New Fortress Energy Inc. 10-Q

Item 1. Financial Statements. New Fortress Energy Inc. Condensed Consolidated Balance Sheets As of March 31, 2023 and December 31, 2022 (Unaudited, in thousands of U.S. dollars, except share amounts) March 31, 2023 December 31, 2022 Assets Current assets Cash and cash equivalents $ 296,860 $ 675,492 Restricted cash 325,298 165,396 Receivables, net of allowances of $ 748 and $ 884 , respectively 353,192 280,313 Inventory 76,536 39,070 Prepaid expenses and other current assets, net 102,251 226,883 Total current assets 1,154,137 1,387,154 Construction in progress 3,357,434 2,418,608 Property, plant and equipment, net 2,094,417 2,116,727 Equity method investments 136,300 392,306 Right-of-use assets 477,757 377,877 Intangible assets, net 80,312 85,897 Goodwill 776,760 776,760 Deferred tax assets, net 8,074 8,074 Other non-current assets, net 138,555 141,679 Total assets $ 8,223,746 $ 7,705,082 Liabilities Current liabilities Current portion of long-term debt $ 277,035 $ 64,820 Accounts payable 310,272 80,387 Accrued liabilities 602,928 1,162,412 Current lease liabilities 106,666 48,741 Other current liabilities 99,275 52,878 Total current liabilities 1,396,176 1,409,238 Long-term debt 4,951,545 4,476,865 Non-current lease liabilities 349,621 302,121 Deferred tax liabilities, net 26,455 25,989 Other long-term liabilities 50,623 49,010 Total liabilities 6,774,420 6,263,223 Commitments and contingencies (Note 19) Stockholders’ equity Class A common stock, $ 0.01 par value, 750 million shares authorized, 204.7 million issued and outstanding as of March 31, 2023; 208.8 million issued and outstanding as of December 31, 2022 2,047 2,088 Additional paid-in capital 1,047,541 1,170,254 Retained earnings 191,819 62,080 Accumulated other comprehensive income 57,344 55,398 Total stockholders’ equity attributable to NFE 1,298,751 1,289,820 Non-controlling interest 150,575 152,039 Total stockholders’ equity 1,449,326 1,441,859 Total liabilities and stockholders’ equity $ 8,223,746 $ 7,705,082 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Table of Contents New Fortress Energy Inc. Condensed Consolidated Statements of Operations and Comprehensive Income For the three months ended March 31, 2023 and 2022 Unaudited, in thousands of U.S. dollars, except share and per share amounts) Three Months Ended March 31, 2023 2022 Revenues Operating revenue $ 501,688 $ 400,075 Vessel charter revenue 76,524 92,420 Other revenue 919 12,623 Total revenues 579,131 505,118 Operating expenses Cost of sales (exclusive of depreciation and amortization shown separately below) 184,938 208,298 Vessel operating expenses 13,291 22,964 Operations and maintenance 26,671 23,168 Selling, general and administrative 52,138 48,041 Transaction and integration costs 494 1,901 Depreciation and amortization 34,375 34,290 Total operating expenses 311,907 338,662 Operating income 267,224 166,456 Interest expense 71,673 44,916 Other expense (income), net 25,005 ( 19,725 ) Income before income from equity method investments and income taxes 170,546 141,265 Income from equity method investments 9,980 50,235 Tax provision (benefit) 28,960 ( 49,681 ) Net income 151,566 241,181 Net income attributable to non-controlling interest ( 1,360 ) ( 2,912 ) Net income attributable to stockholders $ 150,206 $ 238,269 Net income per share – basic $ 0.72 $ 1.14 Net income per share – diluted $ 0.71 $ 1.13 Weighted average number of shares outstanding – basic 208,707,385 209,928,070 Weighted average number of shares outstanding – diluted 209,325,619 210,082,295 Other comprehensive income: Net income $ 151,566 $ 241,181 Currency translation adjustment 2,141 120,830 Comprehensive income 153,707 362,011 Comprehensive income attributable to non-controlling interest ( 1,555 ) ( 4,868 ) Comprehensive income attributable to stockholders $ 152,152 $ 357,143 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Table of Contents New Fortress Energy Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity For the three months ended March 31, 2023 and 2022 (Unaudited, in thousands of U.S. dollars, except share amounts) Class A common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Non- controlling interest Total stockholders’ equity Shares Amount Balance as of December 31, 2022 208,770,088 $ 2,088 $ 1,170,254 $ 62,080 $ 55,398 $ 152,039 $ 1,441,859 Net income — — — 150,206 — 1,360 151,566 Other comprehensive income — — — — 1,946 195 2,141 Cancellation of shares ( 4,100,000 ) ( 41 ) ( 122,713 ) — — — ( 122,754 ) Dividends — — — ( 20,467 ) — ( 3,019 ) ( 23,486 ) Balance as of March 31, 2023 204,670,088 $ 2,047 $ 1,047,541 $ 191,819 $ 57,344 $ 150,575 $ 1,449,326 Class A common stock Additional paid-in capital Retained earnings (Accumulated deficit) Accumulated other comprehensive (loss) income Non- controlling interest Total stockholders’ equity Shares Amount Balance as of December 31, 2021 206,863,242 $ 2,069 $ 1,923,990 $ ( 132,399 ) $ ( 2,085 ) $ 202,479 $ 1,994,054 Net income — — — 238,269 — 2,912 241,181 Other comprehensive loss — — — — 118,874 1,956 120,830 Share-based compensation expense — — 880 — — — 880 Issuance of shares for vested RSUs 1,121,255 7 — — — — 7 Shares withheld from employees related to share-based compensation, at cost ( 442,146 ) — ( 15,274 ) — — — ( 15,274 ) Dividends — — ( 20,754 ) — — ( 3,019 ) ( 23,773 ) Balance as of March 31, 2022 207,542,351 $ 2,076 $ 1,888,842 $ 105,870 $ 116,789 $ 204,328 $ 2,317,905 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents New Fortress Energy Inc. Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2023 and 2022 (Unaudited, in thousands of U.S. dollars) Three Months Ended March 31, 2023 2022 Cash flows from operating activities Net income $ 151,566 $ 241,181 Adjustments for: Depreciation and amortization 34,608 34,852 (Earnings) of equity method investees ( 9,980 ) ( 50,235 ) Dividends received from equity method investees 5,830 7,609 Change in market value of derivatives 3,330 ( 24,855 ) Deferred taxes — ( 58,769 ) (Earnings) recognized from vessels chartered to third parties transferred to Energos ( 31,954 ) — Loss on the disposal of equity method investment 37,401 — Other ( 2,090 ) 2,847 Changes in operating assets and liabilities: Decrease (increase) in receivables 28,136 ( 58,462 ) (Increase) in inventories ( 2,271 ) ( 18,617 ) (Increase) in other assets ( 27,966 ) ( 15,440 ) Decrease in right-of-use assets 13,336 17,016 (Decrease) increase in accounts payable/accrued liabilities ( 43,400 ) 68,520 (Decrease) increase in amounts due to affiliates ( 2,519 ) 2,035 (Decrease) in lease liabilities ( 9,709 ) ( 11,773 ) Increase (decrease) in other liabilities 55,822 ( 21,527 ) Net cash provided by operating activities 200,140 114,382 Cash flows from investing activities Capital expenditures ( 563,268 ) ( 189,221 ) Sale of equity method investment 100,000 — Net cash used in investing activities ( 463,268 ) ( 189,221 ) Cash flows from financing activities Proceeds from borrowings of debt 700,000 200,836 Payment of deferred financing costs ( 5,903 ) ( 3,504 ) Repayment of debt ( 1,080 ) ( 123,669 ) Payments related to tax withholdings for share-based compensation — ( 13,054 ) Payment of dividends ( 649,796 ) ( 23,773 ) Net cash provided by financing activities 43,221 36,836 Impact of changes in foreign exchange rates on cash and cash equivalents 948 12,979 Net (decrease) in cash, cash equivalents and restricted cash ( 218,959 ) ( 25,024 ) Cash, cash equivalents and restricted cash – beginning of period 855,083 264,030 Cash, cash equivalents and restricted cash – end of period $ 636,124 $ 239,006 Supplemental disclosure of non-cash investing and financing activities: Changes in accounts payable and accrued liabilities associated with construction in progress and property, plant and equipment additions $ 348,737 $ 19,838 