Executive Summary / Key Takeaways

• Integrated Infrastructure Model Creates Durable Earnings: The $1.05 billion Jamaica acquisition and Iraq project represent a strategic pivot from pure FSRU leasing to owning integrated LNG-to-power platforms, capturing a broader value chain and generating multiple revenue streams under long-term take-or-pay contracts that insulate earnings from commodity volatility.

• Predictable Cash Flows in Uncertain Times: With approximately 90% of contracted cash flows backed by investment-grade counterparties, 99.9% fleet reliability, and a business model CEO Steven Kobos calls "tariff proof," Excelerate has delivered record quarterly EBITDA of $129 million while maintaining minimal exposure to geopolitical and economic shocks.

• Fleet Expansion Positions for LNG Demand Surge: The newbuild Hull 3407 (delivering 1 Bcf/day with industry-leading boil-off rates), Shenandoah conversion project, and reliquefaction technology upgrades provide operational flexibility to capture the expected 200 million tonnes of incremental LNG supply coming online by 2030, particularly in infrastructure-constrained emerging markets.

• Valuation Disconnect Meets Disciplined Capital Allocation: Trading at 11.85x EV/EBITDA with a 1.11% dividend yield targeting low double-digit growth, the stock offers defensive growth characteristics at a discount to volatile peers, while management's $50 million share repurchase program signals confidence in the company's underappreciated earnings power.

Setting the Scene: The "Inlet" for Global LNG

Excelerate Energy, founded in 2003 and headquartered in The Woodlands, Texas, operates the floating infrastructure that serves as the critical "inlet" for liquefied natural gas into countries lacking traditional import terminals. The company owns and operates 11 floating regasification terminals, one onshore terminal, and a combined heat and power plant across nine countries, providing the essential downstream link between global LNG supply and local energy demand. Unlike pure-play shipping companies or fixed terminal operators, Excelerate's business model centers on long-term, take-or-pay lease and operations agreements that generate approximately 90% of future contracted cash flows from investment-grade counterparties. This structure creates a rare combination of infrastructure-like stability with the operational flexibility to deploy assets where they are needed most, positioning the company as the largest provider of regasified LNG capacity in Argentina, Bangladesh, Finland, Jamaica, and the UAE.

The LNG industry stands at an inflection point, with global supply projected to grow from 430 million tonnes per annum (MTPA) in 2025 to over 600 MTPA by 2030. This 40% expansion, driven by new U.S. and Qatari export projects, will require corresponding regasification infrastructure, particularly in emerging markets that lack financing, permitting frameworks, or time to build large-scale onshore terminals. Excelerate's floating storage and regasification units (FSRUs) solve this problem by delivering turnkey import capacity in 18-24 months versus 5-7 years for land-based facilities. The company's strategic positioning is further strengthened by the global push for energy security and decarbonization, as natural gas provides the flexible baseload backup needed for intermittent renewable energy sources while displacing higher-emission fuels like diesel and heavy fuel oil.

Technology and Strategic Differentiation: Purpose-Built for Performance

Excelerate's competitive moat begins with its fleet composition. Unlike competitors such as Golar LNG (GLNG) that rely heavily on converted carriers, Excelerate operates purpose-built FSRUs designed specifically for regasification efficiency and reliability. The company's technical management history reached its apex in 2024 with 99.9% fleet reliability, the highest since operations began in 2007. This performance translates directly into customer value: when Finland experienced a windless cold snap in 2025, Gasgrid Finland calculated that the absence of Excelerate's FSRU Excelsior would have cost the economy between €1.5 billion and €3 billion in a single week. Such quantifiable impact justifies premium pricing and creates powerful switching costs, as customers cannot risk energy security on less reliable alternatives.

The technological pipeline reinforces this advantage. Hull 3407, the newbuild FSRU under construction with HD Hyundai Heavy Industries (009540.KS), will deliver up to 1 billion cubic feet per day with the industry's lowest boil-off rates when it enters service in mid-2026. This asset will anchor the Iraq project, where Excelerate will provide a fully integrated solution including regasification, LNG supply, and terminal infrastructure for a minimum 250 MMscfd offtake. The company's engineering work on converting the newly acquired LNG carrier Excelerate Shenandoah into an FSRU demonstrates a dual-path growth strategy: newbuilds for large-scale, long-term projects, and conversions for faster, more capital-efficient deployment in opportunistic markets. Additionally, the 2027 reliquefaction unit installation on FSRU Experience in Brazil will eliminate excess LNG losses, lower Scope 1 emissions, and extend asset life—upgrading performance while competitors' aging converted fleets face declining efficiency.

Financial Performance: Evidence of a Working Strategy

Excelerate's third-quarter 2025 results provide compelling evidence that the integrated infrastructure strategy is delivering tangible financial results. Record adjusted EBITDA of $129.3 million represented a 40% year-over-year increase, driven by $32.8 million from the Jamaica acquisition and $9.2 million from expanded LNG, gas, and power sales opportunities. Net income rose to $55 million, up $9.5 million from the prior year, despite a $13.4 million increase in interest expense from the $800 million debt offering used to fund the Jamaica purchase. The LNG, Gas and Power segment's revenue exploded 467% to $245.2 million, transforming from a minor optimization business into a core earnings driver that now represents 63% of total revenue.

