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Item 1. Financial Statements

2023-08-08 compared with 2023-05-04 · 314 added, 203 removed, 524 unchanged (50% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of March 31, 2023 and December 31, 2022

As of June 30, 2023 and December 31, 2022

(Unaudited, in thousands of U.S.

dollars, except share amounts)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets

16 unchanged sentences

Current liabilities

Current portion of long-term debt $ 277,035 $ 64,820

Current portion of long-term debt and short-term borrowings $ 366,945 $ 64,820

Accounts payable 602,759 80,387

10 unchanged sentences

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;

Class A common stock, $ 0.01 par value, 750 million shares authorized, 205.0 million issued and outstanding as of June 30, 2023;

208.8 million issued and outstanding as of December 31, 2022

8 unchanged sentences

New Fortress Energy Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income

For the three months ended March 31, 2023 and 2022

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three and six months ended June 30, 2023 and 2022

(Unaudited, in thousands of U.S.

dollars, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Operating revenue $ 494,619 $ 497,240 $ 996,307 $ 897,315

9 unchanged sentences

Depreciation and amortization 42,115 36,356 76,490 70,646

Asset impairment expense — 48,109 — 48,109

Total operating expenses 370,380 451,160 682,287 789,822

1 unchanged sentence

Interest expense 64,396 47,840 136,069 92,756

Other expense (income), net 25,005 ( 19,725 )

Other (income) expense, net ( 6,584 ) ( 22,102 ) 18,421 ( 41,827 )

Income before income from equity method investments and income taxes 133,153 107,957 303,699 249,222

Income from equity method investments 9,980 50,235

Income (loss) from equity method investments 2,269 ( 372,927 ) 12,249 ( 322,692 )

Tax provision (benefit) 15,322 ( 86,539 ) 44,282 ( 136,220 )

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

Net income (loss) 120,100 ( 178,431 ) 271,666 62,750

Net (income) loss attributable to non-controlling interest ( 852 ) 8,666 ( 2,212 ) 5,754

Net income (loss) attributable to stockholders $ 119,248 $ ( 169,765 ) $ 269,454 $ 68,504

Net income (loss) per share – basic $ 0.58 $ ( 0.81 ) $ 1.30 $ 0.33

Net income (loss) per share – diluted $ 0.58 $ ( 0.81 ) $ 1.29 $ 0.33

Weighted average number of shares outstanding – basic 205,045,121 209,669,188 206,867,828 209,797,133

Weighted average number of shares outstanding – diluted 205,711,467 209,669,188 207,534,174 209,810,647

Other comprehensive income:

Net income $ 151,566 $ 241,181

Other comprehensive income (loss):

Net income (loss) $ 120,100 $ ( 178,431 ) $ 271,666 $ 62,750

Currency translation adjustment 16,908 ( 39,703 ) 19,049 81,127

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

Comprehensive income (loss) 137,008 ( 218,134 ) 290,715 143,877

Comprehensive (income) loss attributable to non-controlling interest ( 758 ) 9,812 ( 2,313 ) 4,944

Comprehensive income (loss) attributable to stockholders $ 136,250 $ ( 208,322 ) $ 288,402 $ 148,821

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended March 31, 2023 and 2022

For the three and six months ended June 30, 2023 and 2022

(Unaudited, in thousands of U.S.

12 unchanged sentences

Balance as of March 31, 2023 204,670,088 $ 2,047 $ 1,047,541 $ 191,819 $ 57,344 $ 150,575 $ 1,449,326

Net income — — — 119,248 — 852 120,100

Other comprehensive income (loss) — — — — 17,002 ( 94 ) 16,908

Share-based compensation expense — — 1,179 — — — 1,179

Issuance of shares for vested share-based compensation awards 689,401 3 — — — — 3

Shares withheld from employees related to share-based compensation, at cost ( 328,083 ) — ( 9,519 ) — — — ( 9,519 )

Dividends — — — ( 20,503 ) — ( 6,619 ) ( 27,122 )

Balance as of June 30, 2023 205,031,406 $ 2,050 $ 1,039,201 $ 290,564 $ 74,346 $ 144,714 $ 1,550,875

Class A common stock Additional

1 unchanged sentence

deficit) Accumulated other

comprehensive

(loss) income Non-

comprehensive income (loss) Non-

interest Total

3 unchanged sentences

Net income — — — 238,269 — 2,912 241,181

Other comprehensive loss — — — — 118,874 1,956 120,830

Other comprehensive income — — — — 118,874 1,956 120,830

Share-based compensation expense — — 880 — — — 880

3 unchanged sentences

Balance as of March 31, 2022 207,542,351 $ 2,076 $ 1,888,842 $ 105,870 $ 116,789 $ 204,328 $ 2,317,905

Net income (loss) — — — ( 169,765 ) — ( 8,666 ) ( 178,431 )

Other comprehensive (loss) — — — — ( 38,557 ) ( 1,146 ) ( 39,703 )

Share-based compensation expense — — 358 — — — 358

Issuance of shares for vested RSUs 13,898 — — — — — —

Dividends — — ( 20,582 ) — — ( 7,019 ) ( 27,601 )

Balance as of June 30, 2022 207,556,249 $ 2,076 $ 1,868,618 $ ( 63,895 ) $ 78,232 $ 187,497 $ 2,072,528

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2023 and 2022

For the six months ended June 30, 2023 and 2022

(Unaudited, in thousands of U.S.