Principal payments on financing obligation to Energos by third party charterers ( 11,648 ) — Shares received in Hilli Exchange $ ( 122,754 ) $ — 4 Table of Contents The following table identifies the balance sheet line-items included in Cash and cash equivalents, Current restricted cash, and Non-current restricted cash presented in the Condensed Consolidated Statement of Cash Flows: Three Months Ended March 31, 2023 2022 Cash and cash equivalents $ 296,860 $ 156,173 Current restricted cash 325,298 74,873 Non-current restricted cash — 7,960 Cash and cash equivalents classified as held for sale 13,966 — Cash, cash equivalents and restricted cash – end of period $ 636,124 $ 239,006 Cash and cash equivalents includes $ 13,966 which has been classified as assets held for sale and included in Other non-current assets on the condensed consolidated balance sheets. The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents 1. Organization New Fortress Energy Inc. (“NFE,” together with its subsidiaries, the “Company”), a Delaware corporation, is a global energy infrastructure company founded to help address energy poverty and accelerate the world’s transition to reliable, affordable and clean energy. The Company owns and operates natural gas and liquefied natural gas ("LNG") infrastructure, ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. The Company has liquefaction, regasification and power generation operations in the United States, Jamaica, Brazil and Mexico. The Company has marine operations with vessels operating under time charters and in the spot market globally. The Company currently conducts its business through two operating segments, Terminals and Infrastructure and Ships. The business and reportable segment information reflect how the Chief Operating Decision Maker (“CODM”) regularly reviews and manages the business. 2. Basis of presentation The accompanying unaudited interim condensed consolidated financial statements contained herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect all normal and recurring adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position, results of operations and cash flows of the Company for the interim periods presented. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual audited consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2022 (the "Annual Report"). Certain prior year amounts have been reclassified to conform to current year presentation. The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions, impacting the reported amounts of assets and liabilities, net earnings and disclosures of contingent assets and liabilities as of the date of the condensed consolidated financial statements. Actual results could be different from these estimates. 3. Adoption of new and revised standards The Company has reviewed recently issued accounting pronouncements and concluded that such pronouncements are either not applicable to the Company or no material impact is expected in the condensed consolidated financial statements as a result of future adoption. 4. Revenue recognition Operating revenue in the condensed consolidated statements of operations and comprehensive income includes revenue from sales of LNG and natural gas as well as outputs from the Company’s natural gas-fueled power generation facilities, including power and steam, and the sale of LNG cargos. Included in operating revenue for the three months ended March 31, 2023 are LNG cargo sales to customers of $ 349,361 , of which $ 169,500 was recognized for a cancellation fee received from a customer to cancel a future delivery. LNG cargo sales for the three months ended March 31, 2022 were $ 285,171 . Under most customer contracts, invoicing occurs once the Company’s performance obligations have been satisfied, at which point payment is unconditional. As of March 31, 2023 and December 31, 2022, receivables related to revenue from contracts with customers totaled $ 196,256 and $ 280,382 , respectively, and were included in Receivables, net on the condensed consolidated balance sheets, net of current expected credit losses of $ 748 and $ 884 , respectively. Other items included in Receivables, net not related to revenue from contracts with customers represent leases which are accounted for outside the scope of ASC 606, receivables associated with reimbursable costs and the realized gain of a commodity swap of $ 146,112 . The Company has recognized contract liabilities, comprised of unconditional payments due or paid under the contracts with customers prior to the Company’s satisfaction of the related performance obligations. Contract liabilities associated with performance obligations that are expected to be satisfied during the next 12 months are classified within Other current liabilities on the condensed consolidated balance sheets; when the performance obligation is expected to be satisfied in a 6 Table of Contents period after 12 months from the balance sheet date, the contract liabilities are classified within Other long-term liabilities on the condensed consolidated balance sheets. Contract assets are comprised of the transaction price allocated to completed performance obligations that will be billed to customers in subsequent periods. The contract liabilities and contract assets balances as of March 31, 2023 and December 31, 2022 are detailed below: March 31, 2023 December 31, 2022 Contract assets, net - current $ 8,247 $ 8,083 Contract assets, net - non-current 26,538 28,651 Total contract assets, net $ 34,785 $ 36,734 Contract liabilities $ 36,020 $ 12,748 Revenue recognized in the year from: Amounts included in contract liabilities at the beginning of the year $ 6,809 $ 2,951 Contract assets are presented net of expected credit losses of $ 376 and $ 401 as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023 and December 31, 2022, contract assets was comprised of $ 34,563 and $ 36,483 of unbilled receivables, respectively, which represent unconditional rights to payment only subject to the passage of time, and the reduction to contract assets in the first quarter of 2023 was primarily due to the invoicing of unbilled receivables. Contract liabilities increased in the first quarter of 2023 due to upfront payments received under the Company's contracts in Puerto Rico to provide temporary power and to operate and maintain PREPA's power generation assets. These payments will be recognized as revenue over the expected term of these contracts. The Company has recognized costs to fulfill contracts with customers, which primarily consist of expenses required to enhance resources to deliver under agreements with these customers. These costs can include set-up and mobilization costs incurred ahead of the service period, and such costs will be recognized on a straight-line basis over the expected terms of the agreements. As of March 31, 2023, the Company has capitalized $ 11,632 of which $ 2,010 of these costs is presented within Prepaid expenses and other current assets, net and $ 9,622 is presented within Other non-current assets, net on the condensed consolidated balance sheets. As of December 31, 2022, the Company had capitalized $ 10,377 , of which $ 604 of these costs was presented within Prepaid expenses and other current assets, net and $ 9,773 was presented within Other non-current assets, net on the condensed consolidated balance sheets. Transaction price allocated to remaining performance obligations Some of the Company’s contracts are short-term in nature with a contract term of less than a year. The Company applied the optional exemption not to report any unfulfilled performance obligations related to these contracts. The Company has arrangements in which LNG, natural gas or outputs from the Company’s power generation facilities are sold on a “take-or-pay” basis whereby the customer is obligated to pay for the