New Fortress Energy Inc. 10-Q

Item 1. Financial Statements. New Fortress Energy Inc. Condensed Consolidated Balance Sheets As of June 30, 2023 and December 31, 2022 (Unaudited, in thousands of U.S. dollars, except share amounts) June 30, 2023 December 31, 2022 Assets Current assets Cash and cash equivalents $ 104,342 $ 675,492 Restricted cash 100,513 165,396 Receivables, net of allowances of $ 805 and $ 884 , respectively 275,292 280,313 Inventory 128,411 39,070 Prepaid expenses and other current assets, net 105,133 226,883 Total current assets 713,691 1,387,154 Construction in progress 4,593,132 2,418,608 Property, plant and equipment, net 2,161,930 2,116,727 Equity method investments 138,569 392,306 Right-of-use assets 504,299 377,877 Intangible assets, net 74,540 85,897 Goodwill 776,760 776,760 Deferred tax assets, net 8,074 8,074 Other non-current assets, net 164,244 141,679 Total assets $ 9,135,239 $ 7,705,082 Liabilities Current liabilities Current portion of long-term debt and short-term borrowings $ 366,945 $ 64,820 Accounts payable 602,759 80,387 Accrued liabilities 821,137 1,162,412 Current lease liabilities 133,431 48,741 Other current liabilities 143,598 52,878 Total current liabilities 2,067,870 1,409,238 Long-term debt 5,064,188 4,476,865 Non-current lease liabilities 349,331 302,121 Deferred tax liabilities, net 27,192 25,989 Other long-term liabilities 75,783 49,010 Total liabilities 7,584,364 6,263,223 Commitments and contingencies (Note 19) Stockholders’ equity 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 2,050 2,088 Additional paid-in capital 1,039,201 1,170,254 Retained earnings 290,564 62,080 Accumulated other comprehensive income 74,346 55,398 Total stockholders’ equity attributable to NFE 1,406,161 1,289,820 Non-controlling interest 144,714 152,039 Total stockholders’ equity 1,550,875 1,441,859 Total liabilities and stockholders’ equity $ 9,135,239 $ 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 (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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues Operating revenue $ 494,619 $ 497,240 $ 996,307 $ 897,315 Vessel charter revenue 65,840 75,134 142,364 167,554 Other revenue 886 12,481 1,805 25,104 Total revenues 561,345 584,855 1,140,476 1,089,973 Operating expenses Cost of sales (exclusive of depreciation and amortization shown separately below) 225,768 272,401 410,706 480,699 Vessel operating expenses 11,443 18,628 24,734 41,592 Operations and maintenance 33,697 20,490 60,368 43,658 Selling, general and administrative 55,803 50,310 107,941 98,351 Transaction and integration costs 1,554 4,866 2,048 6,767 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 Operating income 190,965 133,695 458,189 300,151 Interest expense 64,396 47,840 136,069 92,756 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 (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 (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 (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 (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. 2 Table of Contents New Fortress Energy Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity For the three and six months ended June 30, 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 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 paid-in capital Retained earnings (Accumulated deficit) Accumulated other comprehensive income (loss) 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 income — — — — 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 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. 3 Table of Contents New Fortress Energy Inc. Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023 and 2022 (Unaudited, in thousands of U.S. dollars) Six Months Ended June 30, 2023 2022 Cash flows from operating activities Net income $ 271,666 $ 62,750 Adjustments for: Depreciation and amortization 76,949 71,172 (Earnings) losses of equity method investees ( 12,249 ) 322,692 Drydocking expenditure — ( 12,439 ) Dividends received from equity method investees 5,830 14,859 Change in market value of derivatives 572 ( 9,798 ) Deferred taxes — ( 178,109 ) Asset impairment expense — 48,109 Earnings recognized from vessels chartered to third parties transferred to Energos ( 71,536 ) — Loss on the disposal of equity method investment 37,401 — Other 12,435 6,808 Changes in operating assets and liabilities: (Increase) in receivables ( 14,532 ) ( 123,843 ) (Increase) in inventories ( 60,710 ) ( 35,167 ) Decrease (increase) in other assets 63,576 ( 58,949 ) Decrease in right-of-use assets 40,655 35,265 Increase in accounts payable/accrued liabilities 75,746 71,603 (Decrease) in lease liabilities ( 38,885 ) ( 31,352 ) Increase (decrease) in other liabilities 116,959 ( 12,668 ) Net cash provided by operating activities 503,877 170,933 Cash flows from investing activities Capital expenditures ( 1,465,642 ) ( 441,708 ) Sale of equity method investment 100,000 — Other investing activities ( 1,450 ) — Net cash used in investing activities ( 1,367,092 ) ( 441,708 ) Cash flows from financing activities Proceeds from borrowings of debt 919,625 437,917 Payment of deferred financing costs ( 6,659 ) ( 4,805 ) Repayment of debt — ( 146,030 ) Payments related to tax withholdings for share-based compensation ( 9,519 ) ( 13,054 ) Payment of dividends ( 676,918 ) ( 47,374 ) Other financing activities ( 3,946 ) — Net cash provided by financing activities 222,583 226,654 Impact of changes in foreign