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

2 unchanged sentences

Depreciation and amortization 76,949 71,172

(Earnings) of equity method investees ( 9,980 ) ( 50,235 )

(Earnings) losses of equity method investees ( 12,249 ) 322,692

Drydocking expenditure — ( 12,439 )

Dividends received from equity method investees 5,830 14,859

1 unchanged sentence

Deferred taxes — ( 178,109 )

Asset impairment expense — 48,109

Earnings recognized from vessels chartered to third parties transferred to Energos ( 71,536 ) —

2 unchanged sentences

Changes in operating assets and liabilities:

Decrease (increase) in receivables 28,136 ( 58,462 )

(Increase) in receivables ( 14,532 ) ( 123,843 )

(Increase) in inventories ( 60,710 ) ( 35,167 )

(Increase) in other assets ( 27,966 ) ( 15,440 )

Decrease (increase) in other assets 63,576 ( 58,949 )

Decrease in right-of-use assets 40,655 35,265

(Decrease) increase in accounts payable/accrued liabilities ( 43,400 ) 68,520

(Decrease) increase in amounts due to affiliates ( 2,519 ) 2,035

Increase in accounts payable/accrued liabilities 75,746 71,603

(Decrease) in lease liabilities ( 38,885 ) ( 31,352 )

4 unchanged sentences

Sale of equity method investment 100,000 —

Other investing activities ( 1,450 ) —

Net cash used in investing activities ( 1,367,092 ) ( 441,708 )

5 unchanged sentences

Payment of dividends ( 676,918 ) ( 47,374 )

Other financing activities ( 3,946 ) —

Net cash provided by financing activities 222,583 226,654

7 unchanged sentences

Shares received in Hilli Exchange ( 122,754 ) —

Repurchase obligation $ 24,320 $ —

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,

Six Months Ended June 30,

Cash and cash equivalents $ 104,342 $ 138,329

21 unchanged sentences

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 .

Operating revenue in the condensed consolidated statements of operations and comprehensive income (loss) 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.

For the three and six months ended June 30, 2023, the Company recognized LNG cargo sales to customers of $ 267,777 and $ 617,138 , respectively, which includes $ 162,500 and $ 332,000 of contract settlements, respectively.

LNG cargo sales for the three and six months ended June 30, 2022 were $ 309,030 and $ 594,201 , respectively.

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

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.

As of June 30, 2023 and December 31, 2022, receivables related to revenue from contracts with customers totaled $ 269,973 and $ 280,382 , respectively, and were included in Receivables, net on the condensed consolidated balance sheets, net of current expected credit losses of $ 805 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, and receivables associated with reimbursable costs.

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

The contract liabilities and contract assets balances as of June 30, 2023 and December 31, 2022 are detailed below:

June 30, 2023 December 31, 2022

Contract assets, net - current $ 8,414 $ 8,083

4 unchanged sentences

Amounts included in contract liabilities at the beginning of the year $ 12,613 $ 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.

Contract assets are presented net of expected credit losses of $ 351 and $ 401 as of June 30, 2023 and December 31, 2022, respectively.

As of June 30, 2023 and December 31, 2022, contract assets was comprised of $ 32,603 and $ 36,483 of unbilled receivables, respectively, which represent unconditional rights to payment only subject to the passage of time.

Contract liabilities increased during the six months ended June 30, 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.

1 unchanged sentence

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 June 30, 2023, the Company has capitalized $ 26,349 of which $ 2,104 of these costs is presented within Prepaid expenses and other current assets, net and $ 24,245 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.

4 unchanged sentences

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

multiplied by the outstanding minimum guaranteed volumes.

The fixed transaction price allocated to the remaining performance obligations under these arrangements represents the fixed margin multiplied by the outstanding minimum guaranteed volumes.

The Company expects to recognize this revenue over the following time periods.

3 unchanged sentences

2024 2,043,173

2025 1,355,952

Thereafter 7,988,459

2 unchanged sentences

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.

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.

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 in "Note 10 Equity method investments"), 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

June 30, 2023 December 31, 2022

Property, plant and equipment $ 902,839 $ 1,292,957

1 unchanged sentence

Property, plant and equipment, net $ 828,224 $ 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,

The components of lease income from vessel operating leases for the three and six months ended June 30, 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 shown below for the three and six months ended June 30, 2023 is comprised of revenue from third-party charters of vessels included in the Energos Formation Transaction.