minimum guaranteed volumes even if it does not take delivery. The price under these agreements is typically based on a market index plus a fixed margin. The fixed transaction price allocated to the remaining performance obligations under these arrangements represents the fixed margin 7 Table of Contents multiplied by the outstanding minimum guaranteed volumes. The Company expects to recognize this revenue over the following time periods. The pattern of recognition reflects the minimum guaranteed volumes in each period: Period Revenue Remainder of 2023 $ 667,782 2024 1,183,908 2025 770,982 2026 501,753 2027 498,876 Thereafter 7,943,959 Total $ 11,567,260 For all other sales contracts that have a term exceeding one year, the Company has elected the practical expedient in ASC 606 under which the Company does not disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. For these excluded contracts, the sources of variability are (a) the market index prices of natural gas used to price the contracts, and (b) the variation in volumes that may be delivered to the customer. Both sources of variability are expected to be resolved at or shortly before delivery of each unit of LNG, natural gas, power or steam. As each unit of LNG, natural gas, power or steam represents a separate performance obligation, future volumes are wholly unsatisfied. Lessor arrangements Property, plant and equipment subject to vessel charters accounted for as operating leases is included within Vessels within "Note 12 Property, plant and equipment, net." Vessels included in the Energos Formation Transaction (defined below), including those vessels chartered to third parties, continue to be recognized on the condensed consolidated balance sheet. The carrying amount of these vessels that are leased to third parties under operating leases is as follows: March 31, 2023 December 31, 2022 Property, plant and equipment $ 896,719 $ 1,292,957 Accumulated depreciation ( 91,385 ) ( 80,233 ) Property, plant and equipment, net $ 805,334 $ 1,212,724 The components of lease income from vessel operating leases for the three months ended March 31, 2023 and 2022 are shown below. As the Company has not recognized the sale of all of the vessels included in the Energos Formation Transaction, the operating lease income for the three months ended March 31, 2023 includes revenue of $ 76,524 from third-party charters of vessels included in the Energos Formation Transaction. Three Months Ended March 31, 2023 2022 Operating lease income $ 76,524 $ 80,222 Variable lease income — 10,564 Total operating lease income $ 76,524 $ 90,786 Prior to the completion of the Energos Formation Transaction, the Company's charter of the Nanook was accounted for as a finance lease, and the Company recognized interest income of $ 11,581 for the three months ended March 31, 2022 related to this finance lease. The Company also recognized revenue of $ 1,634 for the three months ended March 31, 2022 related to the operation and services agreement and variable charter revenue within Vessel charter revenue in the condensed consolidated statements of operations and comprehensive income. The Company recognized the sale of the net investment in the finance lease of the Nanook as part of the Energos Formation Transaction. 8 Table of Contents Subsequent to the Energos Formation Transaction, all cash receipts on vessel charters, including the finance lease of the Nanook , will be received by Energos. As such, there are no future cash receipts from operating leases, and the future cash receipts from other finance leases are not significant as of March 31, 2023. 5. Leases, as lessee The Company has operating leases primarily for the use of LNG vessels, marine port space, office space, land and equipment under non-cancellable lease agreements. The Company’s leases may include multiple optional renewal periods that are exercisable solely at the Company’s discretion. Renewal periods are included in the lease term when the Company is reasonably certain that the renewal options would be exercised, and the associated lease payments for such periods are reflected in the right-of-use ("ROU") asset and lease liability. The Company’s leases include fixed lease payments which may include escalation terms based on a fixed percentage or may vary based on an inflation index or other market adjustments. Escalations based on changes in inflation indices and market adjustments and other lease costs that vary based on the use of the underlying asset are not included as lease payments in the calculation of the lease liability or ROU asset; such payments are included in variable lease cost when the obligation that triggers the variable payment becomes probable. Variable lease cost includes contingent rent payments for office space based on the percentage occupied by the Company in addition to common area charges and other charges that are variable in nature. The Company also has a component of lease payments that are variable related to the LNG vessels, in which the Company may receive credits based on the performance of the LNG vessels during the period. As of March 31, 2023 and December 31, 2022, ROU assets, current lease liabilities and non-current lease liabilities consisted of the following: March 31, 2023 December 31, 2022 Operating right-of-use-assets $ 407,553 $ 355,883 Finance right-of-use-assets (1) 70,204 21,994 Total right-of-use assets $ 477,757 $ 377,877 Current lease liabilities: Operating lease liabilities $ 77,692 $ 44,371 Finance lease liabilities 28,974 4,370 Total current lease liabilities $ 106,666 $ 48,741 Non-current lease liabilities: Operating lease liabilities $ 313,822 $ 290,899 Finance lease liabilities 35,799 11,222 Total non-current lease liabilities $ 349,621 $ 302,121 (1) Finance lease ROU assets are recorded net of accumulated amortization of $ 3,923 and $ 2,134 as of March 31, 2023 and December 31, 2022 , respectively. 9 Table of Contents For the three months ended March 31, 2023 and 2022, the Company’s operating lease cost recorded within the condensed consolidated statements of operations and comprehensive income was as follows: Three Months Ended March 31, 2023 2022 Fixed lease cost $ 16,368 $ 18,500 Variable lease cost 597 470 Short-term lease cost 3,549 4,225 Lease cost - Cost of sales $ 15,754 $ 20,903 Lease cost - Operations and maintenance 2,841 765 Lease cost - Selling, general and administrative 1,919 1,527 For the three months ended March 31, 2023 and 2022, the Company has capitalized $ 4,256 and $ 8,242 of lease costs, respectively. Capitalized costs include of vessels and port space used during the commissioning of development projects. Short-term lease costs for vessels chartered by the Company to transport inventory from a supplier’s facilities to the Company’s storage locations are capitalized to inventory. The Company has leases of turbines, ISO tanks and a parcel of land that transfer the ownership in underlying assets to the Company at the end of the lease, and these leases are treated as finance leases. For the three months ended March 31, 2023 and 2022, the Company’s finance interest expense and amortization recorded in Interest expense and Depreciation and amortization, respectively, within the condensed consolidated statements of operations and comprehensive income were as follows: Three Months Ended March 31, 2023 2022 Interest expense related to finance leases $ 468 $ 229 Amortization of right-of-use asset related to finance leases 1,789 379 Cash paid for operating leases is reported in operating activities in the condensed consolidated statements of cash flows. Supplemental cash flow information related to leases was as follows for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Operating cash outflows for operating lease liabilities $ 24,849 $ 27,122 Financing cash outflows for finance