The segment dynamics reveal a deliberate strategic shift. Terminal Services revenue declined 2.8% to $145.9 million in Q3, primarily due to lower reimbursable costs and the absence of prior-year deferred revenue recognition from FSRU drydocking. While this modest decline might concern investors focused on headline numbers, it actually demonstrates the business model's resilience: core lease revenues remained stable while variable cost pass-throughs fluctuated. More importantly, the LNG, Gas and Power segment's gross margin expansion shows the power of integration. The Jamaica assets contributed $32.2 million to adjusted gross margin in their first full quarter, while the Atlantic Basin supply agreement delivered a second cargo using the Shenandoah, creating incremental value from both infrastructure ownership and supply optimization.

Cash flow generation underscores the strategy's durability. Operating cash flows increased $162 million for the nine months ended September 30, 2025, reflecting the timing of collections on LNG sales and the take-or-pay nature of core contracts. This allowed the company to fund $1.13 billion in investing activities—including the Jamaica acquisition, Hull 3407 milestone payments, and Shenandoah purchase—while maintaining $463 million in cash and full access to its $500 million revolving credit facility. Net leverage of approximately 2x EBITDA provides ample capacity for additional growth investments, while investment-grade credit ratings from Fitch (BB) and S&P (BB+) validate the financial stability of the contracted revenue model.

Outlook and Execution Risk: Converting Opportunity into Earnings

Management's increased 2025 adjusted EBITDA guidance to $435-450 million reflects confidence that the Jamaica integration will deliver a full year of incremental earnings in 2026 and that the core business will maintain its trajectory. The guidance incorporates minimal financial impact from Hurricane Melissa, which struck Jamaica in October 2025 as a Category 5 storm. CEO Steven Kobos's emphasis on "comprehensive insurance coverage" combined with the take-or-pay model provides assurance that even major weather events have limited earnings impact—a critical differentiator in an era of climate volatility. The company's operational response, including relocating the Old Harbour FSRU offshore and restoring full operations within days, validated both the resilience of floating infrastructure and the wisdom of the $1.05 billion investment.

The Iraq project represents the next major growth catalyst. The definitive agreement for the country's first LNG import terminal commits Hull 3407 upon its 2026 delivery, with a 5-year take-or-pay contract for 250 MMscfd and expansion potential to 500 MMscfd. CFO Dana Armstrong's guidance of a 4.5-5x EBITDA build multiple implies approximately $90-100 million in annual EBITDA once fully operational, consistent with returns from fully integrated infrastructure projects. This project exemplifies the strategic shift: rather than simply leasing regasification capacity, Excelerate will own the entire value chain—FSRU, terminal infrastructure, and LNG supply—capturing margins across multiple stages while providing Iraq with energy security.

The Petrobangla QatarEnergy supply agreement, commencing January 2026, adds another $15 million of EBITDA in 2026-2027, stepping to $18 million annually thereafter. This 15-year, take-or-pay contract is priced on Brent Crude with back-to-back sales to Bangladesh, eliminating commodity price risk while securing long-term cash flows. Combined with the 20-year Venture Global SPA and the medium-term Atlantic Basin agreement, Excelerate has built a diversified supply portfolio that supports both its own infrastructure and third-party sales, creating optionality to optimize around market conditions.

Risks and Asymmetries: What Could Break the Thesis

The most material risk to the investment case is execution failure on the integrated infrastructure model. The Jamaica acquisition, while immediately accretive, requires successful integration of power generation, pipeline operations, and LNG marketing capabilities that differ from Excelerate's traditional FSRU leasing business. Transition and transaction costs of $33.6 million in the first nine months of 2025 demonstrate the complexity of merging operations, and any disruption to the Clarendon CHP plant or terminal operations could impair the $80-110 million of incremental EBITDA expected over five years. However, the assets exceeded operational expectations in Q3 2025, maintaining 99.8% reliability, and management's track record of integrating acquisitions since 2008 provides confidence.

Customer concentration presents a structural vulnerability. While management emphasizes the investment-grade quality of counterparties, the loss of a major contract in Bangladesh, Brazil, or Argentina would materially impact earnings. The geopolitical risk is real: Excelerate operates in regions subject to political instability, currency controls, and regulatory changes. Yet the company's experience navigating Argentine economic crises and Bangladeshi payment delays since 2008 has honed a risk management approach that includes local partnerships, currency hedging where possible, and contractual protections. The "tariff-proof" nature of the business model—where LNG is not subject to the trade restrictions impacting other commodities—provides a defensive characteristic that competitors with broader energy exposure lack.

The LNG supply-demand balance poses a longer-term risk. If new export capacity fails to materialize or if demand growth disappoints, charter renewal rates could face pressure when existing contracts expire. However, the tightening ratio of global regas capacity to supply actually strengthens Excelerate's negotiating position. With only 2-3 new FSRUs delivered annually and lead times of 2-3 years for conversions, the supply-demand balance for floating regasification assets is expected to remain tight through 2030. This dynamic, combined with the company's 25% global market share and reputation for reliability, supports the ability to recontract at elevated rates.