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Operating lease income $ 65,840 $ 71,682 $ 142,364 $ 151,904

1 unchanged sentence

Total operating lease income $ 65,840 $ 72,350 $ 142,364 $ 163,136

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.

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 $ 11,545 and $ 23,126 for the three and six months ended June 30, 2022, respectively, related to this finance lease, which was presented within other revenue in the condensed consolidated statements of operations and comprehensive income (loss).

The Company also recognized revenue of $ 2,784 and $ 4,418 for the three and six months ended June 30, 2022, respectively, 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 (loss).

The Company recognized the sale of the net investment in the finance lease of the Nanook as part of the Energos Formation Transaction.

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.

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 June 30, 2023.

Leases, as lessee

7 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, ROU assets, current lease liabilities and non-current lease liabilities consisted of the following:

June 30, 2023 December 31, 2022

Operating right-of-use-assets $ 442,192 $ 355,883

10 unchanged sentences

Total non-current lease liabilities $ 349,331 $ 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.

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,

(1) Finance lease ROU assets are recorded net of accumulated amortization of $ 9,693 and $ 2,134 as of June 30, 2023 and December 31, 2022 , respectively.

For the three and six months ended June 30, 2023 and 2022, the Company’s operating lease cost recorded within the condensed consolidated statements of operations and comprehensive income (loss) was as follows:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Fixed lease cost $ 22,858 $ 20,413 $ 39,226 $ 38,913

4 unchanged sentences

Lease cost - Selling, general and administrative 1,888 1,820 3,807 3,347

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.

For the three months ended June 30, 2023 and 2022, the Company has capitalized $ 14,449 and $ 2,973 of lease costs, respectively.

For the six months ended June 30, 2023 and 2022, the Company has capitalized $ 18,705 and $ 11,215 of lease costs, respectively.

Capitalized costs include vessels and port space used during the commissioning of development

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,

For the three and six months ended June 30, 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 (loss) were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Interest expense related to finance leases $ 1,218 $ 218 $ 1,686 $ 447

1 unchanged sentence

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,

Operating cash outflows for operating lease liabilities $ 24,849 $ 27,122

Financing cash outflows for finance lease liabilities 372 1,308

Supplemental cash flow information related to leases was as follows for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

Cash outflows for operating lease liabilities $ 61,506 $ 52,254

Cash outflows for finance lease liabilities 5,589 2,554

Right-of-use assets obtained in exchange for new operating lease liabilities 126,863 134,075

Right-of-use assets obtained in exchange for new finance lease liabilities 47,672 —

The future payments due under operating and finance leases as of March 31, 2023 are as follows:

The future payments due under operating and finance leases as of June 30, 2023 are as follows:

Operating Leases Financing Leases

11 unchanged sentences

Non-current lease liability 319,240 30,091

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.

As of June 30, 2023, the weighted average remaining lease term for operating leases was 6.4 years and finance leases was 2.4 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 %.

The weighted average discount rate associated with operating leases as of June 30, 2023 was 8.8 % and as of December 31, 2022 was 8.5 %.

The weighted average discount rate associated with finance leases as of June 30, 2023 was 8.3 % and as of December 31, 2022 was 5.1 %.

Financial instruments

1 unchanged sentence

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.

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 (loss).

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.

Mark-to-market unrealized gains of $ 2,816 for the three months ended June 30, 2023 and losses of $ 2,914 for the six months ended June 30, 2023 on this instrument have been recognized in Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss).

Interest rate and currency risk management

3 unchanged sentences

however, the Company does not anticipate non-performance by any counterparties.

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.

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 (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss).

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.

7 unchanged sentences

• 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.

◦ Interest rate swap - The Company did not have any interest rate swaps outstanding as of June 30, 2023.

As of December 31, 2022, the Company had an interest rate swap that was recorded within Other non-current assets on the condensed consolidated balance sheets.

◦ 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 liabilities associated with these derivative liabilities are recorded within Other current liabilities and Other long-term liabilities on the condensed consolidated balance sheets based on the timing of expected settlement.

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.

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:

The following table presents the Company’s financial assets and financial liabilities, including those that are measured at fair value, as of June 30, 2023 and December 31, 2022:

Level 1 Level 2 Level 3 Total

March 31, 2023

June 30, 2023

Investment in equity securities $ 12,789 $ — $ 7,678 $ 20,467

6 unchanged sentences

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 Company believes the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximated their fair value as of June 30, 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,

These adjustments have been recorded within Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Contingent consideration derivative liabilities - Fair value adjustment - gain $ ( 22 ) $ 1,385 $ ( 3,035 ) $ 984

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.