exchange rates on cash and cash equivalents 1,608 ( 2,018 ) Net decrease in cash, cash equivalents and restricted cash ( 639,024 ) ( 46,139 ) Cash, cash equivalents and restricted cash – beginning of period 855,083 264,030 Cash, cash equivalents and restricted cash – end of period $ 216,059 $ 217,891 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 $ 732,858 $ 5,302 Principal payments on financing obligation to Energos by third party charterers ( 32,836 ) — Shares received in Hilli Exchange ( 122,754 ) — Repurchase obligation $ 24,320 $ — 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: Six Months Ended June 30, 2023 2022 Cash and cash equivalents $ 104,342 $ 138,329 Current restricted cash 100,513 71,602 Non-current restricted cash — 7,960 Cash and cash equivalents classified as held for sale 11,204 — Cash, cash equivalents and restricted cash – end of period $ 216,059 $ 217,891 Cash and cash equivalents includes $ 11,204 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 (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 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 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. The contract liabilities and contract assets balances as of June 30, 2023 and December 31, 2022 are detailed below: 6 Table of Contents June 30, 2023 December 31, 2022 Contract assets, net - current $ 8,414 $ 8,083 Contract assets, net - non-current 24,379 28,651 Total contract assets, net $ 32,793 $ 36,734 Contract liabilities $ 91,771 $ 12,748 Revenue recognized in the year from: 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 $ 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. 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 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. 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 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 $ 846,988 2024 2,043,173 2025 1,355,952 2026 525,753 2027 522,876 Thereafter 7,988,459 Total $ 13,283,201 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 7 Table of Contents 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 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: June 30, 2023 December 31, 2022 Property, plant and equipment $ 902,839 $ 1,292,957 Accumulated depreciation ( 74,615 ) ( 80,233 ) Property, plant and equipment, net $ 828,224 $ 1,212,724 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 Variable lease income — 668 — 11,232 Total operating lease income $ 65,840 $ 72,350 $ 142,364 $ 163,136 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 June 30, 2023. 8 Table of Contents 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 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 Finance right-of-use-assets (1) 62,107 21,994 Total right-of-use assets $ 504,299 $ 377,877 Current lease liabilities: Operating lease liabilities $ 105,739 $ 44,371 Finance lease liabilities 27,692 4,370 Total current lease liabilities $ 133,431 $ 48,741 Non-current lease liabilities: Operating lease liabilities $ 319,240 $ 290,899 Finance lease liabilities 30,091 11,222 Total non-current lease liabilities $ 349,331 $ 302,121 (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 Variable lease cost 1,004 466 1,601 936 Short-term lease cost 2,370 1,897 5,919 6,122 Lease cost - Cost of sales $ 15,137 $ 20,112 $ 30,891 $ 41,015 Lease cost - Operations and maintenance 9,207 844 12,048 1,609 Lease cost - Selling, general and administrative 1,888 1,820 3,807 3,347 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 9 Table of Contents 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 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 Amortization of right-of-use asset related to finance leases 5,771 380 7,560 759 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 six months ended June 30, 2023 and 2022: Six Months Ended June 30, 2023 2022 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 June 30, 2023 are as follows: Operating Leases Financing Leases Due remainder of 2023 $ 67,316 $ 16,095 2024 136,911 29,997 2025 74,914 12,427 2026 52,013 3,041 2027 51,547 436 Thereafter 185,473 943 Total lease payments $ 568,174 $ 62,939 Less: effects of discounting 143,195 5,156 Present value of lease liabilities $ 424,979 $ 57,783 Current lease liability $ 105,739 $ 27,692 Non-current lease liability 319,240 30,091 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 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 %. 10 Table of Contents 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 (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 (loss). 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 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 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. 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 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 June 30, 2023 and December 31, 2022. The Company uses the income approach when valuing the following financial instruments: 11 Table of Contents ◦ 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. ◦ 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 June 30, 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 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 June 30, 2023 and December 31, 2022: Level 1 Level 2 Level 3 Total June 30, 2023 Assets Investment in equity securities $ 12,789 $ — $ 7,678 $ 20,467 Liabilities Commodity swap $ — $ 2,816 $ — $ 2,816 Contingent consideration derivative liabilities — — 44,552 44,552 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 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 (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: 12 Table of Contents 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 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. 