lease liabilities 372 1,308 Right-of-use assets obtained in exchange for new operating lease liabilities 65,040 127,451 Right-of-use assets obtained in exchange for new finance lease liabilities 49,999 — 10 Table of Contents The future payments due under operating and finance leases as of March 31, 2023 are as follows: Operating Leases Financing Leases Due remainder of 2023 $ 79,564 $ 25,406 2024 102,863 29,997 2025 66,893 11,867 2026 51,925 3,041 2027 51,464 436 Thereafter 184,056 941 Total lease payments $ 536,765 $ 71,688 Less: effects of discounting 145,251 6,915 Present value of lease liabilities $ 391,514 $ 64,773 Current lease liability $ 77,692 $ 28,974 Non-current lease liability 313,822 35,799 As of March 31, 2023, the weighted average remaining lease term for operating leases was 7.2 years and finance leases was 2.6 years. Because the Company generally does not have access to the rate implicit in the lease, the incremental borrowing rate is utilized as the discount rate. The weighted average discount rate associated with operating leases as of both March 31, 2023 and December 31, 2022 was 8.5 %. The weighted average discount rate associated with finance leases as of March 31, 2023 was 8.3 % and as of December 31, 2022 was 5.1 %. 6. Financial instruments Commodity risk management The Company has utilized commodity swap transactions to manage exposure to changes in market pricing of natural gas or LNG. Realized and unrealized gains and losses on these transactions have been recognized in Cost of sales in the condensed consolidated statements of operations and comprehensive income. During the fourth quarter of 2022, the Company entered into a commodity swap transaction to swap market pricing exposure for approximately 6.8 TBtus for a fixed price of $ 40.55 per MMBtu. The swap settled during the first quarter of 2023 resulting in a gain of $ 41,315 recognized as a reduction to Cost of sales in the condensed consolidated statements of operations and comprehensive income. The gain was comprised of a realized gain of $ 146,112 and the reversal of the unrealized gain of $ 104,797 recognized in the fourth quarter of 2022. In January 2023, the Company entered into a commodity swap transaction. Mark-to-market losses of $ 5,730 on this instrument have been recognized in Cost of sales in the condensed consolidated statements of operations and comprehensive income. Interest rate and currency risk management The Company was party to an interest rate swap, and in the first quarter of 2023, the interest rate swap was terminated. The Company does not hold or issue instruments for speculative purposes, and the counterparties to such contracts are major banking and financial institutions. Credit risk exists to the extent that the counterparties are unable to perform under the contracts; however, the Company does not anticipate non-performance by any counterparties. 11 Table of Contents The mark-to-market gain or loss on the interest rate swap and other derivative instruments that are not intended to mitigate commodity risk are reported in Other expense (income), net in the condensed consolidated statements of operations and comprehensive income. Fair value Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows: • Level 1 – observable inputs such as quoted prices in active markets for identical assets or liabilities. • Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs. • Level 3 – unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants price the asset or liability. The valuation techniques that may be used to measure fair value are as follows: • Market approach – uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. • Income approach – uses valuation techniques, such as the discounted cash flow technique, to convert future amounts to a single present amount based on current market expectations about those future amounts. • Cost approach – based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). The Company uses the market approach when valuing investment in equity securities which is recorded in Other non-current assets on the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022. The Company uses the income approach when valuing the following financial instruments: ◦ Interest rate swap - The Company did not have any interest rate swaps outstanding as of March 31, 2023. As of December 31, 2022, the Company had an interest rate swap that was recorded within Other non-current assets, net on the condensed consolidated balance sheets. ◦ The liability and asset associated with commodity swaps are recorded within Other current liabilities and Prepaid expenses and other current assets on the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively. ◦ Contingent consideration derivative liability represents consideration due to the sellers in asset acquisitions when certain contingent events occur. The liability associated with these derivative liabilities is recorded within Other current liabilities and Other long-term liabilities on the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022. The fair value of derivative instruments, including commodity swaps is estimated considering current interest rates, foreign exchange rates, closing quoted market prices and the creditworthiness of counterparties. The Company estimates fair value of the contingent consideration derivative liabilities using a discounted cash flows method with discount rates based on the average yield curve for bonds with similar credit ratings and matching terms to the discount periods as well as a probability of the contingent events occurring. 12 Table of Contents The following table presents the Company’s financial assets and financial liabilities, including those that are measured at fair value, as of March 31, 2023 and December 31, 2022: Level 1 Level 2 Level 3 Total March 31, 2023 Assets Investment in equity securities $ 12,653 $ — $ 7,678 $ 20,331 Liabilities Commodity swap $ — $ 5,730 $ — $ 5,730 Contingent consideration derivative liabilities — — 44,374 44,374 December 31, 2022 Assets Investment in equity securities $ 10,128 $ — $ 7,678 $ 17,806 Interest rate swap — 11,650 — 11,650 Commodity swap — 104,797 — 104,797 Liabilities Contingent consideration derivative liabilities $ — $ — $ 46,619 $ 46,619 The Company believes the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximated their fair value as of March 31, 2023 and December 31, 2022 and are classified as Level 1 within the fair value hierarchy. The table below summarizes the fair value adjustment to instruments measured at Level 3 in the fair value hierarchy, including the contingent consideration derivative liabilities. These adjustments have been recorded within Other expense (income), net in the condensed consolidated statements of operations and comprehensive income for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Contingent consideration derivative liabilities - Fair value adjustment - gain $ ( 3,013 ) $ ( 446 ) During the three months ended March 31, 2023 and 2022, the Company had no settlements of other financial instruments or any transfers in or out of Level 3 in the fair value hierarchy. 7. Restricted cash As of March 31, 2023 and December 31, 2022, restricted cash consisted of the following: March 31, 2023 December 31, 2022 Cash restricted under the terms of loan agreements $ 85,819 $ 124,085 Collateral for letters of credit and performance bonds 239,479 41,392 Collateral for interest rate swaps — 2,500 Total restricted cash $ 325,298 $ 167,977 Current restricted cash $ 325,298 $ 165,396 Non-current restricted cash — 2,581 13 Table of Contents As of March 31, 2023, the balance presented as collateral for letters of credit and performance bonds increased as the Company has posted cash collateral of $ 203,000 to support a letter of credit which will be utilized to facilitate the purchase of turbines that is expected to be completed in the second quarter of 2023. A portion of these turbines will be utilized to support the Company's contract to generate temporary power in Puerto Rico. Uses of cash proceeds under the Barcarena Term Loan (see Note 17) are restricted to certain payments to construct the Barcarena Power Plant. Non-current restricted cash is presented in Other non-current assets, net on the condensed consolidated balance sheets. 