERC jurisdiction. FERC directed us to file an application for authorization to operate the San Juan Facility within 180 days of the order, which was September 15, 2021, but also found that allowing operation of the San Juan Facility to continue during the pendency of an application is in the public interest. FERC also concluded that no enforcement action against us is warranted, presuming we comply with the requirements of the order. Parties to the proceeding, including the Company, sought rehearing of the March 19, 2021 FERC order, and FERC has denied all requests for rehearing, and the FERC order was affirmed by the United States Court of Appeals for the District of Columbia Circuit on June 14, 2022. To comply with the FERC’s directive, on September 15, 2021, we filed an application for authorization to operate the San Juan Facility, which remains pending. 43 Table of Contents Results of Operations – Three Months Ended June 30, 2022 compared to Three Months Ended March 31, 2022 and Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021 Segment performance is evaluated based on operating margin and the tables below present our segment information for the three months ended June 30, 2022 and March 31, 2022, and for the six months ended June 30, 2022 and June 30, 2021: Three Months Ended June 30, 2022 (in thousands of $) Terminals and Infrastructure (1) Ships (2) Total Segment Consolidation and Other (3) Consolidated Total revenues $ 543,455 $ 111,024 $ 654,479 $ (69,624) $ 584,855 Cost of sales 271,948 — 271,948 453 272,401 Vessel operating expenses 4,255 21,288 25,543 (6,915) 18,628 Operations and maintenance 29,540 — 29,540 (9,050) 20,490 Segment Operating Margin $ 237,712 $ 89,736 $ 327,448 $ (54,112) $ 273,336 Three Months Ended March 31, 2022 (in thousands of $) Terminals and Infrastructure (1) Ships (2) Total Segment Consolidation and Other (3) Consolidated Total revenues $ 480,349 $ 114,942 $ 595,291 $ (90,173) $ 505,118 Cost of sales 235,532 — 235,532 (27,234) 208,298 Vessel operating expenses 3,492 25,942 29,434 (6,470) 22,964 Operations and maintenance 30,242 — 30,242 (7,074) 23,168 Segment Operating Margin $ 211,083 $ 89,000 $ 300,083 $ (49,395) $ 250,688 44 Table of Contents Six Months Ended June 30, 2022 (in thousands of $) Terminals and Infrastructure (1) Ships (2) Total Segment Consolidation and Other (3) Consolidated Total revenues $ 1,023,804 $ 225,966 $ 1,249,770 $ (159,797) $ 1,089,973 Cost of sales 507,480 — 507,480 (26,781) 480,699 Vessel operating expenses 7,747 47,230 54,977 (13,385) 41,592 Operations and maintenance 59,782 — 59,782 (16,124) 43,658 Segment Operating Margin $ 448,795 $ 178,736 $ 627,531 $ (103,507) $ 524,024 Six Months Ended June 30, 2021 (in thousands of $) Terminals and Infrastructure (1) Ships (2) Total Segment Consolidation and Other (3) Consolidated Total revenues $ 327,232 $ 95,762 $ 422,994 $ (53,471) $ 369,523 Cost of sales 200,122 — 200,122 (2,021) 198,101 Vessel operating expenses — 20,175 20,175 (4,775) 15,400 Operations and maintenance 39,895 — 39,895 (5,079) 34,816 Segment Operating Margin $ 87,215 $ 75,587 $ 162,802 $ (41,596) $ 121,206 (1) Terminals and Infrastructure includes our effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR. The losses and earnings attributable to the investment of $389,996 and $36,680 for the three months ended June 30, 2022 and March 31, 2022, respectively, are reported in (Loss) income from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss). In the six months ended June 30, 2022 and 2021, the losses and earnings attributable to the investment were $353,315 and $28,447, respectively. (2) Ships includes our effective share of revenues, expenses and operating margin attributable to 50% ownership of the Hilli Common Units. The earnings attributable to the investment of $17,069 and $13,555 for the three months ended June 30, 2022 and March 31, 2022, respectively, are reported in (Loss) income from equity method investments in the consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2022 and 2021, the earnings attributable to the investment were $30,623 and $10,494, respectively. (3) Consolidation and Other adjust for the inclusion of our effective share of revenues, expenses and operating margin attributable to 50% ownership of CELSEPAR and Hilli Common Units in our segment measure and exclusion of the unrealized mark-to-market gain or loss on derivative instruments. Terminals and Infrastructure Segment Three Months Ended, (in thousands of $) June 30, 2022 March 31, 2022 Change Total revenues $ 543,455 $ 480,349 $ 63,106 Cost of sales 271,948 235,532 36,416 Vessel operating expenses 4,255 3,492 763 Operations and maintenance 29,540 30,242 (702) Segment Operating Margin $ 237,712 $ 211,083 $ 26,629 45 Table of Contents Six Months Ended, (in thousands of $) June 30, 2022 June 30, 2021 Change Total revenues $ 1,023,804 $ 327,232 $ 696,572 Cost of sales 507,480 200,122 307,358 Vessel operating expenses 7,747 — 7,747 Operations and maintenance 59,782 39,895 19,887 Segment Operating Margin $ 448,795 $ 87,215 $ 361,580 Total revenue Total revenue for the Terminals and Infrastructure Segment increased $63,106 for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. The increase was primarily driven by increased revenue from LNG cargo sales to third parties and increases to the Henry Hub index that forms a portion of the pricing to invoice most of our customers in this segment. Revenue from cargo sales was $309,030 for the three months ended June 30, 2022 and $285,171 for the three months ended March 31, 2022. Our revenue has been positively impacted by increases to the Henry Hub index during 2022, and the impact was more pronounced in the second quarter. The average Henry Hub index pricing used to invoice our customers increased by 45% for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. Total revenue for the Terminals and Infrastructure Segment increased $696,572 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The increase was primarily driven by increased revenue from LNG cargo sales to third parties, additional revenue from our investment in CELSEPAR and increases to the Henry Hub index that forms a portion of the pricing to invoice most of our customers in this segment. Revenue from cargos sales was $594,201 for the six months ended June 30, 2022 as compared to $7,211 for the six months ended June 30, 2021 as we did not have any significant cargo sales transactions in the first and second quarters