Executive Summary / Key Takeaways

• NextDecade Corporation is rapidly advancing its Rio Grande LNG Facility, with Phase 1 (Trains 1-3) ahead of schedule and Final Investment Decisions (FIDs) recently achieved for Trains 4 and 5, signaling a significant expansion of its liquefaction capacity to 30 MTPA by the early 2030s.
• The company's strategic integration of Carbon Capture and Storage (CCS) initiatives, alongside its core LNG business, positions it to meet growing global demand for lower-carbon energy, offering a differentiated value proposition in an evolving energy landscape.
• Recent financial results reflect the company's intensive development phase, with increased general and administrative expenses and interest costs, but also a notable reduction in derivative losses for the three months ended September 30, 2025, as it moves towards operational cash flow generation expected in late 2027.
• NextDecade has secured substantial project financing and long-term Sale and Purchase Agreements (SPAs) for its initial five trains, providing a robust foundation for future revenue streams and mitigating significant market risk.
• Key risks include the substantial capital requirements for ongoing and future development, potential interest rate volatility, and the ability to secure additional financing, though the company's recent financing successes demonstrate strong market confidence.

Forging a New Energy Frontier: NextDecade's Strategic Ascent

NextDecade Corporation ($NEXT), founded in 2010, stands at the forefront of the evolving global energy landscape, primarily engaged in the construction and development of its ambitious Rio Grande LNG Facility in Brownsville, Texas. This Houston-based energy company is not merely building an LNG export terminal; it is crafting a strategic response to the dual imperatives of energy security and decarbonization. Its overarching strategy centers on delivering secure, affordable, and cleaner energy by leveraging abundant U.S. natural gas resources and integrating advanced carbon capture and storage (CCS) solutions. This foundational approach, rooted in its history of meticulous project development, positions NextDecade as a compelling player in the global energy transition.

The global LNG market is experiencing a period of significant expansion, driven by increasing energy demand, particularly from emerging economies in Asia, and the critical need for energy diversification in regions like Europe. Global LNG demand is projected to grow from 400 million tonnes (Mt) in 2023 to 650–700 Mt by 2040, with Asia accounting for over 70% of this new demand. China alone is expected to more than double its current LNG imports, exceeding 150 Mt, while India aims to increase gas to 15% of its energy mix, potentially pushing imports past 50 Mt. This robust demand outlook, further propelled by the surprisingly strong growth in AI-driven data center needs, which are projected to add 100–200 TWh of power demand annually by 2030, underscores the long-term relevance of LNG as a firm generation capacity source.

However, this growth is met with a significant wave of new supply. Between 2025 and 2030, over 300 billion cubic meters per year (bcm/yr) of new LNG export capacity is expected to come online from projects already under construction or having reached Final Investment Decision (FID), marking the largest capacity wave in LNG market history. The United States and Qatar are leading this expansion, with the U.S. LNG infrastructure market alone predicted to reach $62.5 billion in 2032 from $46.3 billion in 2025, growing at a CAGR of approximately 6.8%. This dynamic environment presents both immense opportunity and intense competition.

Technological Edge and Sustainable Ambition

NextDecade's competitive differentiation is anchored in its commitment to advanced liquefaction technology and its pioneering approach to carbon capture. The Rio Grande LNG Facility utilizes Honeywell (HON) AP-C3MR™ liquefaction technology, a predominant and globally recognized standard for natural gas liquefaction. This choice, coupled with fully wrapped, lump-sum turnkey Engineering, Procurement, and Construction (EPC) contracts with Bechtel Energy Inc., provides a strong foundation for guaranteed cost, performance, and schedule. This technological and contractual framework aims to minimize execution risk and ensure reliable, efficient operations once the facility is online.