8. Inventory As of March 31, 2023 and December 31, 2022, inventory consisted of the following: March 31, 2023 December 31, 2022 LNG and natural gas inventory $ 50,038 $ 15,398 Automotive diesel oil inventory 9,270 8,164 Bunker fuel, materials, supplies and other 17,228 15,508 Total inventory $ 76,536 $ 39,070 Inventory is adjusted to the lower of cost or net realizable value each quarter. Changes in the value of inventory are recorded within Cost of sales in the condensed consolidated statements of operations and comprehensive income. No adjustments were recorded during the three months ended March 31, 2023 and 2022. 9. Prepaid expenses and other current assets As of March 31, 2023 and December 31, 2022, prepaid expenses and other current assets consisted of the following: March 31, 2023 December 31, 2022 Prepaid expenses $ 24,701 $ 56,380 Recoverable taxes 47,989 37,504 Commodity swap — 104,797 Due from affiliates 890 698 Other current assets 28,671 27,504 Total prepaid expenses and other current assets, net $ 102,251 $ 226,883 Prepaid expenses included $ 4,821 and $ 34,882 of prepaid LNG inventory as of March 31, 2023 and December 31, 2022, respectively. Other current assets as of March 31, 2023 and December 31, 2022 primarily consists of deposits, as well as the current portion of contract assets (Note 4). 10. Equity method investments Changes in the balance of the Company’s equity method investments is as follows: March 31, 2023 Equity method investments as of December 31, 2022 $ 392,306 Dividends ( 5,830 ) Equity in earnings of investees 9,980 Sale of equity method investments ( 260,156 ) Equity method investments as of March 31, 2023 $ 136,300 14 Table of Contents The carrying amounts of the Company's equity method investments as of March 31, 2023 and December 31, 2022 are: March 31, 2023 December 31, 2022 Hilli LLC $ — $ 260,000 Energos 136,300 132,306 Total $ 136,300 $ 392,306 As of March 31, 2023, the carrying value of the Company’s equity method investments was less than its proportionate share of the underlying net assets of its investees by $ 1,548 . At December 31, 2022, the carrying value of the Company’s equity method investments exceeded its proportionate share of the underlying net assets of its investees by $ 16,976 , and the basis difference attributable to amortizable net assets is amortized to Income from equity method investments in the condensed consolidated statements of operations and comprehensive income over the remaining estimated useful lives of the underlying assets. Hilli LLC On March 15, 2023, the Company completed a transaction with Golar LNG Limited for the sale of the Company's investment in the common units of Hilli LLC in exchange for approximately 4.1 million NFE shares and $ 100,000 in cash (the "Hilli Exchange"). In the fourth quarter of 2022, the Company recognized an other-than-temporary impairment on the investment in Hilli LLC of $ 118,558 ; this impairment was recognized in Loss from equity method investments in the consolidated statements of operations and comprehensive income. Upon completion of the Hilli Exchange, a loss on disposal of $ 37,401 was recognized in Other expense (income), net in the condensed consolidated statements of operations and comprehensive income. As a result of the Hilli Exchange, the Company no longer has an ownership interest in the Hilli . NFE shares received from GLNG were cancelled upon closing of the Hilli Exchange. The Company had guaranteed 50 % of the outstanding principal and interest amounts payable by Hilli Corp., a direct subsidiary of Hilli LLC. The Company had also guaranteed letters of credit issued by a financial institution in the event of Hilli Corp.’s underperformance or non-performance under the liquefaction tolling agreement with its customer. In conjunction with the Hilli Exchange, the Company is no longer a guarantor under these arrangements, and the remaining guarantee liability of $ 2,286 was derecognized as a reduction to Selling, general and administrative in the condensed consolidated statements of operations in the three months ended March 31, 2023. Energos On August 15, 2022, the Company and an affiliate of certain funds or investment vehicles managed by affiliates of Apollo Global Management, Inc., AP Neptune Holdings Ltd. ("Purchaser"), completed a sales and financing transaction resulting in cash proceeds of approximately $ 1.85 billion. This sales and financing transaction comprised (1) the formation of a limited liability company doing business as Energos Infrastructure ("Energos"), (2) the sale for cash of eight vessels, along with these vessels' owning and operating entities to the Purchaser, (3) the contribution of acquired vessel owning entities to Energos by the Purchaser and (4) the Company's contribution of three vessels, along with each vessels' owning and operating entities, to Energos in exchange for equity in Energos (the “Energos Formation Transaction”). As a result of the Energos Formation Transaction, the Company owns an approximately 20 % equity interest in Energos, with the remaining interest owned by the Purchaser. The Company's equity investment provides certain rights, including representation on the board of directors, which give the Company significant influence over the operations of Energos, and as such, the investment has been accounted for under the equity method; this investment is included within the Ships segment. Energos is also an affiliate, and all transactions with Energos are transactions with an affiliate. Due to the timing and availability of financial information of Energos, the Company recognizes its proportional share of the income or loss from the equity method investment on a financial reporting lag of one fiscal quarter. For the three months ended March 31, 2023, the Company has recognized earnings from Energos of $ 3,994 . 15 Table of Contents 11. Construction in progress The Company’s construction in progress activity during the three months ended March 31, 2023 is detailed below: March 31, 2023 Construction in progress as of December 31, 2022 $ 2,418,608 Additions 931,823 Impact of currency translation adjustment 8,387 Transferred to property, plant and equipment, net ( 1,384 ) Construction in progress as of March 31, 2023 $ 3,357,434 Interest expense of $ 50,976 and $ 13,137 , inclusive of amortized debt issuance costs, was capitalized for the three months ended March 31, 2023 and 2022, respectively. The Company has significant development activities in Latin America as well as the development of the Company's Fast LNG floating liquefaction solution, and the completion of such developments are subject to risks of successful completion, including those related to government approvals, site identification, financing, construction permitting and contract compliance. The Company's development activities for the three months ended March 31, 2023 were primarily focused on Fast LNG; additions to construction in progress in the first quarter of 2023 of $ 767,607 were to develop Fast LNG projects. 