Foreign currency forward purchase - (gain) $ — $ ( 17,471 ) $ — $ ( 17,471 )

During the six months ended June 30, 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.

Restricted cash

As of March 31, 2023 and December 31, 2022, restricted cash consisted of the following:

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, restricted cash consisted of the following:

June 30, 2023 December 31, 2022

Cash restricted under the terms of loan agreements $ 40,678 $ 124,085

4 unchanged sentences

Non-current restricted cash — 2,581

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.

As of June 30, 2023, the balance presented as collateral for letters of credit and performance bonds includes $ 21,300 to support a letter of credit to facilitate the purchase of turbines that was completed in the third 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.

Use of cash proceeds under the Barcarena Term Loan are restricted to certain payments to construct the Barcarena Power Plant (each as defined in our Annual Report).

Non-current restricted cash is presented in Other non-current assets, net on the condensed consolidated balance sheets.

As of March 31, 2023 and December 31, 2022, inventory consisted of the following:

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, inventory consisted of the following:

June 30, 2023 December 31, 2022

LNG and natural gas inventory $ 100,373 $ 15,398

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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.

Changes in the value of inventory are recorded within Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss).

During the six months ended June 30, 2023, the Company recognized an adjustment to inventory of $ 6,232 .

In the second quarter of 2023, the Company acquired a spot cargo at a higher cost to obtain a new customer contract, and the net realizable value of this cargo was below the cost as of June 30, 2023.

No adjustments were recorded during the six months ended June 30, 2022.

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

As of June 30, 2023 and December 31, 2022, prepaid expenses and other current assets consisted of the following:

June 30, 2023 December 31, 2022

Prepaid expenses $ 18,618 $ 56,380

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Total prepaid expenses and other current assets, net $ 105,133 $ 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).

Prepaid expenses as December 31, 2022 included $ 34,882 of prepaid LNG inventory.

The Company does no t have any significant prepaid LNG as of June 30, 2023.

Other current assets as of June 30, 2023 and December 31, 2022 primarily consists of deposits and the current portion of contract assets (Note 4).

Equity method investments

Changes in the balance of the Company’s equity method investments is as follows:

March 31, 2023

June 30, 2023

Equity method investments as of December 31, 2022

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Sale of equity method investments ( 260,156 )

Equity method investments as of March 31, 2023

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

Equity method investments as of June 30, 2023

The carrying amounts of the Company's equity method investments as of June 30, 2023 and December 31, 2022 are:

June 30, 2023 December 31, 2022

Hilli LLC $ — $ 260,000

1 unchanged sentence

Total $ 138,569 $ 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.

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").

As of June 30, 2023, the carrying value of the Company’s equity method investment was less than its proportionate share of the underlying net assets of its investee 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 was amortized to Income (loss) from equity method investments in the condensed consolidated statements of operations and comprehensive income (loss) over the remaining estimated useful lives of the underlying assets.

On March 15, 2023, the Company completed a transaction with Golar LNG Limited ("GLNG") 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.

this impairment was recognized in Income (loss) from equity method investments in the consolidated statements of operations and comprehensive income (loss) .

Upon completion of the Hilli Exchange, a loss on disposal of $ 37,401 was recognized in Other (income) expense, net in the condensed consolidated

statements of operations and comprehensive income (loss) .

As a result of the Hilli Exchange, the Company no longer has an ownership interest in the Hilli .

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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.

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.

In August 2022, the Company completed a transaction (the “Energos Formation Transaction”) with an affiliate of Apollo Global Management, Inc., pursuant to which the Company transferred ownership of 11 vessel to Energos Infrastructure ("Energos") in exchange for approximately $ 1.85 billion in cash and a 20 % equity interest in Energos.

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;

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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 .

For the three and six months ended June 30, 2023, the Company has recognized earnings from Energos of $ 2,269 and $ 6,263 .

Construction in progress

The Company’s construction in progress activity during the three months ended March 31, 2023 is detailed below:

March 31, 2023

The Company’s construction in progress activity during the six months ended June 30, 2023 is detailed below:

June 30, 2023

Construction in progress as of December 31, 2022

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Impact of currency translation adjustment 28,620

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.

Assets placed in service ( 102,724 )

Construction in progress as of June 30, 2023 $ 4,593,132

Interest expense of $ 118,573 and $ 29,495 , inclusive of amortized debt issuance costs, was capitalized for the six months ended June 30, 2023 and 2022, respectively.

The Company has significant development activities in Latin America as well as the development of the Company's Fast LNG 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 six months ended June 30, 2023 were primarily focused on Fast LNG and to construct temporary power generation assets to support the Puerto Rican grid stabilization project;

additions to construction in progress in the first six months of 2023 of $ 2,031,681 were to develop Fast LNG projects and Puerto Rican temporary power.