Beyond liquefaction, NextDecade is actively exploring a potential Carbon Capture and Storage (CCS) project at the Rio Grande LNG Facility, alongside advancing proprietary processes to lower the cost of utilizing CCS. This strategic initiative aligns with a broader industry trend where CCS is gaining significant momentum, with global operational capacity reaching over 50 million tonnes of CO2 annually by early 2025, and projected to reach around 430 Mt CO2 per year by 2030. Cumulative investments in CCS are expected to reach about $80 billion in the coming five years, with policy-driven growth anticipated to lower costs by approximately 14% by 2030. While the company previously withdrew an application for a CCS project at FERC in August 2024, it continues to explore subsurface and technical options for commercialization, signaling a long-term commitment to lower-carbon energy solutions. This focus on integrating CCS into its LNG operations provides a tangible benefit: the ability to offer "cleaner" LNG, potentially commanding a premium or securing long-term contracts with environmentally conscious buyers. As Chairman and CEO Matt Schatzman stated, "We believe that reliable, competitively priced energy and responsible environmental stewardship are not mutually exclusive. Our customers – and energy consumers around the world – should never have to choose between pocketbook and planet."

Operational Momentum and Strategic Partnerships

The company's journey has been marked by significant operational milestones and strategic financial structuring. Construction on Phase 1 (Trains 1-3) of the Rio Grande LNG Facility commenced in July 2023, and as of September 2025, overall project completion for Trains 1 and 2 and common facilities stood at 55.90%, with engineering 95% complete, procurement 88.80% complete, and construction 29.80% complete. Train 3 was 33.40% overall complete. Management has indicated that progress on Phase 1 is ahead of schedule.

The latter half of 2025 proved transformative for NextDecade. On September 9, 2025, the company announced a positive Final Investment Decision (FID) for Train 4, followed by a full notice to proceed (NTP) to Bechtel. This was swiftly followed by a positive FID for Train 5 on October 16, 2025, also with a full NTP issued to Bechtel. These FIDs were critical, unlocking approximately $6.70 billion in project financing for each train, including substantial equity commitments from joint venture partners like Global Infrastructure Partners, GIC, Mubadala Investment Company, and TotalEnergies (TTE), alongside senior secured non-recourse bank credit facilities and private placement notes. The successful closing of these financings, as highlighted by CEO Matt Schatzman, occurred "without a material impact to NextDecade shares outstanding."

NextDecade has secured long-term Sale and Purchase Agreements (SPAs) for approximately 25.30 MTPA of LNG from Trains 1 through 5 with 14 creditworthy counterparties, boasting a weighted average term of 19.50 years. These contracts are structured with a fixed fee and a variable fee indexed to Henry Hub, designed to cover natural gas, fuel, and other sourcing costs. The Henry Hub-linked SPAs for Trains 1-5 are expected to generate approximately $3 billion in annual fixed fees, unadjusted for inflation. Notably, Train 4 secured SPAs with Saudi Aramco (ARMCO) (1.20 MTPA) and TotalEnergies (1.50 MTPA), while Train 5 secured agreements with JERA (2 MTPA), EQT Corporation (EQT) (1.50 MTPA), and ConocoPhillips (COP) (1 MTPA). The company also plans to sell commissioning and excess operational LNG volumes into the spot, short-term, and medium-term markets.

The Rio Grande LNG Facility is strategically located in the Rio Grande Valley near Brownsville, Texas, benefiting from proximity to abundant natural gas resources in the Permian Basin and Eagle Ford Shale, access to an uncongested waterway, and a region historically less prone to severe weather events compared to other U.S. Gulf Coast locations. The company's natural gas transportation and supply strategy is diversified, leveraging firm and interruptible agreements to access competitively priced natural gas at the Agua Dulce Hub.