12. Property, plant and equipment, net As of March 31, 2023 and December 31, 2022, the Company’s property, plant and equipment, net consisted of the following: March 31, 2023 December 31, 2022 Vessels $ 1,518,839 $ 1,518,839 Terminal and power plant equipment 218,572 218,296 CHP facilities 125,015 123,897 Gas terminals 177,780 177,780 ISO containers and other equipment 134,924 134,324 LNG liquefaction facilities 63,316 63,316 Gas pipelines 66,319 65,985 Land 53,737 52,995 Leasehold improvements 10,252 9,377 Accumulated depreciation ( 274,337 ) ( 248,082 ) Total property, plant and equipment, net $ 2,094,417 $ 2,116,727 The book value of the vessels that was recognized due to the failed sale leaseback in the Energos Formation Transaction as of March 31, 2023 and December 31, 2022 was $ 1,315,661 and $ 1,328,553 , respectively. Depreciation expense for the three months ended March 31, 2023 and 2022 totaled $ 26,000 and $ 26,109 , respectively, of which $ 231 and $ 563 , respectively, is included within Cost of sales in the condensed consolidated statements of operations and comprehensive income. 16 Table of Contents 13. Goodwill and intangible assets Goodwill The carrying amount of goodwill was $ 776,760 as of both March 31, 2023 and December 31, 2022 . Intangible assets The following tables summarize the composition of intangible assets as of March 31, 2023 and December 31, 2022: March 31, 2023 Gross Carrying Amount Accumulated Amortization Currency Translation Adjustment Net Carrying Amount Weighted Average Life Definite-lived intangible assets Favorable vessel charter contracts $ 106,500 $ ( 71,098 ) $ — $ 35,402 3 Permits and development rights 48,217 ( 4,452 ) ( 1,234 ) 42,531 38 Easements 1,556 ( 307 ) — 1,249 30 Indefinite-lived intangible assets Easements 1,191 — ( 61 ) 1,130 n/a Total intangible assets $ 157,464 $ ( 75,857 ) $ ( 1,295 ) $ 80,312 December 31, 2022 Gross Carrying Amount Accumulated Amortization Currency Translation Adjustment Net Carrying Amount Weighted Average Life Definite-lived intangible assets Favorable vessel charter contracts $ 106,500 $ ( 64,836 ) $ — $ 41,664 3 Permits and development rights 48,217 ( 4,115 ) ( 2,239 ) 41,863 38 Easements 1,556 ( 294 ) — 1,262 30 Indefinite-lived intangible assets Easements 1,191 — ( 83 ) 1,108 n/a Total intangible assets $ 157,464 $ ( 69,245 ) $ ( 2,322 ) $ 85,897 Amortization expense for the three months ended March 31, 2023 and 2022 was $ 6,796 and $ 8,343 , respectively. Amortization expense for the three months ended March 31, 2022 is inclusive of reductions in expense for the amortization of unfavorable contract liabilities. Intangible assets associated with the acquired power purchase agreements have been classified as held for sale as of March 31, 2023 and December 31, 2022; no impairment loss was recognized upon classification as held for sale (See Note 14). 17 Table of Contents 14. Other non-current assets, net As of March 31, 2023 and December 31, 2022, Other non-current assets consisted of the following: March 31, 2023 December 31, 2022 Assets held for sale $ 45,652 $ 40,685 Contract assets, net (Note 4) 26,538 28,651 Investments in equity securities (Note 6) 20,331 17,806 Cost to fulfill (Note 4) 9,622 9,773 Upfront payments to customers 9,010 9,158 Other 27,402 35,606 Total other non-current assets, net $ 138,555 $ 141,679 The Company recognized unrealized gains / (losses) on its investments in equity securities of $ 2,525 and $( 192 ) for the three months ended March 31, 2023 and 2022, respectively, within Other expense (income), net in the condensed consolidated statements of operations and comprehensive income. Investments in equity securities include investments without a readily determinable fair value of $ 7,678 as of March 31, 2023 and December 31, 2022. Upfront payments to customers consist of amounts the Company has paid in relation to two natural gas sales contracts with customers to construct fuel-delivery infrastructure that the customers will own. Other non-current assets includes deferred financing costs related to the Revolving Facility. Assets held for sale In the third quarter of 2022, NFE Brazil Holdings LLC ("Brazil Holdings"), a consolidated indirect subsidiary of NFE and indirect owner of Pecém Energia S.A. (“Pecém”) and Energetica Camacari Muricy II S.A. (“Muricy”), and Centrais Elétricas de Pernambuco S.A. – EPESA (“EPESA”), entered into a Share Purchase Agreement pursuant to which Brazil Holdings agreed to sell 100 % of the shares of Pecém and Muricy to EPESA, following an internal reorganization. The sale price includes cash consideration of BRL 59 million (approximately $ 12 million using the exchange rate as of March 31, 2023), as well as additional consideration for the satisfaction of certain milestones. Consideration under this agreement also includes potential future earnout payments based on the revenue generated from the PPAs by EPESA. The sale of Pecém and Muricy is subject to regulatory approval as well as the customary terms and conditions and conditions precedent prior to closing. All assets and liabilities of Pecém and Muricy were classified as held for sale as of March 31, 2023 and December 31, 2022 . The estimated fair value of these entities based on the consideration in the agreement was in excess of the carrying value, and no impairment loss was recognized upon classification as held for sale. The assets and liabilities held for sale have not been classified as a separate financial statement line item on the condensed consolidated balance sheets and are presented as Other non-current assets and Other long-term liabilities. Liabilities held for sale of $ 24,151 and $ 23,543 are presented as other long-term liabilities as of March 31, 2023 and December 31, 2022, respectively . Assets held for sale include a cash balance of $ 13,966 and $ 11,614 as of March 31, 2023 and December 31, 2022, respectively , which have been included in the ending cash and cash equivalents on the condensed consolidated statement of cash flows. 18 Table of Contents 15. Accrued liabilities As of March 31, 2023 and December 31, 2022, accrued liabilities consisted of the following: March 31, 2023 December 31, 2022 Accrued development costs $ 507,503 $ 364,157 Accrued interest 12,106 51,994 Accrued bonuses 12,063 37,739 Accrued dividend — 626,310 Other accrued expenses 71,256 82,212 Total accrued liabilities $ 602,928 $ 1,162,412 As of March 31, 2023 and December 31, 2022, the balance presented as other accrued expenses includes accruals of $ 11,304 and $ 45,511 , respectively, for inventory purchases completed prior to the end of the period. 16. Other current liabilities As of March 31, 2023 and December 31, 2022 , other current liabilities consisted of the following: March 31, 2023 December 31, 2022 Derivative liabilities $ 23,925 $ 19,458 Contract liabilities (Note 4) 36,020 12,748 Income tax payable 26,592 6,261 Due to affiliates 4,980 7,499 Other current liabilities 7,758 6,912 Total other current liabilities $ 99,275 $ 52,878 17. Debt As of March 31, 2023 and December 31, 2022, debt consisted of the following: March 31, 2023 December 31, 2022 Senior Secured Notes, due September 2025 $ 1,243,914 $ 1,243,351 Senior Secured Notes, due September 2026 1,482,722 1,481,639 Vessel Financing Obligation, due August 2042 1,388,535 1,406,091 South Power 2029 Bonds, due May 2029 216,373 216,177 Barcarena Term Loan, due February 2024 197,036 194,427 Revolving Facility 700,000 — Total debt $ 5,228,580 $ 4,541,685 Current portion of long-term debt $ 277,035 $ 64,820 Long-term debt 4,951,545 4,476,865 Long-term debt is recorded at amortized cost on the condensed consolidated balance sheets. The fair value of the Company's long-term debt is $ 5,086,118 and $ 4,327,311 as of March 31, 2023 and December 31, 2022, respectively, and is classified as Level 2 within the fair value hierarchy. 