of 2021. Our acquisition of our investment in CELSEPAR in the Mergers occurred on April 15, 2021, and as such, we have recognized additional revenue in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. Finally, the average Henry Hub index pricing used to invoice our customers increased by 119% for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The following tables summarize the volumes delivered, exclusive of LNG cargo volumes sold to third parties, in the three months ended June 30, 2022 as compared to the three months ended March 31, 2022, as well as the six months ended June 30, 2022 as compared to the six months ended June 30, 2021: Three Months Ended (in TBtu) June 30, 2022 March 31, 2022 Change Old Harbour Facility 4.1 3.0 1.1 Montego Bay Facility 1.7 0.5 1.2 San Juan Facility 3.0 1.1 1.9 Other 0.5 1.7 (1.2) Total volumes delivered in the current period 9.3 6.3 3.0 Six Months Ended (in TBtu) June 30, 2022 June 30, 2021 Change Old Harbour Facility 7.1 9.4 (2.3) Montego Bay Facility 2.2 4.1 (1.9) San Juan Facility 4.1 7.7 (3.6) Other 2.2 0.6 1.6 Total volumes delivered in the current period 15.6 21.8 (6.2) Additional details of the change in volumes by location are as follows: 46 Table of Contents • Volumes delivered at the Old Harbour Facility increased for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022 due to an increase in volumes delivered at the Old Harbour Power Plant. Decreased consumption at the CHP Plant also drove volume decreases at the Old Harbour Facility for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. • During the first quarter of 2022, no volumes were consumed by the Bogue Power Plant, leading to the significant decrease in volumes delivered at the Montego Bay Facility, due to the port authority at the Port of Montego Bay where our facility resides requiring a reconfiguration and partial relocation of our assets. This reconfiguration was completed in the second quarter of 2022, and at that time, we recommenced deliveries to the Bogue Power Plant. • The San Juan Power Plant completed additional maintenance activities in the first quarter of 2022, leading to lower consumption of natural gas. The increase in volumes delivered at the San Juan Facility for the three months ended June 30, 2022 and the decrease in the six months ended June 30, 2022 were due to these additional maintenance activities. Subsequent to the acquisition of our interest in the Sergipe Facility as part of the Mergers, our share of revenue from our investment in CELSEPAR was $43,576 for the three months ended June 30, 2022 and $63,389 for the three months ended March 31, 2022, which was primarily comprised of fixed capacity payments received under CELSE's PPAs. As hydrology conditions have continued to improve in the second quarter of 2022, the Sergipe Power Plant was not dispatched in the second quarter of 2022, reducing revenue from our share of our investment in CELSEPAR. Our share of revenue from our investment in CELSEPAR was $106,965 for the six months ended June 30, 2022 as compared to $31,769 for the six months ended June 30, 2021, which represents our share of revenue for the period after the Merger. The increase was due the investment impacting our results for the full six months of 2022 as opposed to less than a full quarter of 2021 and revenue earned from dispatch of the Sergipe Power Plant in the first quarter of 2022. Cost of sales Cost of sales includes the procurement of feedgas or LNG, as well as shipping and logistics costs to deliver LNG or natural gas to our facilities. Our LNG and natural gas supply are purchased from third parties or converted in our Miami Facility. Costs to convert natural gas to LNG, including labor, depreciation and other direct costs to operate our Miami Facility are also included in Cost of sales. Cost of sales increased $36,416 for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. • The increase was primarily due to higher cost and volume of LNG cargo sales in the market. We recognized $115,432 during the three months ended June 30, 2022 to acquire cargos sold to third parties, as compared to $86,462 for the three months ended March 31, 2022. Due to the significant increase in market pricing of LNG in the second half of 2021 and continued increase in the first half of 2022, we have optimized our supply portfolio to sell a portion of our committed cargos in the market. LNG cargo sales in the market increased by 0.5 TBtus for the three months ended June 30, 2022. The weighted-average cost of LNG from the sale of a portion of our cargos also increased from $8.81 per MMBtu for the three months ended March 31, 2022 to $11.23 per MMBtu for the three months ended June 30, 2022. • Cost of LNG purchased from third parties for sale to our customers increased $33,376 for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. The increase was primarily attributable to a 48% increase in volumes delivered compared to the three months ended March 31, 2022, and a slight increase in LNG cost. The weighted-average cost of LNG purchased from third parties increased from $9.49 per MMBtu for the three months ended March 31, 2022 to $9.78 per MMBtu for the three months ended June 30, 2022. • During the second quarter of 2022, the Sergipe Power Plant was dispatched substantially less than in the first quarter of 2022 due to improved hydrology conditions in Brazil. Our share of cost of sales from our investment in CELSEPAR, which was primarily comprised of LNG costs to fuel the power plant, was $1,794 for the three months ended June 30, 2022, as compared to $24,742 for the three months ended March 31, 2022. Cost of sales increased $307,358 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. • We recognized cost to acquire LNG cargos sold to third parties and our share of cost of sales from our investment in CELSEPAR during the first and second quarters of 2022, totaling $228,429. We did not have any significant cargo sale transactions in the first half of 2021, and the acquisition of our investment in CELSEPAR in the 47 Table of Contents Mergers occurred subsequent to March 31, 2021. Accordingly, the increased costs of sales was primarily driven by these transactions. • Cost of LNG purchased from third parties for sale to our customers increased $18,100 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. We delivered 10% less volumes to our terminal customers in the current period as compared to the six months ended June 30, 2021. Our cost of LNG was