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

As of June 30, 2023 and December 31, 2022, the Company’s property, plant and equipment, net consisted of the following:

June 30, 2023 December 31, 2022

Vessels $ 1,524,959 $ 1,518,839

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Total property, plant and equipment, net $ 2,161,930 $ 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.

The book value of the vessels that was recognized due to the failed sale leaseback in the Energos Formation Transaction as of June 30, 2023 and December 31, 2022 was $ 1,308,746 and $ 1,328,553 , respectively.

Depreciation expense for the three months ended June 30, 2023 and 2022 totaled $ 30,275 and $ 25,958 , respectively, of which $ 232 and $ 228 , respectively, is included within Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss) .

Depreciation expense for the six months ended June 30, 2023 and 2022 totaled $ 56,275 and $ 52,067 , respectively, of which $ 463 and $ 527 , respectively, is included within Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss) .

Goodwill and intangible assets

The carrying amount of goodwill was $ 776,760 as of both March 31, 2023 and December 31, 2022 .

The carrying amount of goodwill was $ 776,760 as of both June 30, 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

The following tables summarize the composition of intangible assets as of June 30, 2023 and December 31, 2022:

June 30, 2023

Gross Carrying

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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;

Amortization expense for the three months ended June 30, 2023 and 2022 was $ 6,285 and $ 9,959 , respectively.

Amortization expense for the six months ended June 30, 2023 and 2022 was $ 13,081 and $ 18,302 , respectively.

Amortization expense 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 June 30, 2023 and December 31, 2022;

no impairment loss was recognized upon classification as held for sale (See Note 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

As of June 30, 2023 and December 31, 2022, Other non-current assets consisted of the following:

June 30, 2023 December 31, 2022

Assets held for sale $ 45,371 $ 40,685

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Total other non-current assets, net $ 164,244 $ 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.

The Company recognized unrealized losses on its investments in equity securities of $ 1,314 and $ 898 for the three months ended June 30, 2023 and 2022, respectively, within Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss) .

The Company recognized an unrealized gain of $ 1,211 and an unrealized loss of $ 1,090 on its investment in equity securities for the six months ended June 30, 2023 and 2022, respectively, within Other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss) .

Investments in equity securities include investments without a readily determinable fair value of $ 7,678 as of June 30, 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.

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– 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 price includes cash consideration of BRL 59 million (approximately $ 12 million using the exchange rate as of June 30,

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 power purchase agreements held by Pecém and Muricy.

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 .

All assets and liabilities of Pecém and Muricy were classified as held for sale as of June 30, 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.

Liabilities held for sale of $ 20,263 and $ 23,543 are presented as other long-term liabilities as of June 30, 2023 and December 31, 2022, respectively .

Assets held for sale include a cash balance of $ 11,204 and $ 11,614 as of June 30, 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.

Accrued liabilities

As of March 31, 2023 and December 31, 2022, accrued liabilities consisted of the following:

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, accrued liabilities consisted of the following:

June 30, 2023 December 31, 2022

Accrued development costs $ 618,815 $ 364,157

Accrued interest 61,398 51,994

Accrued inventory 50,432 45,511

Accrued bonuses 23,665 37,739

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Total accrued liabilities $ 821,137 $ 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.

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

As of June 30, 2023 and December 31, 2022 , other current liabilities consisted of the following:

June 30, 2023 December 31, 2022

Derivative liabilities $ 21,278 $ 19,458

Contract liabilities (Note 4) 36,020 12,748

Contract liabilities 62,403 12,748

Repurchase obligation 24,327 —

Income tax payable 19,159 6,261

2 unchanged sentences

Total other current liabilities $ 143,598 $ 52,878

As of March 31, 2023 and December 31, 2022, debt consisted of the following:

March 31, 2023 December 31, 2022

As of June 30, 2023, the Company recognized a repurchase obligation of $ 24,327 , pursuant to agreement to sell and purchase an LNG cargo with the same customer.

The sale and delivery of the LNG cargo to the customer was completed in the second quarter of 2023;

we expect the purchase of a the LNG cargo to be completed in the third quarter of 2023.

Under these agreements, the Company's price to purchase the LNG cargo exceeded the selling price to the customer, and because the purchase price exceeds the original selling prices, the purchase of the LNG cargo is accounted for as a financing arrangement.

The difference between the Company's purchase price of the LNG cargo and the selling price to the customer is recognized as interest expense.

As of June 30, 2023 and December 31, 2022, debt consisted of the following:

June 30, 2023 December 31, 2022

Senior Secured Notes, due September 2025

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Revolving Facility 741,600 —

Equipment Notes, due June 2026 98,532 —

Short-term Borrowings 78,025 —

Total debt $ 5,431,133 $ 4,541,685

Current portion of long-term debt $ 277,035 $ 64,820

Current portion of long-term debt and short-term borrowings $ 366,945 $ 64,820

Long-term debt 5,064,188 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.