19 Table of Contents The terms of the Company's debt instruments have been described in the Annual Report on Form 10-K. Significant changes to the Company's outstanding debt are described below. Revolving Facility In April 2021, the Company entered into a $ 200,000 senior secured revolving credit facility (the "Revolving Facility"). The borrowings under the Revolving Facility bear interest at a Secured Overnight Financing Rate ("SOFR") based rate plus a margin based upon usage of the Revolving Facility. The Revolving Facility matures in 2025, with the potential for the Company to extend the maturity date once in a one-year increment. Borrowings under the Revolving Facility may be prepaid, at the option of the Company, at any time without premium. In 2022, the Revolving Facility was amended twice to increase the borrowing capacity by a total of $ 240,000 , and in February 2023, the Company entered into an amendment which increased the borrowing capacity by $ 301,700 , for a total capacity of $ 741,700 . The amendments did not impact the interest rate or term of the Revolving Facility, and no deferred costs were written off. During the first quarter of 2023, the Company drew $ 700,000 from the Revolving Facility, which is outstanding as of March 31, 2023. The Company incurred $ 5,398 in origination, structuring and other fees, associated with entry into the Revolving Facility, which includes additional fees to expand the facility in 2022. During the first quarter of 2023, the Company incurred an additional $ 4,965 in fees in relation to the 2023 amendment. These costs have been capitalized within Other non-current assets on the condensed consolidated balance sheets. As of March 31, 2023 and December 31, 2022 , total remaining unamortized deferred financing costs for the Revolving Facility was $ 9,560 and $ 5,172 , respectively. The obligations under the Revolving Facility are guaranteed by certain of the Company's subsidiaries. The Company is 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 and onwards. The Company was in compliance with all covenants as of March 31, 2023. Interest expense Interest and related amortization of debt issuance costs, premiums and discounts recognized during major development and construction projects are capitalized and included in the cost of the project. Interest expense, net of amounts capitalized, recognized for the three months ended March 31, 2023 and 2022 consisted of the following: Three Months Ended March 31, 2023 2022 Interest per contractual rates $ 64,259 $ 55,349 Interest expense on Vessel Financing Obligation 54,330 — Amortization of debt issuance costs, premiums and discounts 3,592 2,475 Interest expense incurred on finance lease obligations 468 229 Total interest costs $ 122,649 $ 58,053 Capitalized interest 50,976 13,137 Total interest expense $ 71,673 $ 44,916 Interest expense on the Vessel Financing Obligation includes non-cash expense of $ 49,903 related to payments received by Energos from third-party charterers. 18. Income Taxes The effective tax rate for the three months ended March 31, 2023 was 16.0 % compared to ( 25.9 )% for the three months ended March 31, 2022 . The total tax provision for the three months ended March 31, 2023 was $ 28,960 compared to a 20 Table of Contents benefit of $ 49,681 for the three months ended March 31, 2022 . Our prior year benefit and effective tax rate was primarily driven by significant discrete items, including the remeasurement of a deferred tax liability in conjunction with an internal reorganization. The Company has not recognized any significant discrete items in the first quarter of 2023. 19. Commitments and contingencies The Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. The Company does not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows. 20. Earnings per share Three Months Ended March 31, 2023 2022 Numerator: Net income $ 151,566 $ 241,181 Net loss attributable to non-controlling interests ( 1,360 ) ( 2,912 ) Net income attributable to Class A common stock $ 150,206 $ 238,269 Denominator: Weighted-average shares - basic 208,707,385 209,928,070 Net income per share - basic $ 0.72 $ 1.14 Weighted-average shares - diluted 209,325,619 210,082,295 Net income per share - diluted $ 0.71 $ 1.13 The following table presents potentially dilutive securities excluded from the computation of diluted net income per share for the periods presented because its effects would have been anti-dilutive. March 31, 2023 March 31, 2022 Equity Agreement shares (1) — 472,084 Total — 472,084 (1) Represents Class A common stock that would be issued in relation to an agreement to issue shares executed in conjunction with a prior year asset acquisition. In connection with the dividend policy update in the fourth quarter of 2022, the Board declared a dividend of $ 626,310 representing $ 3.00 per Class A share, which was paid in January 2023. The Company also declared and paid dividends of $ 20,467 and $ 20,754 during the three months ended March 31, 2023 and 2022 , respectively, representing $ 0.10 per Class A share. During each of the three months ended March 31, 2023 and 2022 , the Company paid dividends of $ 3,019 to holders of Golar LNG Partners LP's ("GMLP") 8.75 % Series A Cumulative Redeemable Preferred Units (“Series A Preferred Units”). As these equity interests have been issued by one of the Company’s consolidated subsidiaries, the value of the Series A Preferred Units is recognized as non-controlling interest in the condensed consolidated financial statements . 21. Share-based compensation The Company has granted Performance Share Units ("PSUs") to certain employees and non-employees that contain a performance condition under the New Fortress Energy Inc. 2019 Omnibus Incentive Plan. Vesting is determined based on achievement of a performance metric for the year subsequent to the grant, and the number of shares that will vest can range from zero to a multiple of units granted. As of March 31, 2023, the Company determined it was not probable that the 21 Table of Contents performance condition required for the PSUs granted in the fourth quarter of 2022 ("2022 Grant") to vest would be achieved, and as such, no compensation expense was recognized for this award. PSUs Granted Units Granted Range of Vesting Units Vested / Probable of Vesting Unrecognized Compensation Cost (1) Weighted Average Remaining Vesting Period 2022 Grant 742,073 0 to 1,484,146 — 62,015 0.75 years (1) Unrecognized compensation cost is based upon the maximum amount of shares that could vest. 22. Related party transactions Management services Messrs. Edens, chief executive officer and chairman of the Board of Directors, and Nardone, member of the Board of Directors, are currently employed by Fortress Investment Group LLC (“Fortress”). In the ordinary course of business, Fortress, through affiliated entities, charges the Company for administrative and general expenses incurred pursuant to its Administrative Services Agreement (“Administrative Agreement”). The charges under the Administrative Agreement that are attributable to the Company totaled $ 1,345 and $ 1,515 for the three months ended March 31, 2023 and 2022, respectively. Costs associated with the Administrative Agreement are included within Selling, general and administrative in the condensed consolidated statements of operations and comprehensive income. As of March 31, 2023 and December 31, 2022, $ 1,377 and $ 4,629 were due to Fortress, respectively. In addition to administrative services, an affiliate of Fortress owns and leases an aircraft chartered by the Company for business purposes in the course of operations. The Company incurred, at aircraft operator rates, charter costs of $ 771 and $ 1,022 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022, $ 771 and $ 416 was due to this affiliate, respectively. Land lease The Company has leased land from Florida East Coast Industries, LLC (“FECI”), which is controlled by funds managed by an affiliate of Fortress. The Company recognized expense related to the land lease of $ 103 and $ 103 during the three months ended March 31, 2023 and 2022, respectively, which was included