Financial Performance and Liquidity: A Developmental Snapshot

NextDecade's financial performance for the nine months ended September 30, 2025, reflects its intensive capital expenditure phase as a development-stage company. The net loss attributable to common stockholders increased by approximately $131.70 million to $259.15 million compared to $127.40 million in the same period of 2024. This was primarily driven by a $53.10 million increase in general and administrative expenses, largely due to higher share-based compensation expense related to the Train 4 FID and increased headcount to support future operations. Additionally, interest expense, net, rose by approximately $27.30 million due to additional borrowings for facility construction. The change in derivative loss/gain also contributed, with a $255.90 million increase in fair-value loss on the interest rate swap portfolio due to lower forward SOFR rates.

For the three months ended September 30, 2025, the net loss attributable to common stockholders decreased by approximately $13.70 million to $109.48 million compared to $123.20 million in the prior year. This improvement was primarily a result of a $255.60 million reduction in the mark-to-market loss on the company's interest rate swap portfolio, partially offset by the aforementioned increases in general and administrative expenses and net interest expense.

As a company in the construction phase, NextDecade has not historically generated significant cash flow from operations and does not expect to do so until the liquefaction trains begin operating, with the first train anticipated in late 2027. Cash used in operating activities for the nine months ended September 30, 2025, increased by approximately $62.10 million to $148.74 million, primarily due to higher pre-operational expenditures and working capital investments. Investing activities saw a substantial increase in cash used, rising by approximately $1 billion to $2.88 billion, driven by increased construction expenditures for the Rio Grande LNG Facility. Cash provided by financing activities increased by approximately $1.40 billion to $3.38 billion, primarily from proceeds from debt issuance and equity commitment receipts.

Following the FIDs for Trains 1 through 5, the Rio Grande Project Entities (Phase 1 LLC, Train 4 LLC, and Train 5 LLC) operate with independent capital structures. Their cash resources are restricted and not available to service NextDecade Corporation's direct obligations. NextDecade's primary corporate cash needs include approximately $2.40 billion in aggregate equity capital contributions for Trains 4 and 5, development expenses for expansion projects, and general and administrative expenses. These commitments are being funded through a combination of Super FinCo Loans, cash on hand, and borrowings under the FinCo Credit Agreement. The company intends to fund future development activities with existing cash, a services fee due in September 2026, and through future equity or debt offerings.

Competitive Landscape and Strategic Positioning

NextDecade operates within a highly competitive global LNG and emerging CCS market. Its direct competitors include established players like Cheniere Energy (LNG), Sempra Energy (SRE), Kinder Morgan (KMI), and ExxonMobil (XOM), all of whom possess significant scale, operational experience, and financial resources.

NextDecade's strategic location in Texas, with access to prolific natural gas basins and an uncongested waterway, provides a geographical advantage. Its use of the widely adopted Honeywell AP-C3MR™ liquefaction technology ensures operational reliability. However, its most significant competitive differentiator lies in its commitment to integrating CCS technology. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, NextDecade's focus on lower-carbon LNG could appeal to a growing segment of customers prioritizing environmental stewardship. This specialized approach may allow NextDecade to carve out a unique position, particularly as global carbon pricing regimes mature and demand for decarbonized energy solutions intensifies.

Compared to larger, more diversified energy companies like ExxonMobil, NextDecade currently lags in overall operational scale, financial breadth, and established market presence. Similarly, against pure-play LNG exporters like Cheniere Energy, NextDecade is still in its developmental phase, meaning its cash flow generation and profitability metrics are not yet comparable. For instance, while competitors like Cheniere and Sempra exhibit consistent revenue growth and robust cash flow from their operational assets, NextDecade's current financial statements reflect substantial investment in property, plant, and equipment, with negative operating and net income as it builds out its infrastructure. The U.S. LNG infrastructure market is driven by the increasing use of natural gas in power generation to lower carbon emissions and the easy availability of shale gas, leading to significant investments in export facilities.