7. Restricted cash 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 Collateral for letters of credit and performance bonds 59,835 41,392 Collateral for interest rate swaps — 2,500 Total restricted cash $ 100,513 $ 167,977 Current restricted cash $ 100,513 $ 165,396 Non-current restricted cash — 2,581 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. 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. 8. Inventory 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 Automotive diesel oil inventory 9,195 8,164 Bunker fuel, materials, supplies and other 18,843 15,508 Total inventory $ 128,411 $ 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 (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. 13 Table of Contents 9. Prepaid expenses and other current assets 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 Recoverable taxes 60,956 37,504 Commodity swap — 104,797 Due from affiliates 1,174 698 Other current assets 24,385 27,504 Total prepaid expenses and other current assets, net $ 105,133 $ 226,883 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). 10. Equity method investments Changes in the balance of the Company’s equity method investments is as follows: June 30, 2023 Equity method investments as of December 31, 2022 $ 392,306 Dividends ( 5,830 ) Equity in earnings of investees 12,249 Sale of equity method investments ( 260,156 ) Equity method investments as of June 30, 2023 $ 138,569 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 Energos 138,569 132,306 Total $ 138,569 $ 392,306 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. Hilli LLC 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 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 14 Table of Contents 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 . 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 first quarter of 2023. Energos 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; 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 and six months ended June 30, 2023, the Company has recognized earnings from Energos of $ 2,269 and $ 6,263 . 11. Construction in progress 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 $ 2,418,608 Additions 2,248,628 Impact of currency translation adjustment 28,620 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. 15 Table of Contents 12. Property, plant and equipment, net 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 Terminal and power plant equipment 248,192 218,296 CHP facilities 125,015 123,897 Gas terminals 177,780 177,780 ISO containers and other equipment 136,632 134,324 LNG liquefaction facilities 63,316 63,316 Gas pipelines 66,319 65,985 Land 53,665 52,995 Leasehold improvements 66,520 9,377 Accumulated depreciation ( 300,468 ) ( 248,082 ) 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 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) . 13. Goodwill and intangible assets Goodwill 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 June 30, 2023 and December 31, 2022: June 30, 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 $ ( 76,704 ) $ — $ 29,796 3 Permits and development rights 48,217 ( 4,827 ) ( 1,013 ) 42,377 38 Easements 1,556 ( 317 ) — 1,239 30 Indefinite-lived intangible assets Easements 1,191 — ( 63 ) 1,128 n/a Total intangible assets $ 157,464 $ ( 81,848 ) $ ( 1,076 ) $ 74,540 16 Table of Contents 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 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). 14. Other non-current assets, net 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 Contract assets, net (Note 4) 24,379 28,651 Investments in equity securities (Note 6) 20,467 17,806 Cost to fulfill (Note 4) 24,245 9,773 Upfront payments to customers 8,862 9,158 Other 40,920 35,606 Total other non-current assets, net $ 164,244 $ 141,679 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. 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 June 30, 17 Table of Contents 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 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 $ 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. 15. Accrued liabilities 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 Accrued dividend — 626,310 Other accrued expenses 66,827 36,701 Total accrued liabilities $ 821,137 $ 1,162,412 16. Other current liabilities 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 62,403 12,748 Repurchase obligation 24,327 — Income tax payable 19,159 6,261 Due to affiliates 7,192 7,499 Other current liabilities 9,239 6,912 Total other current liabilities $ 143,598 $ 52,878 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. 