within Operations and maintenance in the condensed consolidated statements of operations and comprehensive income . The Company has amounts due to FECI of $ 23 and $ 0 as of March 31, 2023 and December 31, 2022 , respectively . As of March 31, 2023 and December 31, 2022, the Company has recorded a lease liability of $ 3,341 and $ 3,340 , respectively, within Non-cur rent lease liabilities on the condensed consolidated balance sheets. DevTech investment In August 2018, the Company entered into a consulting arrangement with DevTech Environment Limited (“DevTech”) to provide business development services to increase the customer base of the Company. DevTech also contributed cash consideration in exchange for a 10 % interest in a consolidated subsidiary. The 10 % interest was reflected as non-controlling interest in the Company’s condensed consolidated financial statements. The Company recognized approximately $ 105 and $ 98 in expense within Selling, general and administrative for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022 , $ 105 and $ 80 were due to DevTech, respectively. Fortress affiliated entities The Company provides certain administrative services to related parties including Fortress affiliated entities. No costs are incurred for such administrative services by the Company as the Company is fully reimbursed for all costs incurred. The Company has subleased a portion of office space to affiliates of entities managed by Fortress, and for the three months ended March 31, 2023 and 2022, $ 192 and $ 195 of rent and office related expenses were incurred by these affiliates, respectively. As of March 31, 2023 and December 31, 2022, $ 892 and $ 700 , respectively, were due from all Fortress affiliated entities. 22 Table of Contents Additionally, an entity formerly affiliated with Fortress and currently owned by Messrs. Edens and Nardone provides certain administrative services to the Company, as well as providing office space under a month-to-month non-exclusive license agreement. The Company incurred rent and administrative expenses of approximately $ 589 and $ 600 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022, $ 3,043 and $ 2,455 were d ue to Fortress affiliated entities, respectively. 23. Segments As of March 31, 2023, the Company operates in two reportable segments: Terminals and Infrastructure and Ships: • Terminals and Infrastructure includes the Company’s vertically integrated gas to power solutions, spanning 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. Vessels that are utilized in the Company’s terminal or logistics operations are included in this segment. Terminals and Infrastructure Operating Margin included the Company’s effective share of revenues, expenses and operating margin attributable to the Company's 50 % investment in Centrais Elétricas de Sergipe Participações S.A. (“CELSEPAR”); the Company disposed of this investment in the fourth quarter of 2022. Terminal and Infrastructure segment includes realized gains and losses from the settlement of derivative transactions entered into as economic hedges to reduce market risks associated with commodity prices. • Ships includes FSRUs and LNG carriers that are leased to customers under long-term or spot arrangements. FSRUs are stationed offshore for customer’s operations to regasify LNG; LNG carriers are vessels that transport LNG and are compatible with many LNG loading and receiving terminals globally. Five FSRUs and five LNG carriers are included in this segment. The Company’s investment in Energos is also included in the Ships segment. Ships Operating Margin included our effective share of revenue, expenses and operating margin attributable to our ownership of 50 % of the common units of Hilli LLC prior to the disposition of this investment in first quarter of 2023. The CODM uses Segment Operating Margin to evaluate the performance of the segments and allocate resources. Segment Operating Margin is defined as the segment’s revenue less cost of sales less operations and maintenance less vessel operating expenses, excluding unrealized gains or losses to financial instruments recognized at fair value. Management considers Segment Operating Margin to be the appropriate metric to evaluate and compare the ongoing operating performance of the Company’s segments on a consistent basis across reporting periods as it eliminates the effect of items which management does not believe are indicative of each segment’s operating performance. 23 Table of Contents The table below presents segment information for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 (in thousands of $) Terminals and Infrastructure Ships Total Segment Consolidation and Other (4) Consolidated Statement of operations: Total revenues $ 502,608 $ 97,917 $ 600,525 $ ( 21,394 ) $ 579,131 Cost of sales (1) (3) 73,798 — 73,798 111,140 184,938 Vessel operating expenses — 19,239 19,239 ( 5,948 ) 13,291 Operations and maintenance 26,671 — 26,671 — 26,671 Segment Operating Margin $ 402,139 $ 78,678 $ 480,817 $ ( 126,586 ) $ 354,231 Balance sheet: Total assets $ 6,584,603 $ 1,639,143 $ 8,223,746 $ — $ 8,223,746 Other segmental financial information: Capital expenditures (2) $ 931,823 $ — $ 931,823 $ — $ 931,823 Three Months Ended March 31, 2022 (in thousands of $) Terminals and Infrastructure Ships Total Segment Consolidation and Other (4) Consolidated Statement of operations: Total revenues $ 480,349 $ 114,942 $ 595,291 $ ( 90,173 ) $ 505,118 Cost of sales (3) 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 Balance sheet: Total assets $ 5,291,601 $ 2,074,207 $ 7,365,808 $ — $ 7,365,808 Other segmental financial information: Capital expenditures (2) $ 196,390 $ 3,289 $ 199,679 $ — $ 199,679 (1) Cost of sales in the Company’s segment measure only includes realized gains and losses on derivative transactions that are an economic hedge of our commodity purchases and sales, and in the first quarter of 2023, realized gains of $ 146,112 were recognized as a reduction to Cost of sales in the segment measure. Unrealized changes in the mark-to-market value of derivative transactions of $ 111,140 reconcile Cost of sales in the segment measure to Cost of sales in the condensed consolidated statements of operations and comprehensive income. (2) Capital expenditures includes amounts capitalized to construction in progress and additions to property, plant and equipment during the period. (3) Cost of sales is presented exclusive of costs included in Depreciation and amortization in the condensed consolidated statements of operations and comprehensive income. 24 Table of Contents (4) Consolidation and Other adjusts for the inclusion of the effective share of revenues, expenses and operating margin attributable to the Company's 50 % ownership of CELSEPAR and the common units of Hilli LLC in the segment measure and exclusion of the unrealized mark-to-market gain or loss on derivative instruments. Consolidated Segment Operating Margin is defined as net income, adjusted for Selling, general and administrative expenses, Transaction and integration costs, Depreciation and amortization, Interest expense, Other expense (income), net, Income from equity method investments and Tax provision (benefit). The following table reconciles Net income, the most comparable financial statement measure, to Consolidated Segment Operating Margin: Three Months Ended March 31, (in thousands of $) 2023 2022 Net income $ 151,566 $ 241,181 Add: Selling, general and administrative 52,138 48,041 Transaction and integration costs 494 1,901 Depreciation and amortization 34,375 34,290 Interest expense 71,673 44,916 Other expense (income), net 25,005 ( 19,725 ) Tax provision (benefit) 28,960 ( 49,681 ) (Income) from equity method investments ( 9,980 ) ( 50,235 ) Consolidated Segment Operating Margin $ 354,231 $ 250,688 25 Table of Contents