significantly higher in the current period, and as such, the increase of cost of sales to deliver to our terminal customers did not fully correspond with the decrease in volumes. The weighted-average cost of LNG purchased from third parties increased from $6.37 per MMBtu for the six months ended June 30, 2021 to $9.66 per MMBtu for the six months ended June 30, 2022. • We incurred additional costs associated with the required reconfiguration and partial relocation of our assets at the Port of Montego Bay of $22,165 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2022. • Vessel costs increased $39,544 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 due to additional vessels used in our expanded operations. The weighted-average cost of our LNG inventory balance to be used in our operations as of June 30, 2022 and December 31, 2021 was $12.32 per MMBtu and $9.51 per MMBtu, respectively. Vessel operating expenses Vessel operating expenses include direct costs associated with operating a vessel, and these costs are typically included in the Ships segment. Vessel operating expenses was substantially flat for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. Vessel operating expenses increased $7,747 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 due to vessels included in this segment that are being chartered to third parties during periods when the vessels are not being used in our downstream terminal operations. Operations and maintenance Operations and maintenance includes costs of operating our facilities, exclusive of costs to convert that are reflected in Cost of sales. Operations and maintenance was substantially flat for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. Operations and maintenance increased $19,887 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 . • The increase for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily attributable to higher logistics costs associated with our ISO container distribution system. In the the six months ended June 30, 2022, we continued to source LNG from our Miami Facility to service industrial end users in Jamaica due to the reconfiguration and partial relocation of our assets at the Port of Montego Bay, and we incurred additional costs to distribute LNG to customers via our ISO container distribution system. • Additionally, Operations and maintenance increased $11,045 due to the inclusion of our share of Operations and maintenance from our investment in CELSEPAR from $5,079 for the six months ended June 30, 2021 to $16,124 for the six months ended June 30, 2022, which represents the costs for the period after the Merger. These costs are primarily related to the operation and services agreement for the Nanook , insurance costs and costs for connecting to the transmission system. 48 Table of Contents Ships Segment Three Months Ended, (in thousands of $) June 30, 2022 March 31, 2022 Change Total revenues $ 111,024 $ 114,942 $ (3,918) Cost of sales — — — Vessel operating expenses 21,288 25,942 (4,654) Operations and maintenance — — — Segment Operating Margin $ 89,736 $ 89,000 $ 736 Six Months Ended, (in thousands of $) June 30, 2022 June 30, 2021 Change Total revenues $ 225,966 $ 95,762 $ 130,204 Cost of sales — — — Vessel operating expenses 47,230 20,175 27,055 Operations and maintenance — — — Segment Operating Margin $ 178,736 $ 75,587 $ 103,149 Revenue in the Ships segment is comprised of operating lease revenue under time charters, fees for repositioning vessels as well as the reimbursement of certain vessel operating costs. We have also recognized revenue related to the interest portion of lease payments and the operating and service agreements in connection with the sales-type lease of the Nanook . We include the interest income earned under sales-type leases as revenue as amounts earned under chartering and operating service agreements represent our ongoing ordinary business operations. At the completion of the Mergers, five of the FSRUs and two LNG carriers were on hire under long-term charter agreements, and one LNG carriers, the Grand , was operating in the spot market. In the third quarter, the Grand , began to be utilized in our terminal and logistics operations, and as such, the results of operations of the Grand are included in the Terminals and Infrastructure segment from the third quarter of 2021 onward. The Spirit and the Mazo continue to be in cold lay-up, and no vessel charter revenue was generated from these vessels. Total revenue Total revenue for the Ships segment decreased $3,918 for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. The decrease was primarily driven by lower revenue as a result of one FSRU being off-hire as the vessel transitions between charters; the new charter is expected to commence prior to the end of 2022. The decrease was partially offset by improved results from one of our vessels in the Cool Pool. Total revenue for the Ships segment increased $130,204 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. We completed the Mergers, including all of the vessels comprising the Ships segment, on April 15, 2021, and the increase in revenue is due to the inclusion of the Ships segment in our results of operations for a full six months as opposed to less than a full quarter in the prior year comparable period. Vessel operating expenses Vessel operating expenses include direct costs associated with operating a vessel, such as crewing, repairs and maintenance, insurance, stores, lube oils, communication expenses, management fees and costs to operate the Hilli . We also recognize voyage expenses within Vessel operating expenses, which principally consist of fuel consumed before or after the term of time charter or when the vessel is off hire. Under time charters, the majority of voyage expenses are paid by customers. To the extent that these costs are a fixed amount specified in the charter, which is not dependent upon redelivery location, the estimated voyage expenses are recognized over the term of the time charter. Vessel operating expenses decreased $4,654 for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022, primarily due to customs claims in Jordan where one of our FSRUs operates recognized in the first quarter of 2022 that did not recur in the second quarter of 2022. 