18 Table of Contents 17. Debt 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 $ 1,244,487 $ 1,243,351 Senior Secured Notes, due September 2026 1,483,823 1,481,639 Vessel Financing Obligation, due August 2042 1,371,221 1,406,091 South Power 2029 Bonds, due May 2029 216,575 216,177 Barcarena Term Loan, due February 2024 196,870 194,427 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 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 $ 5,217,159 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 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 19 Table of Contents 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 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 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 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 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 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 Interest expense on Vessel Financing Obligation 52,465 — 106,795 — Amortization of debt issuance costs, premiums and discounts 3,150 3,318 6,742 5,793 Interest expense incurred on finance lease obligations 1,218 218 1,686 447 Total interest costs $ 131,993 $ 64,198 $ 254,642 $ 122,251 Capitalized interest 67,597 16,358 118,573 29,495 Total interest expense $ 64,396 $ 47,840 $ 136,069 $ 92,756 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. 18. Income Taxes 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 half 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 Table of Contents 20. Earnings per share Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: 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 Denominator: Weighted-average shares - basic 205,045,121 209,669,188 206,867,828 209,797,133 Net income per share - basic $ 0.58 $ ( 0.81 ) $ 1.30 $ 0.33 Diluted Numerator: 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 Denominator: Weighted-average shares - diluted 205,711,467 209,669,188 207,534,174 209,810,647 Net income per share - diluted $ 0.58 $ ( 0.81 ) $ 1.29 $ 0.33 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. June 30, 2023 June 30, 2022 Unvested RSUs — 30,486 Equity Agreement shares (1) — 475,755 Total — 506,241 (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 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. 21 Table of Contents 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. 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 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 Compensation Cost (1) Weighted Average Remaining Vesting Period 2022 Grant 746,296 0 to 1,492,592 — 48,309 0.50 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 $ 1,296 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 $ 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. Land lease 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 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- 22 Table of Contents 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 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 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 $ 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. 23. Segments As of June 30, 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 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. 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. The table below presents segment information for the three and six months ended June 30, 2023 and 2022: 23 Table of Contents Three Months Ended June 30, 2023 (in thousands of $) Terminals and Infrastructure Ships Total Segment Consolidation and Other (4) Consolidated Statement of operations: Total revenues $ 495,504 $ 65,841 $ 561,345 $ — $ 561,345 Cost of sales (1) (3) 222,371 — 222,371 3,397 225,768 Vessel operating expenses — 11,443 11,443 — 11,443 Operations and maintenance 33,697 33,697 — 33,697 Segment Operating Margin $ 239,436 $ 54,398 $ 293,834 $ ( 3,397 ) $ 290,437 Balance sheet: Total assets $ 7,924,074 $ 1,211,165 $ 9,135,239 $ — $ 9,135,239 Other segmental financial information: Capital expenditures (2) $ 1,316,805 $ — $ 1,316,805 $ — $ 1,316,805 Six Months Ended June 30, 2023 (in thousands of $) Terminals and Infrastructure Ships Total Segment Consolidation and Other (4) Consolidated 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 24 Table of Contents Three Months Ended June 30, 2022 (in thousands of $) Terminals and Infrastructure Ships Total Segment Consolidation and Other (4) Consolidated Statement of operations: Total revenues $ 543,455 $ 111,024 $ 654,479 $ ( 69,624 ) $ 584,855 Cost of sales (3) 271,948 — 271,948 453 272,401 Vessel operating expenses 4,255 21,288 25,543 ( 6,915 ) 18,628 Operations and maintenance 29,540 — 29,540 ( 9,050 ) 20,490 Segment Operating Margin $ 237,712 $ 89,736 $ 327,448 $ ( 54,112 ) $ 273,336 Balance sheet: Total assets $ 5,189,044 $ 2,062,332 $ 7,251,376 $ — $ 7,251,376 Other segmental financial information: Capital expenditures (2) $ 242,808 $ 11,148 $ 253,956 $ — $ 253,956 Six Months Ended June 30, 2022 (in thousands of $) Terminals and Infrastructure Ships Total Segment Consolidation and Other (4) Consolidated 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). 25 Table of Contents (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 (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 June 30, Six Months Ended June 30, (in thousands of $) 2023 2022 2023 2022 Net income $ 120,100 $ ( 178,431 ) $ 271,666 $ 62,750 Add: Selling, general and administrative 55,803 50,310 107,941 98,351 Transaction and integration costs 1,554 4,866 2,048 6,767 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 Other expense (income), net ( 6,584 ) ( 22,102 ) 18,421 ( 41,827 ) Tax provision (benefit) 15,322 ( 86,539 ) 44,282 ( 136,220 ) (Income) from equity method investments ( 2,269 ) 372,927 ( 12,249 ) 322,692 Consolidated Segment Operating Margin $ 290,437 $ 273,336 $ 644,668 $ 524,024 24. 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 26 Table of Contents 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. 27 Table of Contents