The fair value of the Company's long-term debt is $ 5,217,159 and $ 4,327,311 as of June 30, 2023 and December 31, 2022, respectively, and is classified as Level 2 within the fair value hierarchy.

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.

Equipment Notes

In June 2023, the Company executed a Master Loan and Security Agreement with a lender to borrow up to $ 200,000 under promissory notes secured by certain turbines acquired in the first quarter of 2023 to support our grid stabilization project in Puerto Rico (the “Equipment Notes”).

Prior to June 30, 2023, the Company borrowed $ 100,000 bearing interest at approximately 7.4 %, and the principal is partially repayable in monthly installments over the 36 month term of the loan with the balance due upon maturity in June 2026.

Proceeds received were net of upfront fees due to the lender, and through June 30, 2023, the Company has incurred $ 1,468 in origination, structuring and other fees, associated with entry into the Equipment Notes .

The Equipment Notes do not contain any restrictive financial covenants.

Short-term Borrowings

The Company may, from time to time, enter into sales and repurchase agreements with a financial institution, whereby the Company sells to the financial institution an LNG cargo and concurrently enters into an agreement to repurchase the same LNG cargo immediately with the repurchase price payable at a future date, generally not to exceed 90-days from the date of the sale and repurchase (the “Short-term Borrowings”).

As of June 30, 2023, the Company had $ 78,025 due under repurchase arrangements with a weighted average interest rate of 9.43 %.

Revolving Facility

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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 .

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.

During the first half of 2023, the Company drew $ 741,600 from the Revolving Facility, which is outstanding as of June 30, 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.

During the first and second quarter of 2023, the Company incurred an additional $ 5,298 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.

As of June 30, 2023 and December 31, 2022 , total remaining unamortized deferred financing costs for the Revolving Facility was $ 9,198 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.

The Company was in compliance with all covenants as of June 30, 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,

Interest expense, net of amounts capitalized, recognized for the three and six months ended June 30, 2023 and 2022 consisted of the following:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Interest per contractual rates $ 75,160 $ 60,662 $ 139,419 $ 116,011

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Total interest expense $ 64,396 $ 47,840 $ 136,069 $ 92,756

Interest expense on the Vessel Financing Obligation includes non-cash expense of $ 49,903 related to payments received by Energos from third-party charterers.

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

benefit of $ 49,681 for the three months ended March 31, 2022 .

Interest expense on the Vessel Financing Obligation includes non-cash expense of $ 32,460 and $ 82,363 f or the three and six months ended June 30, 2023 related to payments received by Energos from third-party charterers.

The effective tax rate for the three months ended June 30, 2023 was 11.3 % compared to 32.7 % for the three months ended June 30, 2022 .

The total tax provision for the three months ended June 30, 2023 was $ 15,322 compared to a benefit of $ 86,539 for the three months ended June 30, 2022 .

The effective tax rate for the six months ended June 30, 2023 was 14.0 % compared to 185.4 % for the six months ended June 30, 2022 .

The total tax provision for the six months ended June 30, 2023 was $ 44,282 compared to a benefit of $ 136,220 for the six months ended June 30, 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.

The Company has not recognized any significant discrete items in the first half of 2023.

Commitments and contingencies

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Earnings per share

Three Months Ended March 31,

Net income $ 151,566 $ 241,181

Net loss attributable to non-controlling interests ( 1,360 ) ( 2,912 )

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Net income (loss) $ 120,100 $ ( 178,431 ) $ 271,666 $ 62,750

Net (income) loss attributable to non-controlling interests ( 852 ) 8,666 ( 2,212 ) 5,754

Net income attributable to Class A common stock $ 119,248 $ ( 169,765 ) $ 269,454 $ 68,504

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Net income per share - basic $ 0.58 $ ( 0.81 ) $ 1.30 $ 0.33

Net income (loss) $ 120,100 $ ( 178,431 ) $ 271,666 $ 62,750

Net (income) loss attributable to non-controlling interests ( 852 ) 8,666 ( 2,212 ) 5,754

Adjustments attributable to dilutive securities ( 304 ) — ( 1,954 ) —

Net income (loss) attributable to Class A common stock 118,944 ( 169,765 ) 267,500 68,504

Weighted-average shares - diluted 205,711,467 209,669,188 207,534,174 209,810,647

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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

June 30, 2023 June 30, 2022

Unvested RSUs — 30,486

Equity Agreement shares (1)

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(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”).

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 $ 20,503 and $ 20,582 during the three months ended June 30, 2023 and 2022 , respectively, representing $ 0.10 per Class A share.

The Company declared and paid dividends of $ 40,970 and $ 41,336 during the six months ended June 30, 2023 and 2022, respectively, representing $ 0.10 per Class A share.