49 Table of Contents Vessel operating expenses increased $27,055 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.We completed the Mergers, including all of the vessels comprising the Ships segment, on April 15, 2021, and the increase in vessel operating expenses is due to the inclusion of the Ships segment in our results of operations for a full six months as opposed to less than a full quarter in the prior year comparable period. Other operating results Three Months Ended, Six Months Ended, (in thousands of $) June 30, 2022 March 31, 2022 Change June 30, 2022 June 30, 2021 Change Selling, general and administrative $ 50,310 $ 48,041 $ 2,269 $ 98,351 $ 78,152 $ 20,199 Transaction and integration costs 4,866 1,901 2,965 6,767 40,716 (33,949) Depreciation and amortization 36,356 34,290 2,066 70,646 36,886 33,760 Asset impairment expense 48,109 — 48,109 48,109 — 48,109 Total operating expenses 139,641 84,232 55,409 223,873 155,754 68,119 Operating income (loss) 133,695 166,456 (32,761) 300,151 (34,548) 334,699 Interest expense 47,840 44,916 2,924 92,756 50,162 42,594 Other (income), net (22,102) (19,725) (2,377) (41,827) (8,058) (33,769) Net income (loss) before income from equity method investments and income taxes 107,957 141,265 (33,308) 249,222 (76,652) 325,874 (Loss) income from equity method investments (372,927) 50,235 (423,162) (322,692) 38,941 (361,633) Tax (benefit) provision (86,539) (49,681) (36,858) (136,220) 3,532 (139,752) Net (loss) income $ (178,431) $ 241,181 $ (419,612) $ 62,750 $ (41,243) $ 103,993 Selling, general and administrative Selling, general and administrative includes compensation expenses for our corporate employees, employee travel costs, insurance, professional fees for our advisors and screening costs associated with development activities for projects that are in initial stages and development is not yet probable. Selling, general and administrative increased $2,269 for the three months ended June 30, 2022, as compared to the three months ended March 31, 2022. The increase was primarily attributable to higher payroll costs, screening costs and professional fees due to the continued expansion of our operations as compared to the first quarter of 2022. Selling, general and administrative increased $20,199 for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021. The increase was primarily attributable to higher payroll and professional fees associated with the continued expansion of our operations. Transaction and integration costs For the three months ended June 30, 2022, we incurred $4,866 for transaction and integration costs, as compared to $1,901 for the three months ended March 31, 2022. For the three months ended June 30, 2022, we incurred transaction and integration costs in connection with the Sergipe Sale, which consisted primarily of financial advisory, legal accounting and consulting costs. For the six months ended June 30, 2022, we incurred $6,767 for transaction and integration costs, as compared to $40,716 for the six months ended June 30, 2021. For the six months ended June 30, 2021, we incurred in transaction and integration costs in connection with the Sergipe Sale, which consisted primarily of financial advisory, legal accounting and consulting costs and to a lesser extent integration costs from the Mergers as the integration of GMLP and Hygo has progressed since the acquisition date. 50 Table of Contents Depreciation and amortization Depreciation and amortization increased $2,066 for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. For the three months ended June 30, 2022, we incurred higher amortization of favorable and unfavorable contracts and permits. Depreciation and amortization increased $33,760 for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The increase was primarily due to the following: • Subsequent to the completion of the Mergers, our results of operations include depreciation expense primarily for the vessels acquired for a full six months as opposed to less than a full quarter in the prior year comparable period. We recognized $18,483 of incremental depreciation expense for the acquired vessels during the six months ended June 30, 2022. • Amortization of the value recorded for favorable and unfavorable contracts acquired in the Mergers of an additional $11,815 for the six months ended June 30, 2022. Asset impairment expense As a result of the Hygo Merger, we recognized long-lived assets associated the expansion of the Sergipe Power Plant. In the second quarter of 2022, we recognized asset impairment expense of $48,109, as the fair value of these assets was less than the carrying value and the asset group was held for sale. Interest expense Interest expense increased by $2,924 for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022. The increase was primarily due an increase in total principal outstanding due to draws on the Revolving Facility (defined in our Annual Report) and borrowings under the South Power 2029 Bonds (defined below); principal balance on outstanding facilities was $4,191,026 as of June 30, 2022 as compared to total outstanding debt of $3,978,250 as of March 31, 2022. Interest expense increased by $42,594 for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021. The increase was primarily due to an increase in total principal outstanding due to draws on the Revolving Facility, borrowings under the Vessel Term Loan Facility (defined in our Annual Report) and the South Power 2029 Bonds, all occurring after June 30, 2022; principal balance on outstanding facilities was $4,191,026 as of June 30, 2022 as compared to total outstanding debt of $3,527,297 as of June 30, 2021. Interest expense also increased due to debt assumed in the Mergers, which were completed on April 15, 2021. Other (income), net Other (income), net was $(22,102) and $(19,725) for the three months ended June 30, 2022 and March 31, 2022, respectively. Other (income), net was $(41,827) and $(8,058) for the six months ended June 30, 2022 and June 30, 2021, respectively. Other (income) recognized in the three and six months ended June 30, 2022 was primarily comprised of the following: • Mark-to-market gains on the foreign currency forward purchase of $17,471 in both the three and six months ended June 30, 2022. • Additionally, changes in the fair value of the cross-currency interest rate swap and the interest rate swap acquired in connection with the Mergers offset by interest expense on the interest rate swap acquired in connection with the Mergers, resulted in income of $2,213 and $24,270 for the three and six months ended June 30, 2022. Tax provision We recognized a tax benefit for the three months ended June 30, 2022 of $86,539 compared to a tax benefit of $49,681 for the three months ended March 31, 2022. We recognized a tax benefit for the six months ended June 30, 2022 of $136,220 compared to a tax provision of $3,532 for the six months ended June 30, 2021. The tax benefits recognized in the three and six months ended June 30, 2022 were primarily driven by the remeasurement of a deferred income tax liability in conjunction with an internal reorganization and the impairment of our investment in CELSEPAR. Our equity method investment in CELSEPAR is now directly held by a subsidiary domiciled in the United Kingdom; the investment was previously held by a subsidiary domiciled in Brazil resulting in a discrete tax 51 Table of Contents benefit of $76,460 recognized in the first quarter of 2022. Additionally, in the second quarter of 2022, we recognized an other-than-temporary impairment ("OTTI") on the value of this investment, resulting in a further discrete benefit of $100,627. This increase in tax benefit for the three and six months ended June 30, 2022 was partially offset by an increase in pretax income for certain profitable operations, including GMLP and Hygo. The Company has not recorded any material changes in liabilities for uncertain tax positions in the second quarter of 2022. (Loss) income from equity method investments We recognized loss and income from our investments in Hilli and CELSEPAR of $372,927 and $50,235 for the three months ended June 30, 2022 and March 31, 2022, respectively. In connection with the Sergipe Sale, we recognized an other than temporary impairment of the investment in CELSEPAR of $345,447. Our share of earnings from CELSEPAR was also significantly impacted by a foreign currency remeasurement loss of $28,788 for the three months ended June 30, 2022 as a result of the remeasurement of the Nanook finance lease obligation, as compared to a remeasurement gain of $42,466 for the three months ended March 31, 2022. We recognized loss from our investments in Hilli and CELSEPAR of $322,692 for the six months ended June 30, 2022. For the six months ended June 30, 2021, during the period after the completion of the Mergers, we recognized income from our investments in Hilli and CELSEPAR of $38,941. In connection with the Sergipe Purchase and Sale, we recognized an other than temporary impairment of the investment in CELSEPAR of $345,447. Our share of earnings from CELSEPAR was significantly impacted by a foreign currency remeasurement gain of $13,678 for the six months ended June 30, 2022 as a result of the remeasurement of the Nanook finance lease obligation, as compared to a remeasurement gain of $25,776 during the period after the Mergers for the six months ended June 30, 2021. Factors Impacting Comparability of Our Financial Results Our historical results of operations and cash flows are not indicative of results of operations and cash flows to be expected in the future, principally for the following reasons: • Our historical financial results do not reflect the recently announced Sergipe Sale and Vessel Financing Transaction. After the completion of the Sergipe Sale expected in the fourth quarter of 2022, we will no longer include the results of our equity method investment in CELSEPAR in our financial statements. For the three and six months ended June 30, 2022, we recognized losses of $389,996 and $353,315 , respectively, in Loss (income) from equity method investments in our condensed consolidated statements of operations and comprehensive income (loss). The results of operations of the Sergipe Power Plant have also been included in our Terminal and Infrastructure segment results, contributing segment operation margin of $32,732 and $64,305 for the three and six months ended June 30, 2022, respectively. Finally, we recognized an other than temporary impairment on our investment in CELSEPAR in the second quarter of 2022 of $345,447, which would not recur after the Sergipe Sale is completed. We expect to complete the Vessel Financing Transaction in the third quarter of 2022. Upon the completion of this transaction, the majority of proceeds received will be reflected as additional financing on our condensed consolidated balance sheet, increasing our interest expense in future periods. • Our historical financial results do not reflect new LNG supply agreements, as well as our Fast LNG solution that will lower the cost of our LNG supply. We currently purchase the majority of our supply of LNG from third parties, sourcing approximately 96% of our LNG volumes from third parties for the six months ended June 30, 2022. We have entered into LNG supply agreements at a price indexed to Henry Hub through 2030, resulting in expected pricing below the pricing in our previous long-term supply agreement. We have entered into supply agreements to secure supply of LNG volumes equal to approximately 100% of our expected needs for our Montego Bay Facility, Old Harbour Facility, San Juan Facility, La Paz Facility and Puerto Sandino Facility for the next six years; pricing under these agreements is indexed to Henry Hub, resulting in expected pricing below our historical supply agreements. We also anticipate that the deployment of Fast LNG floating liquefaction facilities will significantly lower the cost of our LNG supply and reduce our dependence on third-party suppliers. Since August 2021, LNG prices have increased materially. Due to this significant increase in market pricing of LNG, we have optimized our supply portfolio to sell a portion of our committed cargos in the market with delivery throughout 2022, and these cargo sales are expected to increase our 2022 revenues and results of operations . 