Competitive Context: Where Excelerate Stands Apart

Excelerate's positioning against Golar LNG highlights the advantage of purpose-built assets. While Golar's converted carriers offer cost efficiency, their regasification rates are materially lower and reliability less proven than Excelerate's specialized fleet. Golar's Q3 2025 adjusted EBITDA grew 41% to $83.4 million, yet the company remains unprofitable overall with a 69.6x P/E ratio and 38.98x EV/EBITDA—multiples that reflect execution risk on FLNG projects rather than stable cash flows. Excelerate's 20.05x P/E and 11.85x EV/EBITDA represent a discount for superior profitability and lower risk, suggesting the market has not fully recognized the quality differential.

New Fortress Energy (NFE)'s struggles underscore the value of Excelerate's disciplined approach. NFE's Q2 2025 results included a $699 million impairment and a net loss of $557 million, driven by high execution risk on its "fast LNG" power projects and debt-to-equity of 8.28x. While NFE targets similar integrated markets in the Caribbean, its volatile cash flows and frequent writedowns contrast sharply with Excelerate's 99.9% reliability and 2x leverage. The Jamaica acquisition effectively leapfrogged NFE's regional ambitions, securing the island's sole LNG platform and establishing a hub-and-spoke model for Caribbean distribution that NFE cannot easily replicate.

FLEX LNG (FLNG) and Cheniere Energy Partners (CQP) represent different ends of the value chain. FLEX's pure-play shipping model generates 76.34% gross margins and 28.06% profit margins, but its 11.44x EV/EBITDA multiple reflects limited growth as shipping rates face pressure from new vessel deliveries. Cheniere's 11.15x EV/EBITDA and 22.54% profit margins demonstrate the scale advantages of fixed export infrastructure, but its 1% revenue growth pales against Excelerate's 19.2% forecast. Excelerate's integrated model captures margins from both shipping and regasification while maintaining the flexibility to redeploy assets, a structural advantage that justifies its position between these pure-play peers.

Valuation Context: Reasonable Price for Quality

At $28.67 per share, Excelerate trades at a market capitalization of $3.27 billion and an enterprise value of $4.27 billion, representing 11.85x trailing EBITDA and 20.05x earnings. These multiples stand at a significant discount to Golar (38.98x EV/EBITDA) and New Fortress (32.46x EV/EBITDA), while comparable to FLEX LNG (11.44x) and Cheniere Partners (11.15x). The discount is particularly striking given Excelerate's superior growth trajectory—2025 EBITDA guidance of $435-450 million implies 25-30% year-over-year growth—and its 8.53% return on equity, which exceeds Golar's 4.24% and New Fortress's negative 87.33%.

The dividend framework provides a tangible signal of management's confidence in cash flow durability. The quarterly dividend of $0.08 per share, yielding 1.11% annually, is supported by a conservative 18.18% payout ratio. Management's explicit target of low double-digit dividend growth from 2026 through 2028 indicates expectations for sustained earnings expansion driven by Jamaica optimization, Iraq project ramp-up, and potential Caribbean expansion. This commitment to shareholder returns, combined with the completed $50 million share repurchase program at an average price of $20.41, suggests management views the current valuation as disconnected from intrinsic value.

Balance sheet strength underpins the valuation case. Net debt of $818 million and 2x leverage provide ample capacity to fund the $200 million final payment for Hull 3407 and the $450 million Iraq project investment without equity dilution. The investment-grade credit ratings (BB/Bb+) reflect rating agencies' recognition of the contracted cash flow stability, a distinction not afforded to more speculative peers. With $463 million in cash and full $500 million revolver availability, Excelerate has the liquidity to execute its growth strategy while maintaining financial flexibility.

Conclusion: A Defensive Growth Story at an Inflection Point

Excelerate Energy has evolved from a specialized FSRU lessor into an integrated LNG infrastructure platform, with the Jamaica acquisition serving as proof-of-concept for a scalable model that captures the full value chain from supply to power generation. This strategic shift, combined with take-or-pay contracts covering 90% of cash flows and operational excellence that delivers 99.9% reliability, creates a defensive earnings profile rare in the energy sector. The company's fleet expansion—anchored by Hull 3407's industry-leading specifications and the Shenandoah conversion option—positions it to capture the 200 million tonnes of new LNG supply expected by 2030, particularly in markets where floating solutions offer the only viable path to energy security.

The investment thesis hinges on two variables: successful integration of the Jamaica platform to deliver the projected $80-110 million of incremental EBITDA, and execution of the Iraq project to replicate the integrated model in a new geography. Management's track record since 2008, combined with the immediate accretion from Jamaica and the swift restoration of operations after Hurricane Melissa, provides confidence in execution capability. The valuation at 11.85x EV/EBITDA offers a reasonable entry point for a business with 25% market share, investment-grade counterparties, and a dividend growing at low double-digit rates. For investors seeking exposure to LNG demand growth without commodity price risk, Excelerate's defensive moat and growth optionality present a compelling risk-reward proposition.