During each of the three months ended June 30, 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”).

During each of the six months ended June 30, 2023 and 2022, the Company paid dividends of $ 6,038 to holders of the 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.

During the three and six months ended June 30, 2023, one of the Company's majority owned consolidated subsidiaries paid a dividend to all shareholders, and the dividend of $ 3,600 paid to the non-controlling shareholders has been recognized as non-controlling interest in the condensed consolidated financial statements.

Share-based compensation

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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

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.

As of June 30, 2023, the Company determined it was not probable that the 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

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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.

The charges under the Administrative Agreement that are attributable to the Company totaled $ 1,296 and $ 1,144 for the three months ended June 30, 2023 and 2022, respectively, and totaled $ 2,641 and $ 2,659 for the six months ended June 30, 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 (loss) .

As of June 30, 2023 and December 31, 2022, $ 2,487 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.

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.

The Company incurred, at aircraft operator rates, charter costs of $ 640 and $ 1,125 for the three months ended June 30, 2023 and 2022, respectively, and $ 1,411 and $ 2,147 for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, $ 1,232 and $ 416 was due to this affiliate, respectively.

The Co mpany 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 $ 126 and $ 103 during the three months ended June 30, 2023 and 2022, respectively, and $ 252 and $ 206 during the six months ended June 30, 2023 and 2022, respectively, which was included within Operations and maintenance in the condensed consolidated statements of operations and comprehensive income (loss).

The Company has amounts due to FECI of $ 46 and $ 0 as of June 30, 2023 and December 31, 2022, respectively.

As of June 30, 2023 and December 31, 2022, the Company has recorded a lease liability of $ 3,349 and $ 3,340 , respectively, within Non-current lease liabilities on the condensed consolidated balance sheets.

DevTech investment

1 unchanged sentence

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.

The 10 % interest was reflected as non-

controlling interest in the Company’s condensed consolidated financial statements.

The Company recognized approximately $ 96 and $ 119 in expense within Selling, general and administrative for the three months ended June 30, 2023 and 2022, respectively, and $ 201 and $ 217 in expense within Selling, general and administrative for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, $ 201 and $ 80 were due to DevTech, respectively.

Fortress affiliated entities

1 unchanged sentence

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.

The Company has subleased a portion of office space to affiliates of entities managed by Fortress, and for the three months ended June 30, 2023 and 2022, $ 331 and $ 201 of rent and office related expenses were incurred by these affiliates, respectively.

For the six months ended June 30, 2023 and 2022, $ 541 and $ 396 of rent and office related expenses were incurred by these affiliates, respectively.

As of June 30, 2023 and December 31, 2022, $ 1,176 and $ 700 , respectively, were due from all Fortress affiliated entities.

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.

As of March 31, 2023, the Company operates in two reportable segments:

The Company incurred rent and administrative expenses of approximately $ 660 and $ 582 for the three months ended June 30, 2023 and 2022, respectively, and $ 1,249 and $ 1,182 for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, $ 3,427 and $ 2,455 were d ue to Fortress affiliated entities, respectively.

As of June 30, 2023, the Company operates in two reportable segments:

Terminals and Infrastructure and Ships:

5 unchanged sentences

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.

• Ships includes vessels that are leased to customers under long-term or spot arrangements, and as of June 30, 2023, eight vessels are included in this segment.

The Company’s investment in Energos is also included in the Ships segment.

3 unchanged sentences

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.

The table below presents segment information for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31, 2023

The table below presents segment information for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30, 2023

(in thousands of $) Terminals and

14 unchanged sentences

$ 1,316,805 $ — $ 1,316,805 $ — $ 1,316,805

Three Months Ended March 31, 2022

Six Months Ended June 30, 2023

(in thousands of $) Terminals and

Infrastructure Ships Total

Segment Consolidation

and Other (4)

Statement of operations:

Total revenues $ 998,112 $ 163,758 $ 1,161,870 $ ( 21,394 ) $ 1,140,476

Cost of sales (1) (3)

296,169 — 296,169 114,537 410,706

Vessel operating expenses — 30,682 30,682 ( 5,948 ) 24,734

Operations and maintenance 60,368 — 60,368 — 60,368

Segment Operating Margin $ 641,575 $ 133,076 $ 774,651 $ ( 129,983 ) $ 644,668

Balance sheet:

Total assets $ 7,924,074 $ 1,211,165 $ 9,135,239 $ — $ 9,135,239

Other segmental financial information:

Capital expenditures (2)

$ 2,248,628 $ — $ 2,248,628 $ — $ 2,248,628

Three Months Ended June 30, 2022

(in thousands of $) Terminals and

Infrastructure Ships Total Segment Consolidation

12 unchanged sentences

$ 242,808 $ 11,148 $ 253,956 $ — $ 253,956

(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.