NextDecade's smaller scale also presents potential vulnerabilities, such as higher per-unit operational costs during its ramp-up phase and a greater dependency on successful regulatory approvals and financing for each new train. However, the high capital requirements and complex regulatory hurdles inherent in the LNG and CCS industries also act as significant barriers to entry, protecting existing players like NextDecade from a flood of new competitors. The shift towards regional CCS hub development, where third-party service providers handle aspects like CO2 capture, transportation, or storage, could also create opportunities for NextDecade's CCS initiatives.

Outlook and Future Growth Trajectory

The outlook for NextDecade is one of significant growth and transformation as its multi-train Rio Grande LNG Facility comes online. The commercial operation date for the first liquefaction train is expected in late 2027, based on the guaranteed schedule under the EPC contracts. Train 4 is guaranteed substantial completion in the second half of 2030, and Train 5 in the first half of 2031.

With Trains 1 through 5 expected to provide approximately 30 MTPA of liquefaction production capacity, NextDecade anticipates accounting for roughly 5% of projected global liquefaction supply in the early 2030s. The company is also actively developing and advancing the permitting process for expansion Trains 6 through 8, which are wholly owned by NextDecade and are cumulatively expected to add approximately 18 MTPA of liquefaction capacity. A pre-filing application with FERC for Train 6 is expected in 2025, with a full application in 2026. This strategic roadmap indicates a potential to nearly double the site's total LNG capacity to 48 MTPA, solidifying its long-term growth trajectory.

The recent satisfaction of the FERC Remand Condition on October 30, 2025, which made the authorization for the first five trains non-appealable and allowed the Train 4 and Train 5 interest rate swaps to become effective, removes a significant regulatory overhang and provides clear runway for construction and financing. This regulatory clarity, combined with strong global LNG demand forecasts and increasing interest in sustainable energy solutions, underpins NextDecade's ambitious expansion plans.

Risks and Considerations

Despite the promising outlook, investors should be mindful of several key risks. The most prominent is the substantial capital intensity of LNG and CCS projects. While NextDecade has successfully secured significant project financing for its initial five trains, future expansion, particularly for Trains 6 through 8 and the CCS project, will require additional debt and equity financing. There is no assurance that such financing will be available on commercially acceptable terms or without diluting existing stockholders. Increases in interest rates could also escalate the cost of servicing the company's substantial indebtedness.

Operational risks associated with large-scale construction, including potential delays or cost overruns, remain a concern, although the lump-sum turnkey EPC contracts with Bechtel aim to mitigate these. The company's reliance on third parties for successful project completion is also a factor. Furthermore, global LNG demand and pricing are subject to market volatility, geopolitical events, and changes in energy policies and regulations, including environmental laws and carbon pricing regimes. The potential for technological innovation to lessen NextDecade's competitive advantage or shift demand away from LNG also exists.

Conclusion

NextDecade Corporation is rapidly emerging as a pivotal player in the global energy transition, strategically positioned at the nexus of robust LNG demand and the growing imperative for decarbonization. The company's recent achievements, including the successful Final Investment Decisions and comprehensive financing for Trains 4 and 5, underscore its execution capabilities and the strong market confidence in its Rio Grande LNG Facility. With Phase 1 progressing ahead of schedule and a clear roadmap for expanding liquefaction capacity to 30 MTPA and potentially beyond, NextDecade is poised to become a significant global LNG supplier by the early 2030s.

The integration of advanced liquefaction technology with a forward-looking commitment to carbon capture and storage provides NextDecade with a distinct competitive edge, appealing to a market increasingly valuing sustainable energy solutions. While the company's current financial profile reflects its developmental stage, characterized by significant capital deployment and negative cash flow from operations, the secured long-term SPAs and structured project financing provide a clear path to future revenue generation and profitability. Investors should recognize NextDecade as a high-growth infrastructure play, where the successful completion and operation of its projects, underpinned by technological differentiation and strategic market positioning, are expected to unlock substantial long-term value. The journey ahead will require continued vigilance over financing, project execution, and market dynamics, but NextDecade's recent momentum suggests a compelling narrative of transformative growth in the global energy sector.