52 Table of Contents • Our historical financial results do not include significant projects that are near completion or in development. Our results of operations for the three and six months ended June 30, 2022 include our Montego Bay Facility, Old Harbour Facility, San Juan Facility, certain industrial end-users and our Miami Facility. We recently placed a portion of our La Paz Facility into service, and in the fourth quarter of 2021, our revenue and results of operations began to be impacted by operations in Mexico. We are continuing to develop of our La Paz Power Plant and our Puerto Sandino Facility, and our current results do not include revenue and operating results from these projects. Our current results also exclude other developments, including the Barcarena Facility, Santa Catarina Facility and Ireland Facility. Liquidity and Capital Resources We believe we will have sufficient liquidity from proceeds from recent borrowings, access to additional capital sources and cash flow from operations to fund our capital expenditures and working capital needs for the next 12 months and the reasonably foreseeable future. We expect to fund our current operations and continued development of additional facilities through cash on hand, borrowings under our debt facilities, the completion of the Sergipe Sale, the completion of the Vessel Financing Transaction and cash generated from operations. We may also opportunistically elect to generate additional liquidity through future debt or equity issuances and asset sales to fund developments and transactions. We have historically funded our developments through proceeds from our IPO and debt and equity financing, most recently as follow s (below terms defined in our Annual Report): • In September 2020, we issued $1,000,000 of 2025 Notes and repaid all other outstanding debt. No principal payments are due on the 2025 Notes until maturity in 2025. • In December 2020, we received proceeds of $263,125 from the issuance of $250,000 of additional notes on the same terms as the 2025 Notes (subsequent to this issuance, these additional notes are included in the definition of 2025 Notes herein). • In December 2020, we issued 5,882,352 shares of Class A common stock and received proceeds of $290,771, net of $1,221 in issuance costs. • In April 2021, we issued $1,500,000 of 2026 Notes; we also entered into the $200,000 Revolving Facility that has a term of approximately five years. In February and May 2022, we amended the Revolving Facility to increase the borrowing capacity by $115,000 and $125,000 , respectively, for a total capacity under the Revolving Facility of $440,000. • In August 2021, we entered into the CHP Facility and initially drew $100,000, which may be increased to $285,000. In January 2022, we agreed to rescind the CHP Facility and entered into an agreement for the issuance of secured bonds. Amounts outstanding at the time of the mutual rescission of the CHP Facility of $100,000 were credited towards the purchase price of the South Power 2029 Bonds (defined below) . Through June 30, 2022, we have received proceeds of $221,845 from the issuance of South Power 2029 Bonds. • In September 2021, Golar Partners Operating LLC, our indirect subsidiary, closed on the Vessel Term Loan Facility. Under this facility, we borrowed an initial amount of $430,000, which may be increased to $725,000, subject to satisfaction of certain conditions including the provision of security in relation to additional vessels. We have assumed total committed expenditures for all completed and existing projects to be approximately $2,057 million, with approximately $1,727 million having already been spent through June 30, 2022. This estimate represents the committed expenditures for our Fast LNG project, as well as committed expenditures necessary to complete the La Paz Facility, Puerto Sandino Facility, the Barcarena Facility, Santa Catarina Facility and the Sri Lanka Facility. We expect to be able to fund all such committed projects with a combination of cash on hand, cash flows from operations and proceeds from the South Power 2029 Bonds. We will also expect to fund future Fast LNG development with proceeds received from the Sergipe Sale and Vessel Financing Transaction. We may also enter into other financing arrangements to generate proceeds to fund our developments. As of June 30, 2022, we have spent approximately $128 million to develop the Pennsylvania Facility. Approximately $22 million of construction and development costs have been expensed as we have not issued a final notice to proceed to our engineering, procurement and construction contractors. Cost for land, as well as engineering and equipment that could be deployed to other facilities and associated financing costs of approximately $106 million, has been capitalized, and to date, we have repurposed approximately $17 million of engineering and equipment to our Fast LNG project. We intend to apply for updated permits for the Pennsylvania Facility with the aim of obtaining these permits to coincide with the commencement of construction activities. 53 Table of Contents Contractual Obligations We are committed to make cash payments in the future pursuant to certain contracts. The following table summarizes certain contractual obligations in place as of December 31, 2021. There were no significant changes to our contractual obligations in the first half of 2022. (in thousands of $) Total Year 1 Years 2 to 3 Year 4 to 5 More than 5 years Long-term debt obligations $ 4,936,353 $ 305,575 $ 878,471 $ 3,341,677 $ 410,630 Purchase obligations 5,265,356 784,060 1,637,783 1,450,817 1,392,696 Lease obligations 420,329 67,131 101,295 68,393 183,510 Total $ 10,622,038 $ 1,156,766 $ 2,617,549 $ 4,860,887 $ 1,986,836 Long-term debt obligations For information on our long-term debt obligations, see “—Liquidity and Capital Resources—Long-Term Debt.” The amounts included in the table above are based on the total debt balance, scheduled maturities, and interest rates in effect as of December 31, 2021. Purchase obligations We are party to contractual purchase commitments for the purchase, production and transportation of LNG and natural gas, as well as engineering, procurement and construction agreements to develop our terminals and related infrastructure. Our commitments to purchase LNG and natural gas are principally take-or-pay contracts, which require the purchase of minimum quantities of LNG and natural gas, and these commitments are designed to assure sources of supply and are not expected to be in excess of normal requirements. For purchase commitments priced based upon an index such as Henry Hub, the amounts shown in the table above are based on the spot price of that index as of December 31, 2021. We have secured supply of LNG for approximately 100% of our expected needs for our Montego Bay Facility, Old Harbour Facility, San Juan Facility, La Paz Facility and Puerto Sandino Facility for the next six years. We have construction purchase commitments in connection with our development projects, including the La Paz Facility, Puerto Sandino Facility, Barcarena Facility, Santa Catarina Facility, as well as our Fast LNG solution. Commitments included in the table above include commitments under engineering, procurement and construction contracts where a notice to proceed has been issued. Lease obligations Future minimum lease payments under non-cancellable lease agreements, inclusive of fixed lease payments for renewal periods we are reasonably certain will be exercised, are included in the above table. Fixed lease payments for short-term leases are also included in the table above. Our lease obligations are primarily related to LNG vessel time charters, marine port leases, ISO tank leases, office space and a land lease. As of December 31, 2021, we had seven vessels under time charter leases with remaining non-cancellable terms ranging from one month to ten years. The lease commitments in the table above include only the lease component of these arrangements due over the non-cancellable term and does not include any operating services. We have executed a lease for an LNG carrier that has not commenced as of December 31, 2021, which has a noncancelable terms of seven years and includes fixed payments of approximately $198,100; these payments are not included in the table above. We have leases for port space and a land site for the development of our facilities. Terms for leases of port space range from 20 to 25 years. The land site lease is held with an affiliate of the Company and has a remaining term of approximately five years with an automatic renewal term of five years for up to an additional 20 years. During 2020, we executed multiple lease agreements for the use of ISO tanks, and we began to receive these ISO tanks and the lease terms commenced during the second quarter of 2021. The lease term for each of these leases is five years and expected payments under these lease agreements have been included in the above table. Office space includes space shared with affiliated companies in New York, as well as offices in Miami, New Orleans, and Rio de Janeiro, which have lease terms between three to seven years. 54 Table of Contents Cash Flows The following table summarizes the changes to our cash flows for the six months ended June 30, 2022 and June 30, 2021, respectively : Six Months Ended June 30, (in thousands of $) 2022 2021 Change Cash flows from: Operating activities $ 170,933 $ (111,352) $ 282,285 Investing activities (441,708) (1,830,933) 1,389,225 Financing activities 226,654 1,544,584 (1,317,930) Net (decrease) in cash, cash equivalents, and restricted cash $ (44,121) $ (397,701) $ 353,580 Cash provided by (used in) operating activities Our cash flow provided by (used in) operating activities was $170,933 for the six months ended June 30, 2022, which increased by $282,285 from cash used in operating activities of $(111,352) for the six months ended June 30, 2021. Our net income for the six months ended June 30, 2022, when adjusted for non-cash items, increased by $366,338 from the six months ended June 30, 2021. Changes in working capital accounts, primarily increases in accounts payable and accrued liabilities, partially offset the additional net income in 2022. Cash (used in) investing activities Our cash flow (used in) investing activities was $(441,708) for the six months ended June 30, 2022, which decreased by $1,389,225 from cash used in investing activities of $(1,830,933) for the six months ended June 30, 2021. Cash outflows for investing activities during the six months ended June 30, 2022 were used for continued development of our Fast LNG solution, Santa Catarina Facility, Barcarena Facility, as well as expenditures to complete our La Paz Facility and Puerto Sandino Facility. Cash used for the Mergers, net of cash acquired was $1,586,042 for the six months ended June 30, 2021. Cash outflows for investing activities during the six months ended June 30, 2021 were also used for continued development of the Puerto Sandino Facility, Barcarena Facility, Santa Catarina Facility, as well as our Fast LNG solution. Cash provided by financing activities Our cash flow provided by financing activities was $226,654 for the six months ended June 30, 2022, which decreased by $1,317,930 from cash used in financing activities of $1,544,584 for the six months ended June 30, 2021. Cash provided by financing activities during the six months ended June 30, 2022 was due to proceeds from issuance of debt of $437,917, offset by repayments of debt of $146,030 and payment of dividends of $47,374. Cash provided by financing activities during the six months ended June 30, 2021 was due to proceeds received from the borrowings under the 2026 Notes of $1,500,000 and the draw of $152,500 on the Revolving Facility. The proceeds received were further offset by financing fees paid in connection with the borrowings and dividends paid for the six months ended June 30, 2021. Long-Term Debt and Preferred Stock The terms of our debt instruments and associated obligations have been described in our Annual Report. There have been no significant changes to the terms of our outstanding debt, covenant requirements or payment obligations, other than described below. South Power 2029 Bonds In August 2021, NFE South Power Holdings Limited (“South Power”), a wholly owned subsidiary of NFE, entered into a financing agreement (“CHP Facility”), initially receiving approximately $100,000. The CHP Facility was secured by a mortgage over the lease of the site on which our CHP Plant is located and related security. In January 2022, South Power and the counterparty to the CHP Facility agreed to rescind the CHP Facility and entered into an agreement for the issuance of secured bonds (“South Power 2029 Bonds”) and subsequently authorized the issuance of up to $285,000 in South Power 55 Table of Contents 2029 Bonds. The South Power 2029 Bonds are secured by, amongst other things, the CHP Plant. Amounts outstanding at the time of the mutual rescission of the CHP Facility of $100,000 were credited towards the purchase price of the South Power 2029 Bonds. In the first and second quarters of 2022, South Power issued $121,845, of South Power 2029 Bonds for a total amount outstanding of $221,845 as of June 30, 2022 . The South Power 2029 Bonds bear interest at an annual fixed rate of 6.50% and shall be repaid in quarterly installments beginning in August 2025 with the final repayment date in May 2029. Interest payments on outstanding principal balances are due quarterly.Principal payments and interest payments on the South Power 2029 Bonds are guaranteed by NFE. South Power will be required to comply with certain financial covenants as well as customary affirmative and negative covenants. The South Power 2029 Bonds also provides for customary events of default, prepayment and cure provisions. In conjunction with obtaining the CHP Facility, we incurred $3,243 in origination, structuring and other fees. The rescission of the CHP Facility and issuance of South Power 2029 Bonds was treated as a modification, and fees attributable to lenders that participated in the CHP Facility will be amortized over the life of the South Power 2029 Bonds; additional fees associated with such lenders of $258 were recognized as expense in the first quarter of 2022. Additional fees for new lenders participating in the South Power 2029 Bonds were recognized as a reduction of the principal balance on the condensed consolidated balance sheets. As of June 30, 2022 and December 31, 2021, the remaining unamortized deferred financing costs for the CHP Facility was $6,063 and $3,180, respectively. Debt and lease restrictions The VIE loans and certain lease agreements with customers assumed in the Mergers contain certain operating and financing restrictions and covenants that require: (a) certain subsidiaries to maintain a minimum level of liquidity of $30,000 and consolidated net worth of $123,950, (b) certain subsidiaries to maintain a minimum debt service coverage ratio of 1.20:1, (c) certain subsidiaries to not exceed a maximum net debt to EBITDA ratio of 6.5:1, (d) certain subsidiaries to maintain a minimum percentage of the vessel values over the relevant outstanding loan facility balances of either 110% and 120%, (e) certain subsidiaries to maintain a ratio of liabilities to total assets of less than 0.70:1. As of June 30, 2022, the Company was in compliance with all covenants under debt and lease agreements. Financial covenants under GMLP's Vessel Term Loan Facility include requirements that GMLP and the borrowing subsidiary maintain a certain amount of Free Liquid Assets, that the EBITDA to Consolidated Debt Service and the Net Debt to EBITDA ratios are no less than 1.15:1 and no greater than 6.50:1, respectively, and that Consolidated Net Worth is greater than $250 million, each as defined in the Vessel Term Loan Facility. GMLP was in compliance with these covenants as of June 30, 2022 . The Company is also required to comply with covenants under the Revolving Facility and letter of credit facility, including requirements to maintain Debt to Capitalization Ratio of less than 0.7:1.0, and for quarters in which the Revolving Facility is greater than 50% drawn, the Debt to Annualized EBITDA Ratio must be less than 5.0:1.0 for fiscal quarters ending December 31, 2021 until September 30, 2023 and less than 4.0:1.0 for the fiscal quarter ended December 31, 2023. The Company was in compliance with all covenants as of June 30, 2022. Debt obligations of equity method investees We account for the investments in CELSEPAR and Hilli LLC acquired in the Mergers under the equity method of accounting, and the debt obligations of these entities are not reported separately in our consolidated financial statements. The key terms of CELSEPAR's and Hilli LLC's debt obligations are summarized in our Annual Report. In July 2021, CELSE and CELSEPAR entered into a working capital facility for the posting of certain letters of credit in favor of the supplier of LNG and the financing of LNG costs to satisfy dispatch requirements prior to receiving related variable revenues. Standby letters of credit are guaranteed, jointly but not severally, by CELSE’s shareholders, NFE and Ebrasil. The working capital facility is in an aggregate amount of up to $200.0 million (or its equivalent in Brazilian reais). The facility has a term of 12 months, and was renewed for an additional 12-month period in July 2022 by mutual agreement of the parties. Amounts disbursed under the working capital facility accrue interest at a rate referenced to LIBOR+, and contractual margins. As of June 30, 2022, there were no standby letters of credit issued under this facility. Off Balance Sheet Arrangements 56 Table of Contents As of June 30, 2022 and December 31, 2021, we had no off-balance sheet arrangements that may have a current or future material effect on our consolidated financial position or operating results . Critical Accounting Policies and Estimates A complete discussion of our critical accounting policies and estimates is included in our Annual Report. As of June 30, 2022, there have been no significant changes to our critical accounting estimates since our Annual Report, except as noted below. Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances signal that the carrying value of the assets may not be recoverable based on indicators, such as the acceptance of a purchase price from a market participant which is lower than the asset carrying value. Equity method investments are assessed for an other than temporary loss impairment whenever factors such as an offered purchase price from a market participant is lower than the carrying value of the investment. In the second quarter of 2022, we considered whether there was any indication of impairment of the equity method investment in CELSEPAR and the long-lived assets of CEBARRA due to the Sergipe Sale. NFE determined that there was an OTTI of the CELSEPAR equity method investment and an impairment of CEBARRA long-lived assets. The decline in fair value of these investments was driven by the impact of significant increases in risk-free rates to future cash flows, as well as the country specific risk premium observed in connection with where such investment is held, in the second quarter of 2022. Our estimate of fair value used in the impairment assessments was based on the purchase price in the SPA, as adjusted by contractual adjustments expected to be made to this purchase price at Closing. Judgments used to estimate the fair value included the estimation of expected adjustment to the purchase price and the allocation of the purchase price between CELSEPAR and CEBARRA. Closing is expected in the fourth quarter of 2022, and the gain or loss recognized from the completion of the Sergipe Sale will be impacted by the timing of Closing, the foreign currency exchange rate in effect at Closing, the settlement of working capital and other balances. Recent Accounting Standards For descriptions of recently issued accounting standards, see “Note 3. Adoption of new and revised standards” to our notes to condensed consolidated financial statements included elsewhere in this Quarterly Report.