Six Months Ended June 30, 2022

(in thousands of $) Terminals and

Infrastructure Ships Total Segment Consolidation

and Other (4)

Statement of operations:

Total revenues $ 1,023,804 $ 225,966 $ 1,249,770 $ ( 159,797 ) $ 1,089,973

Cost of sales (3)

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

Balance sheet:

Total assets $ 5,189,044 $ 2,062,332 $ 7,251,376 $ — $ 7,251,376

Other segmental financial information:

Capital expenditures (2)

$ 439,198 $ 14,437 $ 453,635 $ — $ 453,635

(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 commodity purchases and sales, and realized losses of $ 3,911 and unrealized gains of $ 141,853 for the three and six months ended June 30, 2023, respectively, were recognized as a reduction to Cost of sales in the segment measure.

The Company recognized unrealized gains of $ 2,835 and unrealized losses of $ 108,305 on the mark-to-market value of derivative transactions for the three and six months ended June 30, 2023, respectively, and these gains and losses reconcile Cost of sales in the segment measure to Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss) .

The Company has excluded contract acquisition costs that do not meet the criteria for capitalization from the segment measure.

Contract acquisition costs of $ 6,232 for the three and six months ended June 30, 2023 reconcile Cost of sales in the segment measure to Cost of sales in the condensed consolidated statements of operations and comprehensive income (loss).

(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.

(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.

(3) Cost of sales is presented exclusive of costs included in Depreciation and amortization in the condensed consolidated statements of operations and comprehensive income (loss) .

(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 prior to the disposition of these investments, the exclusion of the unrealized mark-to-market gain or loss on derivative instruments, and the exclusion of non-capitalizable contract acquisition costs.

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,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands of $) 2023 2022 2023 2022

3 unchanged sentences

Depreciation and amortization 42,115 36,356 76,490 70,646

Asset impairment expense — 48,109 — 48,109

Interest expense 64,396 47,840 136,069 92,756

3 unchanged sentences

Consolidated Segment Operating Margin $ 290,437 $ 273,336 $ 644,668 $ 524,024

Subsequent events

EB-5 Loan Agreement

On July 21, 2023, the Company entered into a loan agreement under the U.S.

Citizenship and Immigration Services EB-5 Program (“EB-5 Loan Agreement”) to pay for the development and construction of a new green hydrogen facility in Texas.

The maximum aggregate principal amount available under the EB-5 Loan Agreement is $ 100,000 , and outstanding borrowings bear interest at a fixed rate of 4.75 %.

The loan matures in 5 years from the initial advance with an option to extend the maturity by two one-year periods.

It is expected that the loan will be secured by NFE's green hydrogen facility, and NFE has provided a guarantee of our obligations under the EB-5 Loan Agreement.

In July 2023, $ 25,600 was funded under the EB-5 Loan Agreement.

Term Loan Credit Agreement

On August 3, 2023, the Company entered into a Term Loan Credit Agreement (the “Term Loan Agreement”) pursuant to which the lenders funded term loans (the “Term Loans”) to the Company in an aggregate principal amount of $ 400,000 .

The proceeds of the Term Loans may be used for working capital and other general corporate purposes.

The Term Loans will mature on August 1, 2024 and are payable in full on the maturity date.

The Term Loans are guaranteed on a senior secured basis by each domestic subsidiary that is a guarantor under the 2025 Notes, 2026 Notes and Revolving Facility (each as defined in the Annual Report) and will be guaranteed on a senior secured basis by each foreign guarantor that is a guarantor under the 2025 Notes, 2026 Notes and Revolving Facility (each

as defined in the Annual Report) on a post-closing basis.

The Term Loans are and will be secured by substantially the same collateral as the first lien obligations under the 2025 Notes, 2026 Notes and Revolving Facility.

The Term Loans bear interest at a per annum rate equal to Adjusted Term SOFR (as defined in the Term Loan Agreement) plus 3.50 %.

The Company may prepay Term Loans at its option at any time without premium (subject to customary break funding costs).

The Company is required to prepay Term Loans with the net proceeds of certain asset sales, condemnations, and debt and convertible securities issuances, in each case subject to certain exceptions and thresholds.

Additionally, commencing with the fiscal quarter ending December 31, 2023, the Company will be required to prepay Term Loans with the Company’s Excess Cash Flow (as defined in the Term Loan Agreement).

The Term Loan Agreement contains usual and customary representations and warranties, and usual and customary affirmative and negative covenants, including requirements to maintain certain levels of total debt to capitalization and total first lien debt to EBITDA, and the ratios required to be maintained are consistent with the requirements under the Revolving Facility.

Equipment Notes

On July 31, 2023, we borrowed an additional $ 85,000 under the Equipment Notes, and we expect to receive funding on the final tranche of the Equipment Notes of $ 15,000 in August 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements