UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2023
OR
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission File Number: 001-41352
Excelerate Energy, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
87-2878691 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
2445 Technology Forest Blvd., Level 6 The Woodlands, TX |
77381 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (832) 813-7100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Class A Common Stock, $0.001 par value per share |
|
EE |
|
New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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☐ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
|
☒ |
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Smaller reporting company |
|
☐ |
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Emerging growth company |
|
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 5, 2023, there were 26,254,167 shares of Excelerate Energy, Inc.'s Class A Common Stock, $0.001 par value per share, and 82,021,389 shares of Excelerate Energy, Inc.’s Class B Common Stock, par value $0.001 per share, outstanding.
TABLE OF CONTENTS
PART I. |
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Item 1. |
5 |
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5 |
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6 |
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7 |
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8 |
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9 |
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10 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
27 |
Item 3. |
38 |
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Item 4. |
Controls and Procedures |
38 |
PART II. |
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Item 1. |
40 |
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Item 1A. |
40 |
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Item 2. |
40 |
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Item 3. |
40 |
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Item 4. |
40 |
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Item 5. |
40 |
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Item 6. |
41 |
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42 |
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2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about Excelerate Energy, Inc. (“Excelerate” and together with its subsidiaries, “we,” “us,” “our” or the “Company”) and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact including, without limitation, statements regarding our future results of operations or financial condition, business strategy and plans, expansion plans and strategy, economic conditions, both generally and in particular in the regions in which we operate or plan to operate, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “consider,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described under “Risk Factors” in Excelerate’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”), this Form 10-Q and our other filings with the Securities and Exchange Commission (the “SEC”), including, but not limited to, the following:
3
Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-Q. For example, the current global economic uncertainty and geopolitical climate, including the Russia-Ukraine war, may give rise to risks that are currently unknown or amplify the risks associated with many of the foregoing events or factors. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
4
PART I – FINANCIAL INFORMATION
Excelerate Energy, Inc.
Consolidated Balance Sheets
As of March 31, 2023 and December 31, 2022
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
(Unaudited) |
|
|
|
|
||
ASSETS |
(In thousands) |
|
|||||
Current assets |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
530,425 |
|
|
$ |
516,659 |
|
Current portion of restricted cash |
|
3,557 |
|
|
|
2,614 |
|
Accounts receivable, net |
|
57,761 |
|
|
|
82,289 |
|
Inventories |
|
132,179 |
|
|
|
173,603 |
|
Current portion of net investments in sales-type leases |
|
13,544 |
|
|
|
13,344 |
|
Other current assets |
|
24,397 |
|
|
|
35,026 |
|
Total current assets |
|
761,863 |
|
|
|
823,535 |
|
Restricted cash |
|
19,076 |
|
|
|
18,698 |
|
Property and equipment, net |
|
1,706,245 |
|
|
|
1,455,683 |
|
Operating lease right-of-use assets |
|
12,498 |
|
|
|
78,611 |
|
Net investments in sales-type leases |
|
395,998 |
|
|
|
399,564 |
|
Investment in equity method investee |
|
24,201 |
|
|
|
24,522 |
|
Deferred tax assets, net |
|
39,185 |
|
|
|
39,867 |
|
Other assets |
|
41,567 |
|
|
|
26,342 |
|
Total assets |
$ |
3,000,633 |
|
|
$ |
2,866,822 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
||
Accounts payable |
$ |
10,674 |
|
|
$ |
96,824 |
|
Accrued liabilities and other liabilities |
|
54,658 |
|
|
|
66,888 |
|
Current portion of deferred revenue |
|
162,164 |
|
|
|
144,807 |
|
Current portion of long-term debt |
|
21,057 |
|
|
|
20,913 |
|
Current portion of long-term debt – related party |
|
7,864 |
|
|
|
7,661 |
|
Current portion of operating lease liabilities |
|
7,838 |
|
|
|
33,612 |
|
Current portion of finance lease liabilities |
|
46,183 |
|
|
|
20,804 |
|
Total current liabilities |
|
310,438 |
|
|
|
391,509 |
|
Long-term debt, net |
|
188,671 |
|
|
|
193,396 |
|
Long-term debt, net – related party |
|
178,579 |
|
|
|
180,772 |
|
Operating lease liabilities |
|
5,723 |
|
|
|
48,373 |
|
Finance lease liabilities |
|
445,956 |
|
|
|
210,354 |
|
TRA liability |
|
72,951 |
|
|
|
72,951 |
|
Asset retirement obligations |
|
40,259 |
|
|
|
39,823 |
|
Long-term deferred revenue |
|
33,905 |
|
|
|
32,947 |
|
Total liabilities |
$ |
1,276,482 |
|
|
$ |
1,170,125 |
|
|
|
|
|
|
|||
Class A Common Stock ($0.001 par value, 300,000,000 shares authorized and 26,254,167 shares issued and outstanding as of March 31, 2023 and December 31, 2022) |
|
26 |
|
|
|
26 |
|
Class B Common Stock ($0.001 par value, 150,000,000 shares authorized and 82,021,389 shares issued and outstanding as of March 31, 2023 and December 31, 2022) |
|
82 |
|
|
|
82 |
|
Additional paid-in capital |
|
464,807 |
|
|
|
464,721 |
|
Retained earnings |
|
18,190 |
|
|
|
12,009 |
|
Accumulated other comprehensive income |
|
208 |
|
|
|
515 |
|
Non-controlling interest |
|
1,240,838 |
|
|
|
1,219,344 |
|
Total equity |
|
1,724,151 |
|
|
|
1,696,697 |
|
Total liabilities and equity |
$ |
3,000,633 |
|
|
$ |
2,866,822 |
|
The accompanying notes are an integral part of these consolidated financial statements.
5
Excelerate Energy, Inc.
Consolidated Statements of Income (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
|
Three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
|
(In thousands, except share and per share amounts) |
|
|||||
Revenues |
|
|
|
|
|
||
FSRU and terminal services |
$ |
118,577 |
|
|
$ |
97,592 |
|
Gas sales |
|
92,479 |
|
|
|
494,081 |
|
Total revenues |
|
211,056 |
|
|
|
591,673 |
|
Operating expenses |
|
|
|
|
|
||
Cost of revenue and vessel operating expenses |
|
58,792 |
|
|
|
50,063 |
|
Direct cost of gas sales |
|
55,185 |
|
|
|
463,352 |
|
Depreciation and amortization |
|
25,193 |
|
|
|
23,743 |
|
Selling, general and administrative expenses |
|
22,317 |
|
|
|
12,634 |
|
Restructuring, transition and transaction expenses |
|
— |
|
|
|
2,753 |
|
Total operating expenses |
|
161,487 |
|
|
|
552,545 |
|
Operating income |
|
49,569 |
|
|
|
39,128 |
|
Other income (expense) |
|
|
|
|
|
||
Interest expense |
|
(11,955 |
) |
|
|
(7,054 |
) |
Interest expense – related party |
|
(3,592 |
) |
|
|
(12,173 |
) |
Earnings from equity method investment |
|
416 |
|
|
|
778 |
|
Other income (expense), net |
|
3,904 |
|
|
|
(4,116 |
) |
Income before income taxes |
|
38,342 |
|
|
|
16,563 |
|
Provision for income taxes |
|
(7,603 |
) |
|
|
(3,719 |
) |
Net income |
|
30,739 |
|
|
|
12,844 |
|
Less net income (loss) attributable to non-controlling interest |
|
23,895 |
|
|
|
(816 |
) |
Less net loss attributable to non-controlling interest – ENE Onshore |
|
— |
|
|
|
(237 |
) |
Less pre-IPO net income attributable to EELP |
|
— |
|
|
|
13,897 |
|
Net income attributable to shareholders |
$ |
6,844 |
|
|
$ |
— |
|
|
|
|
|
|
|
||
Net income per common share – basic |
$ |
0.26 |
|
|
$ |
— |
|
Net income per common share – diluted |
$ |
0.26 |
|
|
$ |
— |
|
Weighted average shares outstanding – basic |
|
26,254,167 |
|
|
|
— |
|
Weighted average shares outstanding – diluted |
|
26,269,862 |
|
|
|
— |
|
The accompanying notes are an integral part of these consolidated financial statements.
6
Excelerate Energy, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
|
Three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
|
(In thousands) |
|
|||||
Net income |
$ |
30,739 |
|
|
$ |
12,844 |
|
Other comprehensive income (loss) |
|
|
|
|
|
||
Cumulative translation adjustment |
|
(420 |
) |
|
|
— |
|
Change in unrealized gains (losses) on cash flow hedges |
|
(108 |
) |
|
|
3,044 |
|
Share of other comprehensive income (loss) of equity method investee |
|
(737 |
) |
|
|
2,414 |
|
Other comprehensive income attributable to non-controlling interest |
|
958 |
|
|
|
— |
|
Pre-IPO other comprehensive income attributable to EELP |
|
— |
|
|
|
(5,458 |
) |
Comprehensive income |
|
30,432 |
|
|
|
12,844 |
|
Less comprehensive income (loss) attributable to non-controlling interest |
|
23,895 |
|
|
|
(816 |
) |
Less comprehensive loss attributable to non-controlling interest – ENE Onshore |
|
— |
|
|
|
(237 |
) |
Less pre-IPO net income attributable to EELP |
|
— |
|
|
|
13,897 |
|
Comprehensive income attributable to shareholders |
$ |
6,537 |
|
|
$ |
— |
|
The accompanying notes are an integral part of these consolidated financial statements.
7
Excelerate Energy, Inc.
Consolidated Statements of Changes in Equity (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related |
|
Accumulated |
|
|
|
controlling |
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
party |
|
other |
|
Non- |
|
interest – |
|
|
|
||||||||||||
|
Class A Common Stock |
|
|
Class B Common Stock |
|
|
Equity |
|
Retained |
|
paid-in |
|
note |
|
comprehensive |
|
controlling |
|
ENE |
|
Total |
|
||||||||||||||||||
(In thousands, except shares) |
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
interest |
|
earnings |
|
capital |
|
receivable |
|
income (loss) |
|
interest |
|
Onshore |
|
equity |
|
||||||||||||
Balance at January 1, 2023 |
|
26,254,167 |
|
|
$ |
26 |
|
|
|
82,021,389 |
|
|
$ |
82 |
|
|
$ |
— |
|
$ |
12,009 |
|
$ |
464,721 |
|
$ |
— |
|
$ |
515 |
|
$ |
1,219,344 |
|
$ |
— |
|
$ |
1,696,697 |
|
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
6,844 |
|
|
— |
|
|
— |
|
|
— |
|
|
23,895 |
|
|
— |
|
|
30,739 |
|
Other comprehensive loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(307 |
) |
|
(958 |
) |
|
— |
|
|
(1,265 |
) |
Long-term incentive compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
86 |
|
|
— |
|
|
— |
|
|
271 |
|
|
— |
|
|
357 |
|
Class A dividends – $0.025 per share |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
(663 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(663 |
) |
EELP distributions to Class B interests |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,051 |
) |
|
— |
|
|
(2,051 |
) |
Minority owner contribution – Albania Power Project |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
337 |
|
|
— |
|
|
337 |
|
Balance at March 31, 2023 |
|
26,254,167 |
|
|
$ |
26 |
|
|
|
82,021,389 |
|
|
$ |
82 |
|
|
$ |
— |
|
$ |
18,190 |
|
$ |
464,807 |
|
$ |
— |
|
$ |
208 |
|
$ |
1,240,838 |
|
$ |
— |
|
$ |
1,724,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at January 1, 2022 |
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
1,135,769 |
|
$ |
— |
|
$ |
— |
|
$ |
(6,759 |
) |
$ |
(9,178 |
) |
$ |
14,376 |
|
$ |
(130,282 |
) |
$ |
1,003,926 |
|
Net income (loss) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,897 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(816 |
) |
|
(237 |
) |
|
12,844 |
|
Related party note receivable |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
6,600 |
|
|
— |
|
|
— |
|
|
— |
|
|
6,600 |
|
Other comprehensive income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,458 |
|
|
— |
|
|
— |
|
|
5,458 |
|
Balance at March 31, 2022 |
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
1,149,666 |
|
$ |
— |
|
$ |
— |
|
$ |
(159 |
) |
$ |
(3,720 |
) |
$ |
13,560 |
|
$ |
(130,519 |
) |
$ |
1,028,828 |
|
The accompanying notes are an integral part of these consolidated financial statements.
8
Excelerate Energy, Inc.
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
|
Three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Cash flows from operating activities |
(In thousands) |
|
|||||
Net income |
$ |
30,739 |
|
|
$ |
12,844 |
|
Adjustments to reconcile net income to net cash from operating activities |
|
|
|
|
|
||
Depreciation and amortization |
|
25,193 |
|
|
|
23,743 |
|
Amortization of operating lease right-of-use assets |
|
7,428 |
|
|
|
7,663 |
|
ARO accretion expense |
|
436 |
|
|
|
367 |
|
Amortization of debt issuance costs |
|
3,345 |
|
|
|
277 |
|
Deferred income taxes |
|
682 |
|
|
|
176 |
|
Share of net earnings in equity method investee |
|
(416 |
) |
|
|
(778 |
) |
Distributions from equity method investee |
|
— |
|
|
|
2,700 |
|
Long-term incentive compensation expense |
|
357 |
|
|
|
— |
|
(Gain)/loss on non-cash items |
|
1,326 |
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
||
Accounts receivable |
|
24,528 |
|
|
|
144,056 |
|
Inventories |
|
40,422 |
|
|
|
52,813 |
|
Other current assets and other assets |
|
(3,666 |
) |
|
|
(11,924 |
) |
Accounts payable and accrued liabilities |
|
(97,969 |
) |
|
|
(264,001 |
) |
Derivative liabilities |
|
— |
|
|
|
554 |
|
Current portion of deferred revenue |
|
17,357 |
|
|
|
(1,106 |
) |
Net investments in sales-type leases |
|
3,366 |
|
|
|
2,815 |
|
Operating lease assets and liabilities |
|
(7,289 |
) |
|
|
(5,041 |
) |
Other long-term liabilities |
|
958 |
|
|
|
3,489 |
|
Net cash provided by (used in) operating activities |
$ |
46,797 |
|
|
$ |
(31,353 |
) |
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
||
Purchases of property and equipment |
|
(14,929 |
) |
|
|
(11,029 |
) |
Net cash used in investing activities |
$ |
(14,929 |
) |
|
$ |
(11,029 |
) |
|
|
|
|
|
|
||
Cash flows from financing activities |
|
|
|
|
|
||
Proceeds from long-term debt – related party |
|
— |
|
|
|
566,300 |
|
Repayments of long-term debt – related party |
|
(1,990 |
) |
|
|
(506,844 |
) |
Repayments of long-term debt |
|
(4,829 |
) |
|
|
(4,025 |
) |
Payment of debt issuance costs |
|
(4,582 |
) |
|
|
— |
|
Collections of related party note receivables |
|
— |
|
|
|
6,600 |
|
Principal payments under finance lease liabilities |
|
(5,297 |
) |
|
|
(5,345 |
) |
Principal payments under finance lease liabilities – related party |
|
— |
|
|
|
(2,912 |
) |
Contributions |
|
337 |
|
|
|
— |
|
Net cash provided by (used in) financing activities |
$ |
(16,361 |
) |
|
$ |
53,774 |
|
|
|
|
|
|
|
||
Effect of exchange rate on cash, cash equivalents, and restricted cash |
|
(420 |
) |
|
$ |
|
|
|
|
|
|
|
|
||
Net increase in cash, cash equivalents and restricted cash |
|
15,087 |
|
|
|
11,392 |
|
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash |
|
|
|
|
|
||
Beginning of period |
$ |
537,971 |
|
|
$ |
90,964 |
|
End of period |
$ |
553,058 |
|
|
$ |
102,356 |
|
The accompanying notes are an integral part of these consolidated financial statements.
9
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
Excelerate Energy, Inc. (“Excelerate” and together with its subsidiaries, “we,” “us,” “our” or the “Company”) offers flexible liquefied natural gas (“LNG”) solutions, providing integrated services along the LNG value chain. We offer a full range of flexible regasification services, from floating storage and regasification units (“FSRUs”) to infrastructure development, to LNG and natural gas supply. Excelerate was incorporated on September 10, 2021 as a Delaware corporation. Excelerate was formed as a holding company to own, as its sole material asset, a controlling equity interest in Excelerate Energy Limited Partnership (“EELP”), a Delaware limited partnership formed in December 2003 by George B. Kaiser (together with his affiliates other than the Company, “Kaiser”). On April 18, 2022, Excelerate closed its initial public offering (the “IPO”) of 18,400,000 shares of the Company’s Class A Common Stock, $0.001 par value per share (the “Class A Common Stock”), at an offering price of $24.00 per share, pursuant to the Company’s registration statement on Form S-1 (File No. 333-262065), and its prospectus (the “Prospectus”), dated April 12, 2022 and filed on April 14, 2022 with the Securities and Exchange Commission pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended. The IPO generated gross proceeds of $441.6 million before deducting underwriting discounts and commissions of $25.4 million and IPO-related expenses of $7.6 million.
The proceeds of the IPO were used in part (a) to purchase an approximately 24.2% ownership interest in EELP at a per-interest price equal to the IPO price of $24.00 per share, and (b) to fund a $50.0 million cash payment as part of EELP’s purchase of all of the issued and outstanding membership interests in Excelsior, LLC and FSRU Vessel (Excellence), LLC (f/k/a Excellence, LLC), (collectively, the “Foundation Vessels”) ((a) and (b) collectively with the IPO, the “IPO Transaction”). See further discussion of the Foundation Vessels in Note 8 – Property and equipment. Following the IPO and as of March 31, 2023, Kaiser owned directly or indirectly the remaining approximately 75.8% of the ownership interests in EELP. The IPO Transaction, whereby Excelerate began to consolidate EELP in its consolidated financial statements, was accounted for as a reorganization of entities under common control. As a result, the consolidated financial statements of Excelerate recognized the assets and liabilities received from EELP in the reorganization at their historical carrying amounts and retroactively reflected them in the Company’s consolidated financial statements as of the earliest period presented.
In October 2022, Excelerate Energy Holdings, LLC (“EE Holdings”), the indirect sole member of Excelerate New England Onshore, LLC (“ENE Onshore”), and EELP, the sole member of ENE Lateral, entered into a merger agreement, pursuant to which ENE Onshore was merged with and into ENE Lateral (the “ENE Onshore Merger”). ENE Lateral was the surviving entity and ENE Onshore ceased to exist as a separate entity. EE Holdings retained responsibility for all liabilities and obligations of ENE Onshore arising prior to the ENE Onshore Merger. Prior to the ENE Onshore Merger, Excelerate consolidated ENE Onshore as a variable interest entity (“VIE”) as Excelerate was determined to be the primary beneficiary of ENE Onshore. As a result of the ENE Onshore Merger, Excelerate no longer has a non-controlling interest related to ENE Onshore. See Note 18 – Related party transactions for more details on this merger.
Basis of Presentation
These consolidated financial statements and related notes include the assets, liabilities and results of operations of Excelerate and its consolidated subsidiaries and have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. All transactions among Excelerate and its consolidated subsidiaries have been eliminated in consolidation. In management’s opinion, all adjustments necessary for a fair statement are reflected in the interim periods. The year-end consolidated balance sheet data was derived from audited financial statements, but the consolidated balance sheet data does not include all disclosures required by GAAP. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Excelerate and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year or any future period.
A summary of the Company's significant accounting policies can be found in Note 2 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements of the 2022 Annual Report. Other than the updates noted below, there were no significant updates or revisions to our accounting policies during the three months ended March 31, 2023.
Recent accounting pronouncements
Accounting standards recently issued but not yet adopted
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions
10
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848) – Scope” (“ASU 2021-01”), which permits entities to apply optional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform. ASU 2020-04 became effective upon issuance and may be applied prospectively to contract modifications made on or before December 31, 2022. ASU 2021-01 became effective upon issuance and may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively for contract modifications made on or before December 31, 2022. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”), which extended the effective date of the original guidance to December 31, 2024. The Company is currently evaluating the impact of the adoption of ASU 2020-04, ASU 2021-01 and ASU 2022-06 on its Consolidated Financial Statements and related disclosures.
Recurring Fair Value Measurements
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of significance for a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and the placement within the fair value hierarchy levels.
The following table presents the Company’s financial assets and liabilities by level within the fair value hierarchy that are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 (in thousands):
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Financial assets |
|
|
|
|
|
|
||
Derivative financial instruments |
Level 2 |
$ |
1,538 |
|
|
$ |
2,444 |
|
Financial liabilities |
|
|
|
|
|
|
||
Derivative financial instruments |
Level 2 |
$ |
(1,012 |
) |
|
$ |
(630 |
) |
As of March 31, 2023 and December 31, 2022, all derivatives were determined to be classified as Level 2 fair value instruments. No cash collateral has been posted or held as of March 31, 2023 or December 31, 2022. This table excludes cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. The carrying amounts of other financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other accrued liabilities approximate fair value due to their short maturities. The carrying value of long-term debt approximates fair value due to the variable rate nature of these financial instruments.
The determination of the fair values above incorporate factors including not only the credit standing of the counterparties involved, but also the impact of the Company’s nonperformance risks on its liabilities.
The values of the Level 2 interest rate swaps were determined using expected cash flow models based on observable market inputs, including published and quoted interest rate data from public data sources. Specifically, the fair values of the interest rate swaps were derived from the implied forward LIBOR yield curve for the sale period as the future interest rate swap settlements. The Company has not changed its valuation techniques or Level 2 inputs during the three months ended March 31, 2023 and 2022.
Non-Recurring Fair Value Measures
Certain non-financial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as equity investments or long-lived assets subject to impairment. For assets and liabilities measured on a non-recurring basis during the year, separate quantitative disclosures about the fair value measurements would be required for each major category. The Company did not record an impairment on the equity investments or long-lived assets during the three months ended March 31, 2023 and 2022.
11
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
As of March 31, 2023 and December 31, 2022, accounts receivable, net consisted of the following (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Trade receivables |
$ |
53,045 |
|
|
$ |
74,980 |
|
Accrued revenue |
|
4,812 |
|
|
|
5,307 |
|
Amounts receivable from related party |
|
463 |
|
|
|
2,595 |
|
Allowance for doubtful accounts |
|
(559 |
) |
|
|
(593 |
) |
Accounts receivable, net |
$ |
57,761 |
|
|
$ |
82,289 |
|
The following table summarizes the notional values related to the Company’s derivative instruments outstanding at March 31, 2023 (in thousands):
|
March 31, 2023 |
|
|
Interest rate swap(1) |
$ |
62,822 |
|
The following table presents the fair value of each classification of the Company’s derivative instruments designated as hedging instruments as of March 31, 2023 and December 31, 2022 (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Cash flow hedges |
|
|
|
|
|
||
Current assets |
$ |
1,091 |
|
|
$ |
1,211 |
|
Non-current assets |
|
446 |
|
|
|
1,233 |
|
Current liabilities |
|
(1,012 |
) |
|
|
(630 |
) |
Net derivative assets |
$ |
525 |
|
|
$ |
1,814 |
|
The current and non-current portions of derivative assets are included within other current assets and other assets, respectively, on the consolidated balance sheets. The current portion of derivative liabilities is included within accrued liabilities and other liabilities on the consolidated balance sheets.
Derivatives Accounted for as Cash Flow Hedges
The Company’s cash flow hedges include interest rate swaps that are hedges of variability in forecasted interest payments due to changes in the interest rate on LIBOR-based borrowings, a summary which includes the following designations:
The following table presents the gains and losses from the Company’s derivative instruments designated in a cash flow hedging relationship recognized in the consolidated statements of income and comprehensive income for the three months ended March 31, 2023 and 2022 (in thousands):
Derivatives Designated in |
|
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion) |
|
|
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion) |
|
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income |
|
||||||||||
|
|
|
For the three months ended March 31, |
|
|
|
|
For the three months ended March 31, |
|
||||||||||
|
|
|
2023 |
|
|
2022 |
|
|
|
|
2023 |
|
|
2022 |
|
||||
Interest rate swaps |
|
|
$ |
389 |
|
|
$ |
2,958 |
|
|
Interest expense |
|
$ |
(497 |
) |
|
$ |
(86 |
) |
The amount of gain (loss) recognized in other comprehensive income as of March 31, 2023 and expected to be reclassified within the next 12 months is $0.5 million.
12
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
As of March 31, 2023 and December 31, 2022, inventories consisted of the following (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
LNG |
$ |
130,769 |
|
|
$ |
171,578 |
|
Bunker fuel |
|
1,410 |
|
|
|
2,025 |
|
Inventories |
$ |
132,179 |
|
|
$ |
173,603 |
|
For the three months ended March 31, 2023 we recorded a lower of cost or net realizable value write-down of $1.0 million, which is included in Direct cost of gas sales on our consolidated statements of income. No impairments were recorded during the three months ended March 31, 2022.
As of March 31, 2023 and December 31, 2022, other current assets consisted of the following (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Prepaid expenses |
$ |
10,310 |
|
|
$ |
18,635 |
|
Prepaid expenses – related party |
|
2,055 |
|
|
|
2,205 |
|
Tax receivables |
|
9,718 |
|
|
|
10,594 |
|
Other receivables |
|
2,314 |
|
|
|
3,592 |
|
Other current assets |
$ |
24,397 |
|
|
$ |
35,026 |
|
As of March 31, 2023 and December 31, 2022, the Company’s property and equipment, net consisted of the following (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Vessels |
$ |
2,234,342 |
|
|
$ |
2,225,123 |
|
Buoy and pipeline |
|
15,253 |
|
|
|
17,130 |
|
Finance lease right-of-use assets |
|
303,510 |
|
|
|
40,007 |
|
Other equipment |
|
17,015 |
|
|
|
17,469 |
|
Assets in progress |
|
80,139 |
|
|
|
77,983 |
|
Less accumulated depreciation |
|
(944,014 |
) |
|
|
(922,029 |
) |
Property and equipment, net |
$ |
1,706,245 |
|
|
$ |
1,455,683 |
|
For the three months ended March 31, 2023 and 2022, depreciation expense was $24.4 million and $23.2 million, respectively.
Sequoia Acquisition
In March 2023, we exercised our option to purchase the FSRU Sequoia for a purchase price of $265 million (the “Sequoia Purchase”), which at March 31, 2023, was under a bareboat charter with a third party. We closed the Sequoia Purchase in April 2023 using proceeds from the Term Loan Facility and cash on hand. As our acquisition of Sequoia was reasonably certain upon closing of the EE Facilities, the lease on the vessel was reclassified from an operating lease to a financing lease and resulted in a $263.5 million increase in Finance lease right-of-use assets on our March 31, 2023 Balance Sheet in Property and equipment.
Vessel Acquisition
As part of the IPO Transaction, in exchange for (i) 7,854,167 shares of Class A Common Stock with a fair market value (based on the IPO price) of $188.5 million, (ii) a cash payment of $50.0 million and (iii) $21.5 million of estimated future payments under the TRA, EELP purchased from Maya Maritime LLC, a wholly owned subsidiary of the Foundation, all of the issued and outstanding membership interests in the Foundation Vessels. The acquisition of both the Excelsior and the Excellence vessels were accounted for as asset acquisitions in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. In accordance with ASC 805, the accumulated cost of the vessel acquisitions, including Class A Common Stock and contingent consideration related to the TRA, were allocated to the assets acquired based on relative fair value. In 2018, EELP entered into an agreement with a customer to lease the Excellence vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. Historically, EELP, as a lessor, had accounted for the Excellence vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with ASC 842, Leases. The Excellence vessel continues to be accounted for as a sales-type lease and thus did not result in an adjustment to property and equipment.
13
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
As of March 31, 2023 and December 31, 2022, accrued liabilities consisted of the following (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Accrued vessel and cargo expenses |
$ |
19,376 |
|
|
$ |
17,571 |
|
Payroll and related liabilities |
|
8,043 |
|
|
|
14,637 |
|
Accrued turnover taxes |
|
1,473 |
|
|
|
8,091 |
|
Current portion of TRA liability |
|
3,704 |
|
|
|
3,704 |
|
Other accrued liabilities |
|
22,062 |
|
|
|
22,885 |
|
Accrued liabilities |
$ |
54,658 |
|
|
$ |
66,888 |
|
The Company’s long-term debt consists of the following (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Experience Vessel Financing |
$ |
133,025 |
|
|
$ |
136,119 |
|
2017 Bank Loans |
|
81,905 |
|
|
|
83,640 |
|
EE Revolver |
|
— |
|
|
|
— |
|
Term Loan |
|
— |
|
|
|
— |
|
Total debt |
|
214,930 |
|
|
|
219,759 |
|
Less unamortized debt issuance costs |
|
(5,202 |
) |
|
|
(5,450 |
) |
Total debt, net |
|
209,728 |
|
|
|
214,309 |
|
Less current portion, net |
|
(21,057 |
) |
|
|
(20,913 |
) |
Total long-term debt, net |
$ |
188,671 |
|
|
$ |
193,396 |
|
The following table shows the range of interest rates and weighted average interest rates incurred on our variable-rate debt obligations during the three months ended March 31, 2023.
|
|
For the three months ended March 31, 2023 |
||
|
|
Range |
|
Weighted Average |
Experience Vessel Financing |
|
8.0% |
|
8.0% |
2017 Bank Loans |
|
7% – 9.3% |
|
8.6% |
Experience Vessel Financing
In December 2016, we entered into a sale leaseback agreement with a third party to provide $247.5 million of financing for the Experience vessel (the “Experience Vessel Financing”). Due to our requirement to repurchase the vessel at the end of the term, the transaction was accounted for as a failed sale leaseback (a financing transaction). Under the Experience Vessel Financing agreement, the Company makes quarterly principal payments of $3.1 million and interest payments at the 3-month LIBOR plus 3.25% through the loan’s maturity in December 2033.
2017 Bank Loans
Under the Company's financing agreement for the Moheshkhali LNG terminal in Bangladesh (the “2017 Bank Loans”), the Company entered into two loan agreements with external banks. Under the first agreement, the Company borrowed $32.8 million, makes semi-annual payments and accrues interest at the 6-month LIBOR plus 2.42% through the loan maturity date of October 15, 2029.
Under the second agreement, the Company borrowed $92.8 million, makes quarterly payments and accrues interest at the 3-month LIBOR plus 4.50% through the loan maturity date of October 15, 2029.
Revolving Credit Facility and Term Loan Facility
On April 18, 2022, EELP entered into a senior secured revolving credit agreement (“Credit Agreement”), by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the lenders and issuing banks thereunder made available a revolving credit facility (the “EE Revolver”), including a letter of credit sub-facility, to EELP. The EE Revolver enabled us to borrow up to $350 million over a three-year term originally set to expire in .
14
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
On March 17, 2023, EELP entered into an amended and restated senior secured credit agreement (“Amended Credit Agreement”), by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent. The Amended Credit Agreement provides for, among other things (i) a new $250 million term loan facility (the “Term Loan Facility” and, together with the EE Revolver, the “EE Facilities”), (ii) an extension of the maturity date of the EE Revolver, (iii) an increase in the maximum consolidated total leverage by 0.50x to 3.50x, provided that, if the aggregate value of all unsecured debt is equal to or greater than $250 million, maximum consolidated total leverage increases to 4.25x, and (iv) collateral vessel maintenance coverage to be not less than the greater of (a) $750 million and (b) 130% of the sum of the total credit exposure under the Amended Credit Agreement. Proceeds from the Term Loan Facility were used for the acquisition of the FSRU Sequoia in April 2023. The EE Facilities mature in March 2027. Proceeds from the EE Revolver are intended to be used for letters of credit, working capital and other general corporate purposes.
Borrowings under the EE Revolver bear interest at a per annum rate equal to the term Secured Overnight Financing Rate (“SOFR”) reference rate for such period plus an applicable margin, which applicable margin is based on EELP’s consolidated total leverage ratio as defined and calculated under the Amended Credit Agreement. The unused portion of the EE Facilities is subject to an unused commitment fee calculated at a rate per annum ranging from 0.375% to 0.50% based on EELP’s consolidated total leverage ratio.
The Amended Credit Agreement contains customary representations, warranties, covenants (affirmative and negative, including maximum consolidated total leverage ratio, minimum consolidated interest coverage ratio and collateral vessel maintenance coverage covenants), and events of default, the occurrence of which would permit the lenders to accelerate the maturity date of amounts borrowed under the EE Facilities.
As of March 31, 2023, the Company had issued $42.0 million in letters of credit under the EE Revolver and was in compliance with the covenants under its debt facilities. As a result of the EE Revolver’s financial ratio covenants and after taking into account the outstanding letters of credit issued under the facility, all of the $308 million of undrawn capacity was available for additional borrowings as of March 31, 2023.
Maturities
Future principal payments on long-term debt outstanding as of March 31, 2023 are as follows (in thousands):
Remainder of 2023 |
$ |
17,172 |
|
2024 |
|
22,693 |
|
2025 |
|
23,435 |
|
2026 |
|
24,239 |
|
2027 |
|
25,081 |
|
Thereafter |
|
102,310 |
|
Total debt, net |
$ |
214,930 |
|
The Company’s related party long-term debt consists of the following (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Exquisite Vessel Financing |
$ |
186,443 |
|
|
$ |
188,433 |
|
Less current portion |
|
(7,864 |
) |
|
|
(7,661 |
) |
Total long-term related party debt |
$ |
178,579 |
|
|
$ |
180,772 |
|
Exquisite Vessel Financing
In June 2018, the Company entered into a sale leaseback agreement with Nakilat Excelerate LLC, its equity method investment (“Nakilat JV”), to provide $220.0 million of financing for the Exquisite vessel at 7.73% (the “Exquisite Vessel Financing”). The agreement was recognized as a failed sale leaseback transaction and was treated as financing due to the Company’s lease of the vessel.
Amended and Restated Limited Partnership Agreement
Prior to the IPO, EE Holdings was the limited partner of EELP, with a 99% ownership interest in EELP as of March 31, 2022. In connection with the IPO, EE Holdings amended and restated the limited partnership agreement of EELP (the “EELP Limited Partnership Agreement”) whereby all of the outstanding interests of EELP were recapitalized into Class B interests and EELP was authorized to issue Class A interests. Subject to certain limitations, the EELP Limited Partnership Agreement permits Class B interests to be exchanged
15
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
for shares of Class A Common Stock on a one-for-one basis or, at Excelerate’s election, for cash. Also in connection with the IPO, Excelerate became the general partner of EELP. In May 2023, the EELP Limited Partnership Agreement was amended to clarify certain non-material administrative items.
Excelerate Energy, LLC (“EELLC”) was the general partner of EELP prior to the IPO, with a 1% ownership interest in EELP as of March 31, 2022. In connection with the IPO, EELLC distributed to EE Holdings all of its interest in EELP. EE Holdings then contributed to EELP all of its interests in EELLC. As anticipated, EELLC was dissolved in October 2022.
Initial Public Offering
In connection with the IPO, in exchange for $441.6 million in gross proceeds before deducting underwriting discounts and commissions of $25.4 million and IPO-related expenses of $7.6 million, EELP issued 26,254,167 Class A interests to Excelerate, representing approximately 24.2% of the EELP interests, and 82,021,389 Class B interests to EE Holdings, representing approximately 75.8% of the EELP interests. In connection with the closing of the IPO, the Company amended and restated its certificate of incorporation in its entirety to, among other things: (i) authorize 300 million shares of Class A Common Stock; (ii) 150 million shares of Class B Common Stock, $0.001 par value per share (the “Class B Common Stock”); and (iii) 25 million shares of “blank check” preferred stock, $0.001 par value per share.
As of March 31, 2023, there were 26,254,167 shares of Class A Common Stock and 82,021,389 shares of Class B Common Stock outstanding.
Class A Common Stock
The Class A Common Stock outstanding represents 100% of the rights of the holders of all classes of our outstanding common stock to share in distributions from Excelerate, except for the right of Class B stockholders to receive the par value of the Class B Common Stock upon our liquidation, dissolution or winding up or an exchange of Class B interests of EELP.
Class B Common Stock
Following the completion of the IPO, EE Holdings, a company controlled directly and indirectly by Kaiser, holds all of the shares of our outstanding Class B Common Stock. The Class B Common Stock entitles the holder to one vote for each share of Class B Common Stock. Holders of shares of our Class B Common Stock vote together with holders of our Class A Common Stock as a single class on all matters on which stockholders are entitled to vote generally, except as otherwise provided in our amended and restated certificate of incorporation or required by law.
As the only Class B stockholder following the completion of the IPO, EE Holdings has 75.8% of the combined voting power of our common stock. The EELP Limited Partnership Agreement entitles partners (and certain permitted transferees thereof) to exchange their Class B interests for shares of Class A Common Stock on a one-for-one basis or, at our election, for cash. When a Class B interest is exchanged for a share of Class A Common Stock, the corresponding share of Class B Common Stock will automatically be canceled. The EELP Limited Partnership Agreement permits the Class B limited partners to exercise their exchange rights subject to certain timing and other conditions. When a Class B interest is surrendered for exchange, it will not be available for reissuance.
EELP Distribution Rights
The Company, as the general partner of EELP, has the right to determine when distributions will be made to holders of interests and the amount of any such distributions. If a distribution is authorized, such distribution will be made to the holders of Class A interests and Class B interests on a pro rata basis in accordance with the number of interests held by such holder.
Dividends and Distributions
During the three months ended March 31, 2023, EELP declared distributions to all interest holders, including Excelerate. Excelerate will use proceeds from the distribution to pay dividends to holders of Class A Common Stock. The following table details the distributions and dividends for the three months ended March 31, 2023 and December 31, 2022.
|
|
|
|
Class B Interests |
|
|
Class A Common Stock |
|
||||||
Dividend and distribution for the quarter ended |
|
Date Paid or To Be Paid |
|
Distributions Paid or To Be Paid |
|
|
Total Dividends Declared |
|
|
Dividend Declared per Share |
|
|||
|
|
|
|
(in thousands) |
|
|
||||||||
March 31, 2023 |
|
June 8, 2023 |
|
$ |
2,051 |
|
|
$ |
667 |
|
|
$ |
0.025 |
|
December 31, 2022 |
|
April 27, 2023 |
|
$ |
2,051 |
|
|
$ |
663 |
|
|
$ |
0.025 |
|
EELP has made or plans to make a corresponding distribution of $0.025 per interest to holders of Class B interests on the same dates as the dividend payments set forth in the table above.
16
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
Albania Power Project
In April 2022, Excelerate established an entity to provide a temporary power solution in Albania. Excelerate is a 90% owner of the project and has received $2.3 million in cash contributions from the minority owner as of March 31, 2023. The Albania Power Project is fully consolidated in our financial statements.
The following table presents the computation of earnings per share for the three months ended March 31, 2023 (in thousands except share and per share amounts):
|
For the three months ended March 31, 2023 |
|
|
Net income |
$ |
30,739 |
|
Less net income attributable to non-controlling interest |
|
23,895 |
|
Net income attributable to shareholders – basic and diluted |
$ |
6,844 |
|
|
|
|
|
Weighted average shares outstanding – basic |
|
26,254,167 |
|
Issued upon assumed exercise of outstanding stock options |
|
— |
|
Dilutive effect of unvested restricted common stock |
|
15,695 |
|
Dilutive effect of unvested performance stock units |
|
— |
|
Class B Common Stock converted to Class A Common Stock |
|
— |
|
Weighted average shares outstanding – diluted |
|
26,269,862 |
|
|
|
|
|
Earnings per share |
|
|
|
Basic |
$ |
0.26 |
|
Diluted |
$ |
0.26 |
|
The following table presents the common stock shares equivalents excluded from the calculation of diluted earnings per share for the three months ended March 31, 2023, as they would have had an antidilutive effect:
|
For the three months ended March 31, 2023 |
|
|
Restricted common stock |
|
783 |
|
Performance stock units |
|
309 |
|
Class B Common Stock |
|
82,021,389 |
|
Lessee arrangements
Finance leases
Certain enforceable vessel charters and pipeline capacity agreements are classified as finance leases, and the right-of-use assets are included in property and equipment. Lease obligations are recognized based on the rate implicit in the lease or the Company’s incremental borrowing rate at lease commencement.
As of March 31, 2023, the Company was a lessee in finance lease arrangements on one bareboat charter contract, one pipeline capacity agreement and one tugboat. The pipeline capacity agreement and tugboat lease were determined to be finance leases as their terms represent the majority of the economic life of their respective assets. Pursuant to a bareboat charter, the vessel owner provides the use of the vessel to the Company in exchange for a fixed charter hire rate. However, the Company is responsible for the operation and maintenance of the vessel with its own crew, fuel costs, and other related expenses. As such, the bareboat charter includes a lease component only for the lessee to control the use of the vessel and does not contain non-lease components.
In March 2023, Excelerate exercised its option to purchase the FSRU Sequoia, which triggered a reassessment of the associated lease. As our acquisition of Sequoia was reasonably certain as of March 31, 2023, the lease on the vessel was reclassified from an operating lease to a financing lease. In connection with the IPO, EELP purchased two vessels previously leased and accounted for as related party finance leases. In 2018, EELP entered into an agreement with a customer to lease the Excellence vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. EELP, as a lessor, accounts for the Excellence vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with ASC 842. For more information regarding the purchase of the vessels, see Note 8 – Property and equipment.
17
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
Finance lease liabilities as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
External leases: |
|
|
|
|
|
||
Finance lease liabilities |
$ |
492,139 |
|
|
$ |
231,158 |
|
Less current portion of finance lease liabilities |
|
(46,183 |
) |
|
|
(20,804 |
) |
Finance lease liabilities, long-term |
$ |
445,956 |
|
|
$ |
210,354 |
|
Operating leases
As of March 31, 2023, the Company was a lessee in a terminal use lease, which is accounted for as an operating lease.
Additionally, the Company has operating leases for offices in various locations in which operations are performed. Such leases will often include options to extend the lease and the Company will include option periods that, on commencement date, it is reasonably certain the Company will exercise. Variable lease costs relate to certain lease agreements, which include payments that vary for items such as inflation adjustments, or common area charges. Variable lease costs that are not dependent on an index are excluded from the lease payments that comprise the operating lease liability and are expensed in the period in which they are incurred. None of the Company's operating leases contain any residual value guarantees.
A maturity analysis of the Company’s operating and finance lease liabilities (excluding short-term leases) at March 31, 2023 is as follows (in thousands):
Year |
Operating |
|
|
Finance |
|
||
Remainder of 2023 |
$ |
7,890 |
|
|
$ |
291,333 |
|
2024 |
|
1,826 |
|
|
|
33,248 |
|
2025 |
|
1,520 |
|
|
|
33,235 |
|
2026 |
|
938 |
|
|
|
33,235 |
|
2027 |
|
912 |
|
|
|
33,235 |
|
Thereafter |
|
1,335 |
|
|
|
141,120 |
|
Total lease payments |
$ |
14,421 |
|
|
$ |
565,406 |
|
Less: imputed interest |
|
(860 |
) |
|
|
(73,267 |
) |
Carrying value of lease liabilities |
|
13,561 |
|
|
|
492,139 |
|
Less: current portion |
|
(7,838 |
) |
|
|
(46,183 |
) |
Carrying value of long-term lease liabilities |
$ |
5,723 |
|
|
$ |
445,956 |
|
As of March 31, 2023, the Company’s weighted average remaining lease term for operating and finance leases was 3.0 years and 4.5 years, respectively, with a weighted average discount rate of 5.4% and 5.7%, respectively. As of December 31, 2022, the Company’s weighted average remaining lease term for operating and finance leases was 2.6 years and 10.1 years, respectively, with a weighted average discount rate of 5.9% and 6.3%, respectively.
The Company's total lease costs for the three months ended March 31, 2023 and 2022 recognized in the consolidated statements of income consisted of the following (in thousands):
|
For the three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Amortization of finance lease right-of-use assets – related party |
$ |
— |
|
|
$ |
1,226 |
|
Amortization of finance lease right-of-use assets – external |
|
1,017 |
|
|
|
652 |
|
Interest on finance lease liabilities – related party |
|
— |
|
|
|
7,006 |
|
Interest on finance lease liabilities – external |
|
4,085 |
|
|
|
3,919 |
|
Operating lease expense |
|
8,454 |
|
|
|
9,475 |
|
Short-term lease expense |
|
174 |
|
|
|
387 |
|
Total lease costs |
$ |
13,730 |
|
|
$ |
22,665 |
|
18
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
Other information related to leases for the three months ended March 31, 2023 and 2022 are as follows (in thousands):
|
For the three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Operating cash flows for finance leases |
$ |
4,085 |
|
|
$ |
3,919 |
|
Operating cash flows for finance leases – related party |
|
— |
|
|
|
7,006 |
|
Financing cash flow for finance leases |
|
5,297 |
|
|
|
5,345 |
|
Financing cash flow for finance leases – related party |
|
— |
|
|
|
2,912 |
|
Operating cash flows for operating leases |
|
8,314 |
|
|
|
8,837 |
|
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
— |
|
|
|
219 |
|
The following table presents the Company’s revenue for the three months ended March 31, 2023 and 2022 (in thousands):
|
For the three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Revenue from leases |
$ |
81,548 |
|
|
$ |
74,062 |
|
Revenue from contracts with customers |
|
|
|
|
|
||
Time charter, regasification and other services |
|
37,029 |
|
|
|
23,530 |
|
Gas sales |
|
92,479 |
|
|
|
494,081 |
|
Total revenue |
$ |
211,056 |
|
|
$ |
591,673 |
|
Lease revenue
The Company’s time charter contracts are accounted for as operating or sales-type leases. The Company's revenue from leases is presented within revenues in the consolidated statements of income and for the three months ended March 31, 2023 and 2022 consists of the following (in thousands):
|
For the three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Operating lease income |
$ |
63,310 |
|
|
$ |
55,274 |
|
Sales-type lease income |
|
18,238 |
|
|
|
18,788 |
|
Total revenue from leases |
$ |
81,548 |
|
|
$ |
74,062 |
|
Sales-type leases
Sales-type lease income is interest income that is presented within lease revenues on the consolidated statements of income. The Company leased two vessels and terminal under sales-type leases as it is reasonably certain that the ownership of these assets will transfer to the customer at the end of the term. For the three months ended March 31, 2023, the Company recorded lease income from the net investment in the leases within revenue from lease contracts of $18.2 million, compared to $18.8 million for the three months ended March 31, 2022.
Operating leases
Revenue from time charter contracts accounted for as operating leases is recognized by the Company on a straight-line basis over the term of the contract. As of March 31, 2023, the Company is the lessor to time charter agreements with customers on seven of its vessels. The following represents the amount of property and equipment that is leased to customers as of March 31, 2023 and December 31, 2022 (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Property and equipment |
$ |
2,178,642 |
|
|
$ |
2,034,183 |
|
Accumulated depreciation |
|
(878,697 |
) |
|
|
(823,942 |
) |
Property and equipment, net |
$ |
1,299,945 |
|
|
$ |
1,210,241 |
|
19
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
The future minimum revenues presented in the table below should not be construed to reflect total charter hire revenues for any of the years presented. Minimum future revenues included below are based on the fixed components and do not include variable or contingent revenue. Additionally, revenue generated from short-term charters are not included as the duration of the contracts are less than a year. As of March 31, 2023, the minimum contractual future revenues to be received under the time charters during the next five years and thereafter are as follows (in thousands):
Year |
Sales-type |
|
|
Operating |
|
||
Remainder of 2023 |
$ |
58,528 |
|
|
$ |
221,518 |
|
2024 |
|
84,295 |
|
|
|
274,175 |
|
2025 |
|
87,612 |
|
|
|
215,610 |
|
2026 |
|
87,612 |
|
|
|
212,374 |
|
2027 |
|
87,612 |
|
|
|
221,485 |
|
Thereafter |
|
492,036 |
|
|
|
693,487 |
|
Total undiscounted |
$ |
897,695 |
|
|
$ |
1,838,649 |
|
Less: imputed interest |
|
(488,153 |
) |
|
|
|
|
Net investment in sales-type leases |
|
409,542 |
|
|
|
|
|
Less: current portion |
|
(13,544 |
) |
|
|
|
|
Non-current net investment in sales-type leases |
$ |
395,998 |
|
|
|
|
|
Revenue from contracts with customers
The following tables show disaggregated revenues from customers attributable to the country in which the revenues were derived (in thousands). Revenues from external customers are attributed to the country in which the party to the applicable agreement has its principal place of business.
|
For the three months ended March 31, 2023 |
|
|||||||||||||
|
|
|
|
Revenue from contracts with customers |
|
|
|
|
|||||||
|
Revenue from |
|
|
TCP, Regas |
|
|
Gas |
|
|
Total |
|
||||
|
leases |
|
|
and other |
|
|
sales |
|
|
revenue |
|
||||
Brazil |
$ |
12,907 |
|
|
$ |
1,955 |
|
|
$ |
70,253 |
|
|
$ |
85,115 |
|
Bangladesh |
|
17,990 |
|
|
|
10,667 |
|
|
|
— |
|
|
|
28,657 |
|
UAE |
|
16,841 |
|
|
|
5,570 |
|
|
|
— |
|
|
|
22,411 |
|
United States |
|
— |
|
|
|
4,868 |
|
|
|
— |
|
|
|
4,868 |
|
Argentina |
|
9,375 |
|
|
|
5,818 |
|
|
|
— |
|
|
|
15,193 |
|
Pakistan |
|
10,882 |
|
|
|
2,814 |
|
|
|
— |
|
|
|
13,696 |
|
Germany |
|
4,103 |
|
|
|
2,650 |
|
|
|
— |
|
|
|
6,753 |
|
Finland |
|
9,450 |
|
|
|
2,631 |
|
|
|
22,226 |
|
|
|
34,307 |
|
Other |
|
— |
|
|
|
56 |
|
|
|
— |
|
|
|
56 |
|
Total revenue |
$ |
81,548 |
|
|
$ |
37,029 |
|
|
$ |
92,479 |
|
|
$ |
211,056 |
|
|
For the three months ended March 31, 2022 |
|
|||||||||||||
|
|
|
|
Revenue from contracts with customers |
|
|
|
|
|||||||
|
Revenue from |
|
|
TCP, Regas |
|
|
Gas |
|
|
Total |
|
||||
|
leases |
|
|
and other |
|
|
sales |
|
|
revenue |
|
||||
Brazil |
$ |
12,907 |
|
|
$ |
1,661 |
|
|
$ |
419,982 |
|
|
$ |
434,550 |
|
Bangladesh |
|
18,788 |
|
|
|
9,275 |
|
|
|
— |
|
|
|
28,063 |
|
UAE |
|
12,738 |
|
|
|
2,882 |
|
|
|
— |
|
|
|
15,620 |
|
United States |
|
— |
|
|
|
1,099 |
|
|
|
74,099 |
|
|
|
75,198 |
|
Argentina |
|
9,375 |
|
|
|
4,152 |
|
|
|
— |
|
|
|
13,527 |
|
Pakistan |
|
10,882 |
|
|
|
2,484 |
|
|
|
— |
|
|
|
13,366 |
|
Israel |
|
9,372 |
|
|
|
1,654 |
|
|
|
— |
|
|
|
11,026 |
|
Other |
|
— |
|
|
|
323 |
|
|
|
— |
|
|
|
323 |
|
Total revenue |
$ |
74,062 |
|
|
$ |
23,530 |
|
|
$ |
494,081 |
|
|
$ |
591,673 |
|
Assets and liabilities related to contracts with customers
Under most gas sales contracts, invoicing occurs once the Company’s performance obligations have been satisfied, at which point payment is unconditional. Invoicing timing for time charter party (“TCP”), regas and other services varies and occurs according to the contract. As of March 31, 2023, and December 31, 2022, receivables from contracts with customers associated with revenue from services was $24.0 million and $14.9 million, respectively. These amounts are presented within accounts receivable, net on the
20
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
consolidated balance sheets. In addition, revenue for services recognized in excess of the invoiced amounts, or accrued revenue, outstanding at March 31, 2023 and December 31, 2022, was $4.8 million and $5.3 million, respectively. Accrued revenue represents current contract assets that will turn into accounts receivable within the next 12 months and be collected during the Company’s normal business operating cycle. Accrued revenue is presented in accounts receivable, net on the consolidated balance sheets. Other items included in accounts receivable, net represent receivables associated with leases, which are accounted for in accordance with the leasing standard. There were no write downs of trade receivables for lease or time charter services or contract assets for the three months ended March 31, 2023 and 2022.
Contract liabilities from advance payments in excess of revenue recognized from services as of March 31, 2023 and December 31, 2022 were $1.1 million and $134.3 million, respectively. If the performance obligations are expected to be satisfied during the next 12 months, and the contract liabilities are classified within current portion of deferred revenue on the consolidated balance sheets. Amounts to be recognized in revenue after 12 months are recorded in long-term deferred revenue. The remaining portion of current deferred revenue relates to the lease component of the Company’s time charter contracts, which are accounted for in accordance with the leasing standard. Noncurrent deferred revenue presented in other long-term liabilities on the consolidated balance sheets represents payments allocated to the Company’s performance obligation for drydocking services within time charter contracts in which the lease component is accounted for as a sales-type lease. Revenue will be recognized once the performance obligation is complete and occurs every five years.
The following table reflects the changes in our contract liabilities related to long-term contracts with customers as of March 31, 2023 and December 31, 2022 (in thousands):
|
March 31, 2023 |
|
|
Deferred revenues, beginning of period |
$ |
177,754 |
|
Cash received but not yet recognized |
|
191,765 |
|
Revenue recognized from prior period deferral |
|
(173,450 |
) |
Deferred revenues, end of period |
$ |
196,069 |
|
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 long-term arrangements with customers in which the Company provides regasification and other services as part of time charter party contracts. The price under these agreements is typically stated in the contracts. The fixed transaction price allocated to the remaining performance obligations under these arrangements is $895.3 million as of March 31, 2023. The Company expects to recognize revenue from contracts exceeding one year over the following time periods (in thousands):
Remainder of 2023 |
$ |
90,139 |
|
2024 |
|
108,384 |
|
2025 |
|
88,091 |
|
2026 |
|
87,089 |
|
2027 |
|
89,397 |
|
Thereafter |
|
432,153 |
|
|
$ |
895,253 |
|
In April 2022, Excelerate adopted the Excelerate Long-Term Incentive Plan (the “LTI Plan”). The LTI Plan was adopted to promote and closely align the interests of Excelerate's employees, officers, non-employee directors and other service providers and its stockholders by providing stock-based compensation and other performance-based compensation. The LTI Plan allows for the grant of up to 10.8 million shares, stock options, stock appreciation rights, alone or in conjunction with other awards; restricted stock and restricted stock units, including performance vested units; incentive bonuses, which may be paid in cash, stock or a combination thereof; and other stock-based awards. The share pool will be increased on January 1st of each calendar year beginning in 2023 by a number of shares equal to 4% of the outstanding shares of Class A Common Stock on the preceding December 31st. The LTI Plan is administered by the Compensation Committee of the Company’s board of directors.
The Company’s stock option and restricted stock unit awards both qualify as equity awards and are amortized into “Selling, general and administrative expense” and “Cost of revenue and vessel operating expenses” on the Consolidated Statements of Income on a straight-line basis. Stock options were granted to certain employees of Excelerate and vest over five years and expire ten years from the date of grant. The Company also issued restricted stock units to directors and certain employees that vest ratably over either or
21
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
three years. In 2023, the Company issued performance units to certain employees that cliff vest in three years. The performance units contain both a market condition related to Excelerate’s relative Total Shareholder Return as compared to its peer group and a performance condition related to the Company’s EBITDA.
For the three months ended March 31, 2023, the Company recognized $0.4 million in long-term incentive compensation expense for both its stock options and restricted stock unit awards. Excelerate did not have long-term incentive compensation expense for the three months ended March 31, 2022.
Stock options
The following table summarizes stock option activity for the three months ended March 31, 2023 and provides information for outstanding and exercisable options as of March 31, 2023:
|
|
Number of Options |
|
|
Weighted Average Exercise Price |
|
||
|
|
|
|
|
(per share) |
|
||
Outstanding at January 1, 2023 |
|
323,023 |
|
|
$ |
24.00 |
|
|
Granted |
|
— |
|
|
|
— |
|
|
Exercised |
|
— |
|
|
|
— |
|
|
Forfeited or expired |
|
— |
|
|
|
— |
|
|
Outstanding at March 31, 2023 |
|
323,023 |
|
|
$ |
24.00 |
|
|
Exercisable at March 31, 2023 |
|
— |
|
|
$ |
— |
|
|
As of March 31, 2023, the Company had $3.5 million in unrecognized compensation costs related to its stock options that it expects to recognize over a weighted average period of 4.0 years.
Restricted stock unit awards
The following table summarizes restricted stock unit activity for the three months ended March 31, 2023 and provides information for unvested shares as of March 31, 2023:
|
|
Number of Shares |
|
|
Weighted Average Fair Value |
|
||
|
|
|
|
|
(per share) |
|
||
Unvested at January 1, 2023 |
|
37,754 |
|
|
$ |
23.61 |
|
|
Granted |
|
262,340 |
|
|
|
21.62 |
|
|
Vested |
|
— |
|
|
|
— |
|
|
Forfeited |
|
— |
|
|
|
— |
|
|
Unvested at March 31, 2023 |
|
300,094 |
|
|
$ |
21.87 |
|
|
As of March 31, 2023 the Company had $6.1 million in unrecognized compensation costs related to its restricted stock unit awards that it expects to recognize over a weighted average period of 2.7 years.
Performance units
The performance units entitle the holder to between zero and two shares of the Company’s Class A Common Stock based on results as compared to performance and market conditions. The performance condition relates to the Company’s EBITDA and the market condition relates to Excelerate’s relative Total Shareholder Return as compared to its peer group. Changes in the Company’s expected EBITDA performance as compared to award metrics will be recorded to the consolidated statement of income over the vesting period.
The fair value of the Company’s performance units is calculated based on a Monte Carlo simulation of the grant’s market condition, which requires management to make assumptions regarding the risk-free interest rates, expected dividend yields and the expected volatility of the Company’s stock calculated based on a period of time generally commensurate with the expected term of the award. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the median of the historical volatility of the companies that comprise the Vanguard Energy ETF market index as of January 1, 2023 over the expected life of the granted units. The Company uses estimates of forfeitures to estimate the expected term of the units grants. The reversal of any expense due to forfeitures is accounted for as they occur.
|
|
2023 |
|
|
Risk-free interest rate |
|
3.9 |
% |
|
Expected volatility |
|
58.0 |
% |
|
Expected term |
2.76 years |
|
||
22
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
The following table summarizes performance unit activity for the three months ended March 31, 2023 and provides information for unvested performance units (reflected at target performance) as of March 31, 2023:
|
|
Number of Units |
|
|
Weighted Average Fair Value |
|
||
|
|
|
|
|
(per unit) |
|
||
Unvested at January 1, 2023 |
|
— |
|
|
$ |
— |
|
|
Granted |
|
84,719 |
|
|
|
27.85 |
|
|
Vested |
|
— |
|
|
|
— |
|
|
Forfeited |
|
— |
|
|
|
— |
|
|
Unvested at March 31, 2023 |
|
84,719 |
|
|
$ |
27.85 |
|
|
As of March 31, 2023, the Company had $2.4 million in unrecognized compensation costs related to its performance units that it expects to recognize over a weighted average period of 2.9 years.
In computing the provision for income taxes for interim periods, the Company estimates the annual effective tax rate for the full year, which is then applied to the actual year-to-date ordinary income (loss) and reflects the tax effects of discrete items in its provision for income taxes as they occur.
The provision for income taxes for the three months ended March 31, 2023 and 2022 was $7.6 million and $3.7 million, respectively. The increase was primarily attributable to the year-over-year change in the amount and geographical distribution of income and the U.S. income tax incurred at the level of Excelerate beginning in April 2022 of $0.6 million for the three months ended March 31, 2023.
The effective tax rate for the three months ended March 31, 2023 and 2022 was 19.8% and 22.5%, respectively. The decrease was primarily driven by the geographical distribution of income and the varying tax regimes of jurisdictions. Our effective tax rate was also impacted by 1.6% for the three months ended March 31, 2023, due to additional tax recorded since becoming subject to U.S. income taxes at the corporate level beginning in April 2022.
Excelerate is a corporation for U.S. federal and state income tax purposes. Excelerate’s accounting predecessor, EELP, is treated as a pass-through entity for U.S. federal income tax purposes and, as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include any provision for U.S. federal income tax for EELP.
The Company has international operations that are also subject to foreign income tax and U.S. corporate subsidiaries subject to U.S. federal tax. Therefore, our effective income tax rate is dependent on many factors, including the Company’s geographical distribution of income, a rate benefit attributable to the portion of the Company’s earnings not subject to corporate level taxes, and the impact of nondeductible items and foreign exchange impacts as well as varying tax regimes of jurisdictions. In one jurisdiction, the Company’s tax rate is significantly less than the applicable statutory rate as a result of a tax holiday that was granted. This tax holiday will expire in 2033 at the same time that our contract and revenue with our customer ends.
The Company had one debt instrument with related parties as of March 31, 2023. For details on this debt instrument, see Note 11 – Long-term debt – related party. Prior to the ENE Onshore Merger, ENE Onshore and KFMC (as defined herein) were party to the KFMC-ENE Onshore Note (as defined herein) that was settled in full in connection with the merger. Prior to the IPO, EELP, certain of its subsidiaries and other affiliates of Kaiser were guarantors to the Kaiser Credit Line (as defined herein). For details on this facility, see Note 20 – Commitments and contingencies.
Kaiser has, over time, donated significant amounts of money to the Foundation. The Foundation has an independent board and Kaiser does not exert control over or have ownership in the Foundation. However, several of Kaiser’s close family members are on the board of directors of the Foundation and for the purposes of these accounts, where transactions with the Foundation occur, they are reported as related party transactions. As of March 31, 2023 and December 31, 2022, the Company had no outstanding balance with the Foundation. Interest expense in related party finance leases for the three months ended March 31, 2022 amounted to $7.0 million. As part of the vessel management agreements, EELP provided bookkeeping and other back office administrative services for the Foundation Vessels. EELP purchased the Foundation Vessels from an affiliate of the Foundation in connection with the IPO. For further details on this purchase, see Note 8 – Property and equipment.
23
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
The following transactions with related parties are included in the accompanying consolidated statements of income (in thousands):
|
Three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Management fees and other expenses with Kaiser |
$ |
1,026 |
|
|
$ |
748 |
|
The following balances with related parties are included in the accompanying consolidated balance sheets (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Amounts due from related parties |
$ |
463 |
|
|
$ |
2,595 |
|
Amounts due to related parties |
$ |
644 |
|
|
$ |
2,054 |
|
Prepaid expenses – related party |
$ |
2,055 |
|
|
$ |
2,205 |
|
EELP and certain of its subsidiaries and affiliates entered into certain transactions with Kaiser and affiliates of Kaiser as described below.
Prior to the IPO, as credit support for LNG cargo purchases, Kaiser obtained letters of credit under the Kaiser Credit Line on behalf of Excelerate Gas Marketing Limited Partnership, a subsidiary of EELP, in favor of LNG suppliers. For the three months ended March 31, 2022, letters of credit of approximately $15.3 million were issued. In connection with the IPO, the credit support previously provided for LNG cargo purchases under the Kaiser Credit Line has been replaced by letters of credit obtained under the EE Revolver.
In September 2021, as part of an anticipated reorganization in connection with the IPO, certain entities under common control of Kaiser were contributed to EELP (the “Northeast Gateway Contribution”). These entities include Excelerate New England GP, LLC, Northeast Gateway Energy Bridge, LP and Excelerate New England Lateral, LLC (“ENE Lateral” and, together with Excelerate New England GP, LLC and Northeast Gateway Energy Bridge, LP, the “Northeast Companies”). Since the Northeast Gateway Contribution is considered a transaction with entities under common control, EELP accounted for the Northeast Companies’ assets and liabilities received at their parent carrying values and retroactively reflected them in the Company’s consolidated financial statements as of the earliest period presented.
Prior to the Northeast Gateway Contribution, Kaiser issued a guarantee dated September 11, 2013 (and reaffirmed on December 1, 2015) in favor of Algonquin Gas Transmission, LLC (“AGT”) and Maritimes & Northeast Pipeline, L.L.C. (each a wholly owned subsidiary of Enbridge, Inc.), in respect of all payment obligations owed by ENE Onshore and Excelerate New England Lateral, LLC (“ENE Lateral”) (the “AGT Guarantee”). In addition, Kaiser obtained a letter of credit on behalf of ENE Onshore and ENE Lateral (the “AGT LOC”). As of March 31, 2023, there were no amounts remaining available for drawing under the AGT LOC. In connection with the Northeast Gateway Contribution, EELP agreed to (i) indemnify Kaiser in respect of Kaiser’s obligations related to ENE Lateral under the AGT Guarantee and AGT LOC, (ii) pay an annual fee in the amount of $1.2 million (pro-rated based on the number of days such guarantee remains outstanding in any year (beginning September 17, 2021)) to Kaiser to maintain such AGT Guarantee and (iii) reimburse Kaiser for any fees actually incurred under the AGT LOC (the “Kaiser AGT Indemnity Agreement”). Effective October 20, 2022 and in connection with the merger, the Kaiser AGT Indemnity Agreement and the AGT Guarantee were terminated and EELP issued a new guarantee in respect of all payment obligations owed by ENE Lateral to AGT. A final pro-rated payment of $1.0 million was made by EELP to Kaiser in February 2023 in respect of Kaiser maintaining the AGT Guarantee through the Merger.
Also in connection with the Northeast Gateway Contribution during September 2021, EE Holdings made a $57.2 million contribution to the Company to allow it to repay the remaining amount owed on a promissory note between ENE Lateral and KFMC. During September 2021, EE Holdings also made a $16.5 million contribution in the form of a Note Receivable from Kaiser (the “Kaiser Note Receivable”) to provide for funding of certain amounts expected to be paid in the next twelve months, which was repaid in full in February 2022.
In November 2018, the Company entered into a promissory note (the “KFMC Note”) with Kaiser-Francis Management Company, L.L.C. (“KFMC”), an affiliate of Kaiser, as lender. The KFMC Note allowed EELP to draw funds up to $250 million through December 31, 2023 at LIBOR plus 1.55%. Upon consummation of the IPO, the KFMC Note was replaced by the EE Revolver.
In November 2021, KFMC and ENE Onshore entered into a note (the “KFMC-ENE Onshore Note”) with a maximum commitment of $25 million. The KFMC-ENE Onshore Note was settled in full and canceled in connection with the ENE Onshore Merger.
ENE Onshore Merger
In October 2022, EE Holdings, the indirect sole member of ENE Onshore, and EELP, the sole member of ENE Lateral, entered into the ENE Onshore Merger, effective October 31, 2022. ENE Lateral was the surviving entity and ENE Onshore ceased to exist as a
24
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
separate entity. Prior to the ENE Onshore Merger, Excelerate consolidated ENE Onshore as a VIE as Excelerate was determined to be the primary beneficiary of ENE Onshore. As a result of the ENE Onshore Merger, Excelerate ceased to have a non-controlling interest related to ENE Onshore.
In connection with the ENE Onshore Merger, ENE Onshore entered into a Contribution and Note Termination Agreement, pursuant to which ENE Onshore received an equity contribution sufficient to allow it to remit payment to (a) KFMC of the then-outstanding KFMC-ENE Onshore Note and (b) AGT of amounts owed for October 2022 net capacity payments. Subsequently, the KFMC-ENE Onshore Note was terminated. After the contribution, on October 31, 2022, ENE Onshore had no material net assets or liabilities. See the consolidated statements of changes in equity for the full effects of the ENE Onshore Merger.
The Company is subject to concentrations of credit risk principally from cash and cash equivalents, restricted cash, derivative financial instruments, and accounts receivable. The Company limits the exposure to credit risk with cash and cash equivalents and restricted cash by placing it with highly rated financial institutions. Additionally, the Company evaluates the counterparty risk of potential customers based on credit evaluations, including analysis of the counterparty’s established credit rating or assessment of the counterparty’s creditworthiness based on an analysis of financial condition when a credit rating is not available, historical experience, and other factors.
To manage credit risk associated with the interest rate hedges, the Company selected counterparties based on their credit ratings and limits the exposure to any single counterparty. The counterparties to the derivative contracts are major financial institutions with investment grade credit ratings. The Company periodically monitors the credit risk of the counterparties and adjusts the hedging position as appropriate. The impact of credit risk, as well as the ability of each party to fulfill its obligations under the derivative financial instruments, is considered in determining the fair value of the contracts. Credit risk has not had a significant effect on the fair value of the derivative instruments. The Company does not have any credit risk-related contingent features or collateral requirements associated with the derivative contracts.
The following table shows customers with revenues of 10% or greater of total revenues:
|
|
Percentage of Total Revenues |
|
|||||
|
|
Three months ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Customer A |
|
|
40 |
% |
|
|
73 |
% |
Customer B |
|
|
16 |
% |
|
|
0 |
% |
Customer C |
|
|
10 |
% |
|
|
3 |
% |
Customer D |
|
|
0 |
% |
|
|
13 |
% |
Certain customers of ours may purchase a high volume of LNG and/or natural gas from us. These purchases can significantly increase such customers’ percentage of our total revenues as compared to those customers who are only FSRU and terminal service customers. This increase in revenue from their purchases is exacerbated in periods of high market pricing of LNG and natural gas. In conjunction with these LNG and natural gas sales, our direct cost of gas sales also increases by a similar percent due to the increase in volume and market pricing of LNG incurred for such revenue. As such, the increase in revenues by customer may be disproportionate to the relative increase in concentration risk within our operations.
Substantially all of the net book value of our long-lived assets are located outside the United States. The Company’s fixed assets are largely comprised of vessels that can be deployed globally due to their mobile nature. As such, the Company is not subject to significant concentration risk of fixed assets.
The Company may be involved in legal actions in the ordinary course of business, including governmental and administrative investigations, inquiries and proceedings concerning employment, labor, environmental and other claims. The Company will recognize a loss contingency in the consolidated financial statements when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. The Company will disclose any loss contingencies that do not meet both conditions if there is a reasonable possibility that a loss may have been incurred. Gain contingencies are not recorded until realized.
Venture Global SPA
In February 2023, we executed a 20-year LNG sales and purchase agreement with Venture Global LNG (the “Venture Global SPA”). Under the Venture Global SPA, Excelerate will purchase 0.7 MT per annum of LNG on a FOB basis from the Plaquemines
25
Excelerate Energy, Inc.
Notes to Consolidated Financial Statements (Unaudited)
LNG facility in Plaquemines Parish, Louisiana. Our purchase commitment will be based on the final settlement price of monthly Henry Hub natural gas futures contracts plus a contractual spread. Using Henry Hub natural gas futures pricing as of March 31, 2023, our average annual commitment is estimated to be approximately $280 million. The start of this commitment, however, is dependent on the LNG facility becoming operational, which is not expected in the next twelve months.
Supplemental noncash disclosures for the consolidated statement of cash flows consist of the following (in thousands):
|
Three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Supplemental cash flow information: |
|
|
|
|
|
||
Cash paid for taxes |
$ |
5,467 |
|
|
$ |
12,544 |
|
Cash paid for interest |
|
12,157 |
|
|
|
17,989 |
|
Right-of-use assets obtained in exchange for lease obligations |
|
— |
|
|
|
219 |
|
Increase (decrease) in capital expenditures included in accounts payable |
|
(3,498 |
) |
|
|
8,516 |
|
Finance lease right-of-use asset |
|
263,503 |
|
|
|
— |
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets as of March 31, 2023 and December 31, 2022 (in thousands):
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Cash and cash equivalents |
$ |
530,425 |
|
|
$ |
516,659 |
|
Restricted cash – current |
|
3,557 |
|
|
|
2,614 |
|
Restricted cash – non-current |
|
19,076 |
|
|
|
18,698 |
|
Cash, cash equivalents, and restricted cash |
$ |
553,058 |
|
|
$ |
537,971 |
|
Changes in components of accumulated other comprehensive income (loss) were (in thousands):
|
|
Cumulative |
|
|
Qualifying |
|
|
Share of OCI in |
|
|
Total |
|
||||
At January 1, 2023 |
|
$ |
(524 |
) |
|
$ |
551 |
|
|
$ |
488 |
|
|
$ |
515 |
|
Other comprehensive income (loss) |
|
|
(420 |
) |
|
|
389 |
|
|
|
(321 |
) |
|
|
(352 |
) |
Reclassification to income |
|
|
— |
|
|
|
(497 |
) |
|
|
(416 |
) |
|
|
(913 |
) |
Reclassification to NCI |
|
|
318 |
|
|
|
81 |
|
|
|
559 |
|
|
|
958 |
|
At March 31, 2023 |
|
$ |
(626 |
) |
|
$ |
524 |
|
|
$ |
310 |
|
|
$ |
208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
At January 1, 2022 |
|
$ |
(2,167 |
) |
|
$ |
(3,702 |
) |
|
$ |
(3,309 |
) |
|
$ |
(9,178 |
) |
Other comprehensive income (loss) |
|
|
— |
|
|
|
2,958 |
|
|
|
492 |
|
|
|
3,450 |
|
Reclassification to income |
|
|
— |
|
|
|
86 |
|
|
|
1,922 |
|
|
|
2,008 |
|
At March 31, 2022 |
|
$ |
(2,167 |
) |
|
$ |
(658 |
) |
|
$ |
(895 |
) |
|
$ |
(3,720 |
) |
Dividend Declaration
On May 9, 2023, the Company announced that our Board of Directors declared a cash dividend, with respect to the quarter ended March 31, 2023, of $0.025 per share of Class A Common Stock. The dividend is payable on June 8, 2023, to Class A Common Stockholders of record as of the close of business on May 24, 2023. EELP will make a corresponding distribution of $0.025 per interest to holders of Class B interests on the same date of the dividend payment.
FSRU Sequoia Purchase
In April 2023, Excelerate purchased the FSRU Sequoia for $265 million using $250 million borrowed through our Term Loan Facility together with cash on hand. Concurrently with the purchase, the Company entered into interest rate swaps for the same notional amount as the Term Loan Facility. The purpose of the swaps is to hedge our exposure to fluctuations in SOFR related to borrowings on the Term Loan Facility. The interest rate swaps have maturity, payment and reset dates that align with those of the Term Loan Facility.
26
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included in this Form 10-Q and included in the 2022 Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included in the 2022 Annual Report, this Form 10-Q and our other filings with the SEC. Please also see the section titled “Forward-Looking Statements.”
Overview
Excelerate is changing the way the world accesses cleaner and more reliable energy by delivering regasified natural gas, benefiting hundreds of millions of people around the world. From our founding, we have focused on providing flexible LNG solutions to markets in diverse environments across the globe, providing a lesser emitting form of energy to markets that often rely on coal as their primary energy source. At Excelerate, we believe that access to energy sources such as LNG is critical to assisting markets in their decarbonization efforts, while at the same time promoting economic growth and improving quality of life.
We have grown our business significantly since our first FSRU charter in 2003, and today, we are a profitable energy company with a geographically diversified business model. Our business spans the globe, with regional offices in 11 countries and operations in Argentina, Bangladesh, Brazil, Finland, Pakistan, United Arab Emirates and the United States. We are the largest provider of regasified LNG in Argentina and Bangladesh and one of the largest providers of regasified LNG in Brazil and Pakistan, and we operate the largest FSRU in Brazil. We also lease an LNG terminal in Bahia, Brazil (the “Bahia Terminal”) from Petróleo Brasileiro S.A. (“Petrobras”) and in December 2021, started importing LNG and selling natural gas to the Brazilian market. In December 2022, we began importing and selling natural gas and LNG into Europe via the Inkoo Terminal in Finland. We also have plans to sell natural gas to other downstream customers in Brazil, Europe and Bangladesh. In each of these regions, we offer a cleaner energy source from which power can be generated consistently. The high value our customers place on our services has resulted in a reliable source of revenues to us, while our global reach helps balance seasonal demand fluctuation among the geographies in which we operate. For the three months ended March 31, 2023, we generated revenues of $211.1 million, net income of $30.7 million and Adjusted EBITDA of $79.9 million. For the three months ended March 31, 2022, we generated revenues of $591.7 million, net income of $12.8 million and Adjusted EBITDA of $62.7 million. For more information regarding our non-GAAP measure Adjusted EBITDA and a reconciliation to net income, the most comparable U.S. Generally Accepted Accounting Principles (“GAAP”) measure, see “How We Evaluate Our Operations.”
Our business focuses on the integration of the natural gas-to-power LNG value chain, and as part of this value chain, we operate regasification terminals in global economies that utilize our FSRU fleet. Our business is substantially supported by time charter contracts, which are effectively long-term, take-or-pay arrangements and provide consistent revenue and cash flow from our high-quality customer base. As of March 31, 2023, we operate a fleet of ten purpose-built FSRUs, have completed more than 2,500 ship-to-ship transfers of LNG with over 40 LNG operators since we began operations and have safely delivered more than 6,000 billion cubic feet of natural gas through 16 LNG regasification terminals. For the three months ended March 31, 2023 and 2022, we generated revenues of $118.6 million and $97.6 million, respectively, from our FSRU and terminal services businesses, representing approximately 56% and 16% of our total revenues for each of those periods.
We also procure LNG from major producers and sell natural gas through our flexible LNG terminals. For the three months ended March 31, 2023 and 2022 we generated revenues of $92.5 million and $494.1 million, respectively, from LNG and natural gas sales, representing approximately 44% and 84% of our total revenues for each of those periods. The commercial momentum that we have established in recent years and the increasing need for access to LNG around the world, have resulted in a significant portfolio of new growth opportunities for us to pursue. In addition to our FSRU and terminal services businesses and natural gas sales, we plan to expand our business to provide customers with an array of products. We are evaluating and pursuing early-stage projects with opportunities in Europe, Asia Pacific, Latin America, and the Middle East.
Recent Trends and Outlook
The first quarter of 2023 marked one year since the beginning of the Russia-Ukraine war, which has led to a significant restructuring of global natural gas markets. Previously, Europe absorbed excess LNG supply at times of insufficient demand elsewhere, but it is now a greater source of demand for LNG as many European countries seek to replace Russian pipeline gas. We believe that this shift has accelerated the globalization of natural gas, increasing the interconnectedness of the global market and the price elasticity of demand, as witnessed last year, when many LNG importing countries were priced out of spot LNG purchases. In the first quarter of 2023, natural gas prices retreated due to a mild winter in Europe and North Asia, healthy natural gas storage levels, the availability of competing fuels, and overall lower consumer demand. Dutch Title Transfer Facility (“TTF”) pricing averaged $16.77/MMBtu in the first quarter of 2023 as compared to $37.02/MMBtu in the fourth quarter of 2022.
27
The retreat in natural gas prices resulted in many countries returning to LNG spot purchases. Emerging buyers in Asia, such as India, Bangladesh, and Thailand, reentered the spot market, as these countries are highly dependent on natural gas for power generation and as a feedstock for critical industries. According to an S&P Global forecast, Bangladesh LNG imports are predicted to recover in 2023 with import demand estimated at 6.2 Bcm compared to 5.8 Bcm in 2022, due to the comparatively lower LNG pricing. In South America, the decline in prices allowed Argentina to award a 30-cargo buy tender for delivery during the Southern Hemisphere winter season.
In the Northern Hemisphere, the focus is shifting to winter 2023-2024. By the end of the mild 2022-2023 European winter, natural gas storage inventories were approximately 55% full, compared to an average of approximately 36% full over the last ten years, measured at the end of the same period. Storage inventories are expected to be filled to 90% of capacity by November 1, 2023. These same storage inventory levels were achieved in 2022 by European governments authorizing purchases of LNG cargos, which led to TTF pricing reaching a high of $99/MMBtu in August 2022. In the first half of 2022, Europe relied heavily on Russian pipeline gas to fill storage inventories. However, without Russian pipeline gas this year and limited new LNG supply capacity, European governments will need to navigate market volatility and the potential for high price environments in order to meet storage level targets. In the meantime, we expect that countries in the Global South will continue spot LNG purchases at lower price levels and prepare for the year ahead.
Recent Business Updates:
Components of Our Results of Operations
Revenue
We generate revenue through the provision of regasification services using our fleet of FSRUs and LNG terminal assets, as well as physical sales of LNG and natural gas, that are made primarily in connection with our regasification and terminal projects. We provide regasification services through time charters and operation service contracts primarily related to our long-term charter contracts. Most of our time charter revenues are from long-term contracts that function similarly to take-or-pay arrangements in that we are paid if our assets and teams are available and ready to provide services to our customers regardless of whether our customers utilize the services. A portion of our revenue attributable to our charters for the use of our vessels is accounted for as lease revenue, and the revenues attributable to the services provided under those charters are accounted for as non-lease revenue. We generally charge fixed fees for the use of and services provided with our vessels and terminal capacity plus additional amounts for certain variable costs.
Expenses
The principal expenses involved in conducting our business are operating costs, direct cost of gas sales, general and administrative expenses, and depreciation and amortization. A large portion of the fixed and variable costs we incur in our business are in the operation of our fleet of FSRUs and terminals that provide regasification and gas supply to our customers. We manage the level of our fixed costs based on several factors, including industry conditions and expected demand for our services and generally pass-through certain variable costs.
28
We incur significant equipment costs in connection with the operation of our business, including capital equipment recorded as property and equipment, net on our balance sheets and related depreciation and amortization on our income statement. In addition, we incur repair and maintenance and leasing costs related to our property and equipment utilized both in our FSRU and terminal services and gas sales. Property and equipment and other assets include costs incurred for our fleet of FSRUs and terminal assets, including capitalized costs related to drydocking activities. Generally, we are required to drydock each of our vessels every five years, but vessels older than 15 years of age require a shorter duration drydocking or in-situ bottom survey every two and a half years.
Cost of revenue and vessel operating expenses
Cost of revenue and vessel operating expenses include the following major cost categories: vessel operating costs; personnel costs; repair and maintenance; and leasing costs. These operating costs are incurred for both our FSRU and terminal services revenues and gas sales revenues.
Direct cost of gas sales
Direct cost of gas sales includes the cost of LNG and other fuel and direct costs incurred in selling natural gas and LNG, which are significant variable operating costs. These costs fluctuate in proportion to the amount of our natural gas and LNG sales as well as LNG prices.
Depreciation and amortization expenses
Depreciation expense is recognized on a straight-line basis over the estimated useful lives of our property and equipment assets, less an estimated residual value. Certain recurring repairs and maintenance expenditures required by regulators are amortized over the required maintenance period.
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A”) consist primarily of compensation and other employee-related costs for personnel engaged in executive management, sales, finance, legal, tax and human resources. SG&A also consists of expenses associated with office facilities, information technology, external professional services, business development, legal costs and other administrative expenses.
Restructuring, transition and transaction expenses
We incurred restructuring, transition and transaction expenses related to consulting, legal, and audit costs incurred as part of and in preparation for our initial public offering (the “IPO”).
Other income, net
Other income, net, primarily contains interest income, gains or losses from the effect of foreign exchange rates and gains and losses on asset sales.
Interest expense and Interest expense – related party
Our interest expense is primarily associated with our finance leases liabilities and loan agreements with external banks and related parties.
Earnings from equity-method investment
Earnings from equity-method investment relate to our 45% ownership interest in the Nakilat joint venture, which we acquired in 2018.
Provision for income taxes
Excelerate is a corporation for U.S. federal and state income tax purposes. Excelerate’s accounting predecessor, EELP, is treated as a pass-through entity for U.S. federal income tax purposes and, as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include any provision for U.S. federal income tax for EELP. In addition, EELP has international operations that are subject to foreign income tax and U.S. corporate subsidiaries subject to U.S. federal tax. These taxes are also included in our provision for income taxes.
Net income (loss) attributable to non-controlling interest
Net income (loss) attributable to non-controlling interests includes earnings allocable to our shares of Class B Common Stock as well as earnings allocable to the third-party equity ownership interests in our subsidiary, Excelerate Energy Bangladesh, LLC.
29
Net income (loss) attributable to non-controlling interest – ENE Onshore
Net income (loss) attributable to non-controlling interest – ENE Onshore includes the earnings allocable to the equity ownership interests in Excelerate New England Onshore, LLC (“ENE Onshore”). On October 17, 2022, EE Holdings, the indirect sole member of ENE Onshore, and EELP, the sole member of Excelerate New England Lateral, LLC (“ENE Lateral”), entered into a merger agreement, pursuant to which ENE Onshore was merged with and into ENE Lateral (the “ENE Onshore Merger”), effective October 31, 2022. ENE Lateral was the surviving entity and ENE Onshore ceased to exist as a separate entity. Prior to the ENE Onshore Merger, Excelerate consolidated ENE Onshore as a variable interest entity as Excelerate was determined to be the primary beneficiary of ENE Onshore. As a result of the ENE Onshore Merger, Excelerate ceased to have a non-controlling interest related to ENE Onshore.
Factors Affecting the Comparability of Our Results of Operations
As a result of a number of factors, our historical results of operations may not be comparable from period to period or going forward. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.
Impact of the Reorganization
Following the completion of the IPO in April 2022, we are a corporation for U.S. federal and state income tax purposes. EELP is treated as a pass-through entity for U.S. federal income tax purposes and, as such, is generally not subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include provision for U.S. federal income tax for EELP. The reorganization undertaken in connection with the IPO, as described under “Organizational Structure—The Reorganization” in the Prospectus (the “Reorganization”), was accounted for as a reorganization of entities under common control. As a result, our consolidated financial statements recognized the assets and liabilities received in the Reorganization at their historical carrying amounts, as reflected in the historical consolidated financial statements of EELP. In addition, in connection with the Reorganization and the IPO, we entered into the Tax Receivable Agreement (the “TRA”) with Excelerate Energy Holdings, LLC (“EE Holdings”) and the George Kaiser Family Foundation (the “Foundation”) (or their affiliates) (together, the “TRA Beneficiaries”) pursuant to which we will be required to pay the TRA Beneficiaries 85% of the net cash savings, if any, that we are deemed to realize as a result of our utilization of certain tax benefits described under “Certain Relationships and Related Person Transactions—Related Person Transactions—Transactions in Connection with our Reorganization and Initial Public Offering—Tax Receivable Agreement” in our Proxy Statement on DEF 14A filed on April 17, 2023 (the “Proxy Statement”).
Also included in the Reorganization is our acquisition of all of the issued and outstanding membership interests in Excelsior, LLC and FSRU Vessel (Excellence), LLC (f/k/a Excellence, LLC) (collectively, the “Foundation Vessels”). The acquisition of Excelsior, LLC was accounted for as an acquisition of property and equipment at the completion of the Reorganization. The Foundation Vessels had historically been accounted for as finance leases in our historical financial statements. In 2018, EELP entered into an agreement with a customer to lease the Excellence vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. Historically, EELP, as a lessor, has accounted for the Excellence vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with Accounting Standards Codification 842, Leases. The Excellence vessel continues to be accounted for as a sales-type lease and thus did not result in an adjustment to property and equipment.
Public Company Costs
We have incurred and expect to continue to incur incremental, non-recurring costs related to our transition to a publicly traded corporation, including the costs of the IPO and the costs associated with the initial implementation of our Sarbanes-Oxley Section 404 internal control reviews and testing. We also expect to incur additional significant and recurring expenses as a publicly traded corporation, including costs associated with compliance under the Exchange Act, annual and quarterly reports to common stockholders, registrar and transfer agent fees, national stock exchange fees, audit fees, incremental director and officer liability insurance costs and director and officer compensation.
How We Evaluate Our Operations
We operate in a single reportable segment. However, we use a variety of qualitative, operational and financial metrics to assess our performance and valuation. Among other measures, management considers each of the following in assessing our business:
Adjusted Gross Margin;
Adjusted EBITDA; and
Capital Expenditures.
Adjusted Gross Margin
We use Adjusted Gross Margin, a non-GAAP financial measure, which we define as revenues less direct cost of sales and operating expenses, excluding depreciation and amortization, to measure our operational financial performance. Management believes
30
Adjusted Gross Margin is useful because it provides insight on profitability and true operating performance excluding the implications of the historical cost basis of our assets. Our computation of Adjusted Gross Margin may not be comparable to other similarly titled measures of other companies, and you are cautioned not to place undue reliance on this information.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. We define Adjusted EBITDA as net income before interest expense, income taxes, depreciation and amortization, accretion, non-cash long-term incentive compensation expense and items such as charges and non-recurring expenses that management does not consider as part of assessing ongoing operating performance. In the first quarter of 2023, we revised the definition of Adjusted EBITDA to adjust for the impact of non-cash accretion expense, which results in a metric that is consistent with how management will review performance going forward. Management believes accretion expense does not directly reflect our ongoing operating performance.
We adjust net income for the items listed above to arrive at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. This measure has limitations as certain excluded items are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. For the foregoing reasons, Adjusted EBITDA has significant limitations that affect its use as an indicator of our profitability and valuation, and you are cautioned not to place undue reliance on this information.
Capital Expenditures
We incur capital expenditures as part of our regular business operations. Capital expenditures are costs incurred to expand our business operations, increase efficiency of business operations, extend the life of an existing asset, improve an asset’s capabilities, increase future service of an asset, repair existing assets in order to maintain their service capability, and provide upkeep required for regulatory compliance. Costs related to prospective projects are capitalized once it is determined to be probable that the related assets will be constructed.
The tables below reconcile the financial measures discussed above to the most directly comparable financial measure calculated and presented in accordance with GAAP:
|
Three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
|
(In thousands) |
|
|||||
FSRU and terminal services revenues |
$ |
118,577 |
|
|
$ |
97,592 |
|
Gas sales revenues |
|
92,479 |
|
|
|
494,081 |
|
Cost of revenue and vessel operating expenses |
|
(58,792 |
) |
|
|
(50,063 |
) |
Direct cost of gas sales |
|
(55,185 |
) |
|
|
(463,352 |
) |
Depreciation and amortization expense |
|
(25,193 |
) |
|
|
(23,743 |
) |
Gross Margin |
$ |
71,886 |
|
|
$ |
54,515 |
|
Depreciation and amortization expense |
|
25,193 |
|
|
|
23,743 |
|
Adjusted Gross Margin |
$ |
97,079 |
|
|
$ |
78,258 |
|
|
Three months ended March 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
|
(In thousands) |
|
|||||
Net income |
$ |
30,739 |
|
|
$ |
12,844 |
|
Interest expense |
|
15,547 |
|
|
|
19,227 |
|
Provision for income taxes |
|
7,603 |
|
|
|
3,719 |
|
Depreciation and amortization expense |
|
25,193 |
|
|
|
23,743 |
|
Accretion expense |
|
436 |
|
|
|
367 |
|
Long-term incentive compensation expense |
|
357 |
|
|
|
— |
|
Restructuring, transition and transaction expenses |
|
— |
|
|
|
2,753 |
|
Adjusted EBITDA |
$ |
79,875 |
|
|
$ |
62,653 |
|
31
Consolidated Results of Operations
Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
|
For the three months ended March 31, |
|
|||||||||
|
2023 |
|
|
2022 |
|
|
Change |
|
|||
|
(In thousands) |
|
|||||||||
Revenues |
|
|
|
|
|
|
|
|
|||
FSRU and terminal services |
$ |
118,577 |
|
|
$ |
97,592 |
|
|
$ |
20,985 |
|
Gas sales |
|
92,479 |
|
|
|
494,081 |
|
|
|
(401,602 |
) |
Total revenues |
|
211,056 |
|
|
|
591,673 |
|
|
|
(380,617 |
) |
Operating expenses |
|
|
|
|
|
|
|
|
|||
Cost of revenue and vessel operating expenses |
|
58,792 |
|
|
|
50,063 |
|
|
|
8,729 |
|
Direct cost of gas sales |
|
55,185 |
|
|
|
463,352 |
|
|
|
(408,167 |
) |
Depreciation and amortization |
|
25,193 |
|
|
|
23,743 |
|
|
|
1,450 |
|
Selling, general and administrative |
|
22,317 |
|
|
|
12,634 |
|
|
|
9,683 |
|
Restructuring, transition and transaction |
|
— |
|
|
|
2,753 |
|
|
|
(2,753 |
) |
Total operating expenses |
|
161,487 |
|
|
|
552,545 |
|
|
|
(391,058 |
) |
Operating income |
|
49,569 |
|
|
|
39,128 |
|
|
|
10,441 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|||
Interest expense |
|
(11,955 |
) |
|
|
(7,054 |
) |
|
|
(4,901 |
) |
Interest expense – related party |
|
(3,592 |
) |
|
|
(12,173 |
) |
|
|
8,581 |
|
Earnings from equity-method investment |
|
416 |
|
|
|
778 |
|
|
|
(362 |
) |
Other income (loss), net |
|
3,904 |
|
|
|
(4,116 |
) |
|
|
8,020 |
|
Income before income taxes |
|
38,342 |
|
|
|
16,563 |
|
|
|
21,779 |
|
Provision for income taxes |
|
(7,603 |
) |
|
|
(3,719 |
) |
|
|
(3,884 |
) |
Net income |
|
30,739 |
|
|
|
12,844 |
|
|
|
17,895 |
|
Less net income (loss) attributable to non-controlling interests |
|
23,895 |
|
|
|
(816 |
) |
|
|
24,711 |
|
Less net loss attributable to non-controlling interests – ENE Onshore |
|
— |
|
|
|
(237 |
) |
|
|
237 |
|
Less pre-IPO net income attributable to EELP |
|
— |
|
|
|
13,897 |
|
|
|
(13,897 |
) |
Net income attributable to shareholders |
$ |
6,844 |
|
|
$ |
— |
|
|
$ |
6,844 |
|
Additional financial data: |
|
|
|
|
|
|
|
|
|||
Gross Margin |
$ |
71,886 |
|
|
$ |
54,515 |
|
|
$ |
17,371 |
|
Adjusted Gross Margin |
|
97,079 |
|
|
|
78,258 |
|
|
|
18,821 |
|
Adjusted EBITDA |
|
79,875 |
|
|
|
62,653 |
|
|
|
17,222 |
|
Capital expenditures |
|
14,929 |
|
|
|
11,029 |
|
|
|
3,900 |
|
Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
Net income
Net income was $30.7 million for the three months ended March 31, 2023, an increase of $17.9 million, as compared to $12.8 million for the three months ended March 31, 2022. Net income was higher primarily due to higher direct margin earned on gas sales in Brazil and new gas sales in Finland during the three months ended March 31, 2023 ($37.3 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the three months ended March 31, 2022 ($30.7 million), gross margin earned on new charters in Finland and Germany ($12.9 million), less interest expense – related party incurred in the three months ended March 31, 2023 due to the acquisition of the Foundation Vessels ($7.0 million), one of our vessels coming off of suspension in the second quarter of 2022 ($5.6 million), higher interest income received on cash balances invested in money market funds ($4.2 million), a decrease in foreign currency exchange losses ($4.1 million), and lower restructuring, transition and transaction expenses after the completion of our IPO in April 2022 ($2.8 million), partially offset by an increase in general and administrative expenses ($9.7 million), as discussed below, the end of the Israel charter in December 2022 ($8.9 million), an increase in interest expense ($4.9 million), as discussed below, and an increase in the provision for income tax ($3.9 million), as discussed below.
Gross Margin and Adjusted Gross Margin
Gross Margin was $71.9 million for the three months ended March 31, 2023, an increase of $17.4 million, as compared to $54.5 million for the three months ended March 31, 2022. Adjusted Gross Margin was $97.1 million for the three months ended March 31, 2023, an increase of $18.8 million, as compared to $78.3 million for the three months ended March 31, 2022. Gross Margin and Adjusted Gross Margin were higher primarily due to higher direct margin earned on gas sales in Brazil and new gas sales in Finland during the three months ended March 31, 2023 ($37.3 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the three months ended March 31, 2022 ($30.7 million), gross margin earned on new charters in Finland and Germany
32
($12.9 million), and one of our vessels coming off of suspension in the second quarter of 2022 ($5.6 million), partially offset by the end of the Israel charter in December 2022 ($8.9 million).
Adjusted EBITDA
Our Adjusted EBITDA was $79.9 million for the three months ended March 31, 2023, an increase of $17.2 million, as compared to $62.7 million for the three months ended March 31, 2022. Adjusted EBITDA was higher primarily due to higher direct margin earned on gas sales in Brazil and new gas sales in Finland during the three months ended March 31, 2023 ($37.3 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the three months ended March 31, 2022 ($30.7 million), gross margin earned on new charters in Finland and Germany ($12.9 million), one of our vessels coming off of suspension in the second quarter of 2022 ($5.6 million), higher interest income received on cash balances invested in money market funds ($4.2 million), and a decrease in foreign currency exchange losses ($4.1 million), partially offset by an increase in general and administrative expenses ($9.7 million), as discussed below, and the end of the Israel charter in December 2022 ($8.9 million).
For more information regarding our non-GAAP measures Adjusted Gross Margin and Adjusted EBITDA, and a reconciliation to their most comparable GAAP measures, see “—How We Evaluate Our Operations.”
FSRU and terminal services revenues
FSRU and terminal services revenues were $118.6 million for the three months ended March 31, 2023, an increase of $21.0 million, as compared to $97.6 million for the three months ended March 31, 2022. FSRU and terminal services revenues were higher primarily due to the benefits of the Exemplar charter beginning with Gasgrid Finland in the fourth quarter of 2022, Excelsior beginning the German charter in March 2023, Express coming off suspension in the second quarter of 2022 and additional capacity sales in New England in the first quarter of 2023, partially offset by the end of our contract with Israel in the fourth quarter of 2022.
Gas sales revenues
Gas sales revenues were $92.5 million for the three months ended March 31, 2023, a decrease of $401.6 million, as compared to $494.1 million for the three months ended March 31, 2022. The decrease was primarily due to a reduction of LNG sales volumes related to our terminal operations in Brazil as well as LNG sales at our terminal in New England during the three months ended March 31, 2022, partially offset by Finland gas sales activity which commenced in the fourth quarter of 2022.
Cost of revenue and vessel operating expenses
Cost of revenue and vessel operating expenses was $58.8 million for the three months ended March 31, 2023, an increase of $8.7 million, as compared to $50.1 million for the three months ended March 31, 2022. The increase in cost of revenue and vessel operating expenses was primarily due to higher vessel maintenance and crewing costs.
Direct cost of gas sales
Direct cost of gas sales was $55.2 million for the three months ended March 31, 2023, a decrease of $408.2 million, as compared to $463.4 million for the three months ended March 31, 2022. The decrease was primarily due to a reduction of LNG sales volumes related to our terminal operations in Brazil and spot sale opportunities at our terminal in New England during the three months ended March 31, 2022, partially offset by Finland gas sales activity which commenced in the fourth quarter of 2022.
Depreciation and amortization expenses
Depreciation and amortization expenses were $25.2 million for the three months ended March 31, 2023, an increase of $1.5 million, as compared to $23.7 million for the three months ended March 31, 2022. Depreciation and amortization increased primarily due to the acquisition of the Excelsior vessel in the second quarter of 2022.
Selling, general and administrative expenses
Selling, general and administrative expenses were $22.3 million for the three months ended March 31, 2023, an increase of $9.7 million, as compared to $12.6 million for the three months ended March 31, 2022. The increase was primarily due to incremental costs incurred in conjunction with our transition to a publicly traded company and additional business development activities.
Restructuring, transition and transaction expenses
We had no restructuring, transition and transaction expenses for three months ended March 31, 2023. Restructuring, transition and transaction expenses relating to the completion of our IPO in April 2022 were $2.8 million for the three months ended March 31, 2022.
33
Interest expense
Interest expense was $12.0 million for the three months ended March 31, 2023, an increase of $4.9 million, as compared to $7.1 million for the three months ended March 31, 2022. Interest expense increased primarily due to accelerated amortization of deferred issuance costs related to the Amended Credit Agreement, increases in LIBOR rates, partially offset by lower balances remaining on our finance leases and long-term debt.
Interest expense – related party
Interest expense – related party was $3.6 million for the three months ended March 31, 2023, a decrease of $8.6 million, as compared to $12.2 million for the three months ended March 31, 2022. Interest expense decreased primarily due to the acquisition of the Foundation Vessels in the second quarter of 2022.
Other income (expense), net
Other income (expense), net was $3.9 million for the three months ended March 31, 2023, an increase of $8.0 million as compared to $(4.1) million for the three months ended March 31, 2022. The increase was primarily due to less foreign currency exchange losses related to our operations in Brazil and higher interest income received on cash balances invested in money market funds.
Provision for income taxes
The provision for income taxes for the three months ended March 31, 2023 and 2022 was $7.6 million and $3.7 million, respectively. The increase was primarily attributable to the year-over-year change in the amount and geographical distribution of income and the U.S. income tax incurred at the level of Excelerate beginning in April 2022 of $0.6 million for the three months ended March 31, 2023.
The effective tax rate for the three months ended March 31, 2023 and 2022 was 19.8% and 22.5%, respectively. The decrease was primarily driven by the geographical distribution of income and the varying tax regimes of jurisdictions. Our effective tax rate was also impacted by 1.6% for the three months ended March 31, 2023 due to additional tax recorded since becoming subject to U.S. income taxes at the corporate level beginning in April 2022.
Excelerate is a corporation for U.S. federal and state income tax purposes. Excelerate’s accounting predecessor, EELP, is treated as a pass-through entity for U.S. federal income tax purposes and, as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include any provision for U.S. federal income tax for EELP.
The Company has international operations that are also subject to foreign income tax and U.S. corporate subsidiaries subject to U.S. federal tax. Therefore, our effective income tax rate is dependent on many factors, including the Company’s geographical distribution of income, a rate benefit attributable to the portion of the Company’s earnings not subject to corporate level taxes, and the impact of nondeductible items and foreign exchange impacts as well as varying tax regimes of jurisdictions. In one jurisdiction, the Company’s tax rate is significantly less than the applicable statutory rate as a result of a tax holiday that was granted. This tax holiday will expire in 2033 at the same time that our contract and revenue with our customer ends.
Net income (loss) attributable to non-controlling interest
Net income (loss) attributable to non-controlling interest was $23.9 million for the three months ended March 31, 2023, an increase of $24.7 million, as compared to $(0.8) million for the three months ended March 31, 2022. The increase in net income attributable to non-controlling interest was primarily due to the addition of non-controlling interest related to owners of our Class B Common Stock after our IPO, partially offset by higher maintenance costs at one of our terminal locations.
Net loss attributable to non-controlling interest – ENE Onshore
Net loss attributable to non-controlling interest – ENE Onshore was $(0.2) million for the three months ended March 31, 2022. In October 2022, ENE Onshore merged with and into ENE Lateral.
Liquidity and Capital Resources
Based on our cash positions, cash flows from operating activities and borrowing capacity on our debt facilities, we believe we will have sufficient liquidity for the next 12 months for ongoing operations, planned capital expenditures, other investments, debt service obligations, payment of tax distributions and our announced and expected quarterly dividends and distributions, as described in “Dividend and Distribution Policy” in the 2022 Annual Report. For more information regarding our planned dividend payments, see Note 12 – Equity. As of March 31, 2023, we had $530.4 million in unrestricted cash and cash equivalents.
Our proceeds from the IPO in April 2022 were approximately $416.2 million, after deducting underwriting discounts and commissions, but before deducting IPO-related expenses of $7.6 million. Approximately $50.0 million of the IPO net proceeds were
34
used to fund, in part, EELP's purchase of the Foundation Vessels. The remaining proceeds are expected to be used to fund our growth strategy, working capital, and other general corporate purposes.
During the third quarter of 2021, we signed a lease on an LNG terminal in Bahia, Brazil from Petrobras, and in December 2021, we started importing LNG and selling regasified natural gas to Petrobras. In December 2022, we began selling LNG and natural gas to European customers via the Inkoo Terminal in Finland and in February 2023, we began regasification services in Germany at the port of Wilhelmshaven. In addition to Petrobras and customers in Europe, we have plans to sell regasified natural gas to other downstream customers, including in Brazil and Bangladesh. Some of the inventory purchases could potentially exceed cash on hand at certain times. We plan to fund any cash shortfalls with borrowings under the EE Revolver (as defined herein). For more information regarding the EE Revolver, see Note 10 – Long-term debt to the Consolidated Financial Statements. Management believes the EE Revolver will provide sufficient liquidity to execute our contractual purchase obligations. In the event sufficient funds were not available under the EE Revolver, we would seek alternative funding sources.
We have historically funded our business, including meeting our day-to-day operational requirements, repaying our indebtedness and funding capital expenditures, through debt financing, capital contributions and our operating cash flows as discussed below. We expect that our future principal uses of cash will also include additional capital expenditures to fund our growth strategy, pay income taxes and make distributions from EELP to fund income taxes, fund our obligations under the TRA, and pay cash dividends and distributions. Any determination to pay dividends to holders of our common stock and distributions to holders of EELP’s Class B interests will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, legal requirements, covenant compliance, restrictions in our existing and any future debt and other factors that our board of directors deems relevant. In the future we may enter into arrangements to grow our business or acquire or invest in complementary businesses which could decrease our cash and cash equivalents and increase our cash requirements. As a result of these and other factors, we could use our available capital resources sooner than expected and may be required to seek additional equity or debt.
Cash Flow Statement Highlights
Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
|
Three months ended March 31, |
|
|||||||||
|
2023 |
|
|
2022 |
|
|
Change |
|
|||
Net cash provided by (used in): |
(In thousands) |
|
|||||||||
Operating activities |
$ |
46,797 |
|
|
$ |
(31,353 |
) |
|
$ |
78,150 |
|
Investing activities |
|
(14,929 |
) |
|
|
(11,029 |
) |
|
|
(3,900 |
) |
Financing activities |
|
(16,361 |
) |
|
|
53,774 |
|
|
|
(70,135 |
) |
Effect of exchange rate on cash, cash equivalents, and restricted cash |
|
(420 |
) |
|
|
— |
|
|
|
(420 |
) |
Net increase in cash, cash equivalents, and restricted cash |
$ |
15,087 |
|
|
$ |
11,392 |
|
|
$ |
3,695 |
|
Operating Activities
Cash flows provided by operating activities increased by $78.2 million for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily due to:
Investing Activities and Capital Expenditures
Cash flows used in investing activities were comprised of capital expenditures made for the purchases of property and equipment, which increased by $3.9 million for the three months ended March 31, 2023, as compared to the same period in 2022. The increase was primarily due to vessel upgrades made ahead of beginning service at the Inkoo Terminal in Finland.
Financing Activities
Cash flows used in financing activities increased by $70.1 million for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily due to $62.3 million less net borrowings on our long-term debt, $6.6 million of
35
repayments on the Kaiser Note Receivable during the three months ended March 31, 2022, and $4.6 million in deferred financing costs paid in the three months ended March 31, 2023, related to the Amended Credit Agreement.
Debt Facilities
Revolving Credit Facility and Term Loan Facility
On April 18, 2022, EELP entered into a senior secured revolving credit agreement, by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the lenders and issuing banks thereunder made available the EE Revolver, including a letter of credit sub-facility, to EELP. The EE Revolver enabled us to borrow up to $350 million over a three-year term originally set to expire in April 2025.
Also, on April 18, 2022, the Company borrowed under the EE Revolver, on the closing day of such facility, and used the proceeds to repay the KFMC Note in full. The KFMC Note was terminated in connection with such repayment.
On March 17, 2023, EELP entered into an amended and restated senior secured credit agreement (“Amended Credit Agreement”), by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent. The Amended Credit Agreement provides for, among other things (i) a new $250 million term loan facility (the “Term Loan Facility” and, together with the EE Revolver, the “EE Facilities”), (ii) an extension of the maturity date of the EE Revolver, (iii) an increase in the maximum consolidated total leverage by 0.50x to 3.50x, provided that, if the aggregate value of all unsecured debt is equal to or greater than $250 million, maximum consolidated total leverage increases to 4.25x, and (iv) collateral vessel maintenance coverage to be not less than the greater of (a) $750 million and (b) 130% of the sum of the total credit exposure under the Amended Credit Agreement. The EE Facilities mature in March 2027. Proceeds from the EE Revolver are intended to be used for letters of credit, working capital, and other general corporate purposes.
In April 2023, Excelerate purchased the FSRU Sequoia for $265 million using $250 million borrowed through our Term Loan Facility together with cash on hand. Concurrently with the purchase, the Company entered into interest rate swaps for the same notional amount as the Term Loan Facility. The purpose of the swaps is to hedge our exposure to fluctuations in SOFR related to borrowings on the Term Loan Facility. The interest rate swaps have maturity, payment and reset dates that align with those of the Term Loan Facility.
Borrowings under the EE Revolver bear interest at a per annum rate equal to the term SOFR reference rate for such period plus an applicable margin, which applicable margin is based on EELP's consolidated total leverage ratio as defined and calculated under the Amended Credit Agreement. The unused portion of the EE Facilities is subject to an unused commitment fee calculated at a rate per annum ranging from 0.375% to 0.50% based on EELP's consolidated total leverage ratio.
The Amended Credit Agreement contains customary representations, warranties, covenants (affirmative and negative, including maximum consolidated total leverage ratio, minimum consolidated interest coverage ratio, and collateral vessel maintenance coverage covenants), and events of default, the occurrence of which would permit the lenders to accelerate the maturity date of amounts borrowed under the EE Facilities. As of March 31, 2023, the Company had issued $42.0 million in letters of credit under the EE Revolver. As a result of the EE Revolver’s financial ratio covenants and after taking into account the outstanding letters of credit issued under the facility, all of the $308 million of undrawn capacity was available for additional borrowings as of March 31, 2023.
As of March 31, 2023, the Company was in compliance with the covenants under its debt facilities.
Other Contractual Obligations
Operating Leases
We lease a terminal and offices in various locations under noncancelable operating leases. As of December 31, 2022, we had future minimum lease payments of $88.6 million. As of March 31, 2023, we had future minimum lease payments totaling $14.4 million and are committed to $7.9 million in year one, $3.3 million for years two and three, $1.9 million for years four and five and $1.3 million thereafter.
Finance Leases
Certain enforceable vessel charters and pipeline capacity agreements are classified as finance leases, and the right-of-use assets are included in property and equipment. As of December 31, 2022, we had future minimum lease payments totaling $307.3 million. As of March 31, 2023, we had future minimum lease payments totaling $565.4 million and are committed to $291.3 million in payments in year one, $66.5 million for years two and three, $66.5 million for years four and five and $141.0 million thereafter.
Newbuild Agreement Commitments
In October 2022, Excelerate signed a binding Shipbuilding Contract (the “Newbuild Agreement”) with Hyundai Heavy Industries for a new FSRU to be delivered in 2026. As part of the Newbuild Agreement, we currently expect to pay approximately $330 million,
36
subject to adjustment. Related payments are due in five installments with the final installment due concurrently with the delivery of the vessel, which is expected in 2026. During the year ended December 31, 2022, we made the first installment payment of approximately $30.0 million. Our future payment commitments related to the Newbuild Agreement are expected to be approximately $50.0 million in 2024 and $250.0 million in 2025-2026.
Venture Global SPA
In February 2023, we executed a 20-year LNG sales and purchase agreement with Venture Global LNG (the “Venture Global SPA”). Under the Venture Global SPA, Excelerate will purchase 0.7 MT per annum of LNG on a FOB basis from the Plaquemines LNG facility in Plaquemines Parish, Louisiana. Our purchase commitment will be based on the final settlement price of monthly Henry Hub natural gas futures contracts plus a contractual spread. Using Henry Hub natural gas futures pricing as of March 31, 2023, our average annual commitment is estimated to be approximately $280 million. The start of this commitment, however, is dependent on the LNG facility becoming operational, which is not expected in the next twelve months.
Off Balance Sheet Arrangements
Before Excelerate’s IPO, EELP, certain of its subsidiaries and other affiliates of George B. Kaiser (together with his affiliates other than the Company “Kaiser”) were guarantors to a Kaiser revolving loan facility, and EELP provided a first lien against one of EELP’s vessels to collateralize this facility. The facility was a committed line of credit of $600 million with a third-party bank that would have expired on September 30, 2022 (the “Kaiser Credit Line”). EELP utilized the Kaiser Credit Line to issue letters of credit or bank guarantees to counterparties to guarantee its performance. In connection with the IPO, the first lien against an EELP vessel and other collateral and guarantees provided by EELP and its subsidiaries was released by the lender under the Kaiser Credit Line and certain credit support previously provided to EELP by Kaiser under the Kaiser Credit Line was replaced with credit support under the EE Revolver.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires significant judgments from management in estimating matters for financial reporting that are inherently uncertain. For additional information about our accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies” in the 2022 Annual Report and the notes to the audited financial statements included therein.
There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2022 Annual Report.
Recent Accounting Pronouncements
Refer to Note 2 – Summary of significant accounting policies, to the notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for information regarding recently issued accounting pronouncements.
37
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In our normal course of business, we are exposed to certain market risks, including changes in interest rates, natural gas and LNG commodity prices and foreign currency exchange rates. In order to manage these risks, we may utilize derivative instruments. Gains or losses on those derivative instruments would typically be offset by corresponding gains or losses on the hedged item.
Interest Rate Risk
We have entered into long-term interest rate swap agreements in order to hedge a portion of our exposure to changes in interest rates associated with our external bank loans. We are exposed to changes in interest rates on our other debt facilities as well as the portion of our external bank loans that remain unhedged. We may enter into additional derivative instruments to manage our exposure to interest rates.
As of December 31, 2022, the fair value of our interest rate swaps was $2.3 million. As of March 31, 2023, the fair value of our interest rate swaps was $1.5 million. Based on our hedged notional amount as of March 31, 2023, a hypothetical 10% change in the three-month and six-month London Interbank Offered Rate (LIBOR) forward curves would change the estimated fair value of our existing interest rate swaps by less than $0.1 million.
Commodity Price Risk
In the course of our operations, we are exposed to commodity price risk, primarily through our purchases of or commitments to purchase LNG. To reduce our exposure, we may enter into derivative instruments to offset some or all of the associated price risk. During the three months ended March 31, 2023, we utilized an immaterial amount of financial derivatives to hedge some of our commodity price risk. We did not hold any commodity derivative instruments as of March 31, 2023 or 2022.
Foreign Currency Exchange Risk
Our reporting currency is the U.S. dollar and the functional currency of each of our subsidiaries is the U.S. Dollar. Gains or losses due to transactions in foreign currencies are included in “Other income (expense), net” in our consolidated statements of income. Due to a portion of our expenses being incurred in currencies other than the U.S. dollar, our expenses may, from time to time, increase relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. Dollar and the Euro, Argentine Peso, Brazilian Real and the Bangladesh Taka. During the three months ended March 31, 2023, we utilized an immaterial amount of financial derivatives to hedge some of our currency exposure. For the three months ended March 31, 2023 and 2022, we recorded $(0.4) million and $(4.4) million, respectively, in foreign currency gains/(losses) in our consolidated statements of income. As of March 31, 2023, we held an immaterial amount of foreign currency swaps.
Item 4. Internal Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2023. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of March 31, 2023, due to the material weaknesses in internal control over financial reporting described below.
Material Weaknesses in Internal Control over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In preparation of our 2020 and 2019 financial statements to meet the requirements applicable for our 2022 IPO, we identified the following material weaknesses in our internal control over financial reporting which were previously disclosed in our Registration Statement on Form S-1 filed on January 7, 2022, that continue to exist as of March 31, 2023. We did not design and maintain an effective control environment commensurate with public company financial reporting requirements. Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of internal controls, accounting and tax knowledge, experience and training to appropriately analyze, record and disclose accounting matters commensurate with accounting and financial reporting requirements.
38
This material weakness contributed to the following additional material weaknesses:
These material weaknesses resulted in adjustments to selling, general and administrative expenses, cost of revenue and vessel operating expenses, provision for income taxes and related account balances and disclosures as of and for the years ended December 31, 2020 and 2019.
Additionally, each of the above material weaknesses could result in a misstatement of our account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.
Status of Remediation Actions
As it relates to the material weaknesses that continued to exist as of December 31, 2022, we have performed the following remediation actions as of that date:
Additionally, we are in the process of designing and implementing controls related to the period-end financial reporting process, including controls related to business performance reviews and manual journal entries and the completeness and accuracy of our income tax provision. The design and implementation of these controls is in progress and will require validation and testing of their design and operating effectiveness over a sustained period of time. As a result, the timing of when we will be able to remediate the material weaknesses is uncertain. We may also conclude that additional measures will be required to remediate the material weaknesses in our internal control over financial reporting, which may necessitate additional implementation and evaluation time.
Changes in Internal Control over Financial Reporting
Other than as discussed above, there have been no changes in our internal control over financial reporting during the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
39
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we are a party to ongoing legal proceedings in the ordinary course of business. We do not believe the results of currently pending proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations or liquidity.
Item 1A. Risk Factors.
There have been no material changes from the risk factors previously disclosed in “Risk Factors” included in the 2022 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
On May 10, 2023, the Company and EE Holdings, holder of 75.8% of the combined voting power of our common stock, entered into Amendment No. 1 to Sixth Amended and Restated Limited Partnership Agreement of EELP (the “LPA Amendment”). The LPA Amendment reflects, among other things, the clarification that an exchange of Class B interests of EELP for cash at the election of the Company, as EELP’s general partner, will require the Company to contribute the net cash proceeds raised by it through an offering of EE Class A Common Stock to settle such exchange in full. Otherwise, the terms of the Sixth Amended and Restated Limited Partnership Agreement of EELP, which terms are described in the section entitled “Certain Relationships and Related Person Transactions–Related Person Transactions–Transactions in Connection with our Reorganization and Initial Public Offering–EELP Limited Partnership Agreement” in the Company’s Proxy Statement, filed April 17, 2023, and which description is incorporated herein by reference, remain unchanged. The foregoing summary is qualified in its entirety by the terms of the LPA Amendment, which is attached hereto as Exhibit 10.3 and incorporated herein by reference.
40
Item 6. Exhibits.
Exhibit Number |
|
Description |
10.1 |
|
|
10.2 |
|
|
10.3* |
|
|
10.4* |
|
Form of Excelerate Energy, Inc. Long-Term Incentive Plan Notice of Grant of Stock Option. |
10.5* |
|
|
10.6* |
|
|
10.7* |
|
|
10.8* |
|
|
31.1** |
|
|
31.2** |
|
|
32.1** |
|
|
32.2** |
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
** Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Excelerate Energy, Inc. |
|
|
|
|
|
Date: May 11, 2023 |
|
By: |
/s/ Dana Armstrong |
|
|
|
Dana Armstrong |
|
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
42
EXCELERATE ENERGY LIMITED PARTNERSHIP
AMENDMENT NO. 1 TO
SIXTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
THIS AMENDMENT NO. 1 dated as of May 10, 2023 (the “Amendment”), to the SIXTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT dated as of April 14, 2022, as amended from time to time (the “Partnership Agreement”) of EXCELERATE ENERGY LIMITED PARTNERSHIP, a Delaware limited partnership (the “Partnership”), is entered into by and between Excelerate Energy Holdings, LLC, a Delaware limited liability company (“Holdings”), and Excelerate Energy, Inc., a Delaware corporation (the “General Partner”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Partnership Agreement.
RECITALS
WHEREAS, the General Partner and Holdings entered into the Partnership Agreement;
WHEREAS, the General Partner and Holdings desire to amend the Partnership Agreement as hereinafter set forth.
NOW, THEREFORE, the Partnership Agreement is amended as follows:
Section 1. Amendments. As of the date set forth above, the Partnership Agreement is hereby amended as follows (language with underline is new and language with strikethrough has been deleted):
(c) Timing of Tax Distributions. If reasonably practicable, the Partnership shall make distributions of the estimated Tax Distributions in respect of a Fiscal Year on a quarterly basis to facilitate the payment of quarterly estimated income taxes, taking into account amounts previously distributed by reason of this Section 3.02. Not later than sixty (60) Business Days after the end of date on which the Partnership filed its U.S. federal income tax return for the Fiscal Year, the Partnership shall make a final Tax Distribution in an amount sufficient to fulfill the Partnership’s obligations under Section 3.02(a) with respect to such Fiscal Year
(a) Generally. tThe General Partner has the right, in its sole discretion, to elect the form of Exchange Consideration with respect to any Exchange. On an Exchange Date, provided the Exchangeable Interest Partner has satisfied its obligations under Annex D and not validly retracted such proposed Exchange, the General Partner shall deliver or cause to
1
be delivered the Exchange Consideration to such Exchangeable Interest Partner (or its designee), at the address set forth on the applicable Exchange Notice. If the General Partner elects a Cash Settlement, the General Partner shall only be obligated to contribute to the Partnership (or, if the General Partner elects to settle directly pursuant to Section 11.02(b), settle directly for an amount equal to) an amount in respect of such Cash Settlement equal to the net proceeds (after deduction of any underwriters’ discounts and commissions) from the sale a Liquidity Offering by the General Partner of a number of shares of Class A Common Stock equal to the number of Exchangeable Interests being Exchanged for such Cash Settlement. For the avoidance of doubt, in the event the General Partner elects a Cash Settlement, a Liquidity Offering to fund such Cash Settlement will be initiated after the receipt by the General Partner of a Mandatory Exchange Notice or Elective Exchange Notice, as applicable, and the Cash Settlement will occur promptly after consummation of the Liquidity Offering. Except as otherwise required by Law, the General Partner shall, for U.S. federal income tax purposes, be treated as paying an appropriate portion of the selling expenses described in the previous sentence as agent for and on behalf of the Exchangeable Interest Partner.
“Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the product of (x) the number of shares of Class A Common Stock that would otherwise be delivered to a Partner in an Exchange, multiplied by (y) the price per share, net of underwriting discounts and commissions, at which Class A Common Stock is issued by the General Partner in an underwritten offering or block trade commenced in anticipation of the applicable Exchange (a “Liquidity Offering”); or (z) if no such Liquidity Offering occurs prior to the applicable Exchange, the arithmetic average of the volume-weighted average prices for a share of Class A Common Stock on the principal U.S. securities exchange or automated or electronic quotation system on which the Class A Common Stock trades, as reported by The Wall Street Journal or its successor, for each of the three (3) consecutive full Business Days ending on and including the last full Business Day immediately before the Exchange Date, in each case subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. If the Class A Common Stock no longer trades on a securities exchange or automated or electronic quotation system, then the amount specified in clause (y) shall be determined in good faith by a committee of the Board of Directors composed of a majority of the directors of the General Partner that do not have an interest in the Exchangeable Interests and, if the applicable Exchangeable Interests are Class B Interests, shares of Class B Common Stock being Exchanged.
Section 2. References. From and after the date of this Amendment, all references to the Partnership Agreement shall be deemed to refer to the Partnership Agreement as amended by this Amendment.
Section 3. General. Except as amended by this Amendment, all other terms and provisions of the Partnership Agreement shall remain in full force and effect, and the Partnership Agreement, as amended, is hereby ratified. Notwithstanding the foregoing, the General Partner is authorized
2
to amend and restate the Partnership Agreement to incorporate this Amendment and any other duly approved amendments at any time.
Section 4. Governing Law. This Amendment, including its existence, validity, construction, and operating effect, and the rights of each of the parties to this Amendment, shall be governed by and construed in accordance with the Laws of the State of Delaware without regard to otherwise governing principles of conflicts of Law.
Section 4. Counterparts. This Amendment may be executed in any number of counterparts, and each counterpart shall for all purposes be deemed an original, and all such counterparts shall together constitute but one and the same agreement.
[Remainder of Page Intentionally Left Blank]
3
IN WITNESS WHEREOF, the undersigned have executed this Amendment to be effective as of the date set forth above.
EXCELERATE ENERGY, INC.
By: |
/s/ Steven Kobos___________________ |
|
Name: Steven M. Kobos |
|
Title: President and Chief Executive Officer |
EXCELERATE ENERGY HOLDINGS, LLC
By: Kaiser-Francis Management Company, LLC, its manager
By: |
/s/ Don Millican___________________ |
|
Name: Don P. Millican |
|
Title: President |
[Signature Page to Amendment No. 1 to the Sixth Amended and Restated
Limited Partnership Agreement of Excelerate Energy Limited Partnership]
EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
NOTICE OF GRANT OF STOCK OPTION
Name of Optionee: ______________________________
Notice of Grant
Excelerate Energy, Inc. (the “Company”) hereby grants to the Optionee named above the option to purchase shares (the “Option Shares”) of the Company’s Class A common stock, par value $0.001 per share (the “Common Stock”) upon the terms and subject to the conditions set forth in this Grant Notice, the Excelerate Energy, Inc. Long-Term Incentive Plan (the “Plan”) and the Stock Option Agreement promulgated under such Plan, each as amended from time to time. This award of Option Shares is granted pursuant to the Plan and is subject to and qualified in its entirety by the Stock Option Agreement.
|
|
|
|
|
|
|
Grant Date: |
|
[_______] |
|
|
|
Exercise Price: |
|
[_______] |
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|
|
Option Shares: |
|
[_______] |
|
|
|
Expiration Date: |
|
[_______] |
(subject to earlier expiration in accordance with the terms of the Stock Option Agreement) |
|
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|
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|
|
|
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|
|
Type of Option |
[__] Incentive Stock Option |
|
||
|
|
[__] Nonstatutory Stock Option |
|
||
Vesting Schedule
Subject to any acceleration and forfeiture provisions contained in the Stock Option Agreement, this option shall become vested and exercisable on the following basis:
provided that Optionee has not experienced a Termination of Employment from the Grant Date through each such vesting date.
Agreements
By your signature and the Company’s signature below, you and the Company agree that this Stock Option is granted under and governed by the terms of the Plan and the Stock Option Agreement, all of which are attached hereto and incorporated herein by this reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or the Stock Option Agreement, as the case may be.
-1-
You further acknowledge that your rights to any Option Shares will be earned and become vested only as you provide services to the Company over time, that the grant of this Stock Option is not consideration for service you rendered to the Company prior to the Grant Date, and that nothing herein or the attached documents confers upon you any right to continue your employment or other service relationship with the Company or any Affiliate or Subsidiary for any period of time, nor does it interfere in any way with your right or the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate that relationship at any time, for any reason or no reason, with or without Cause, and with or without advance notice, except as may be required by the terms of a Separate Agreement or in compliance with governing public law.
Except as otherwise set forth in the Stock Option Agreement, the vested portion of this Stock Option may be exercised for three months after your Termination of Employment (but in no event later than the Expiration Date). You are responsible for keeping track of these exercise periods following your Termination of Employment. The Company is not obligated to provide further notice of such periods.
“COMPANY”
Excelerate Energy, Inc.
Name: Title: |
“OPTIONEE”
Name
Signature
Address
Address |
-2-
EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement is made and entered into by and between Excelerate Energy, Inc., a Delaware corporation (“Company”), and the Optionee identified in the Notice of Grant of Stock Option (“Grant Notice”) which is attached hereto (“Optionee”).
1. Grant of Stock Option. Subject to the terms and conditions set forth herein, the Company hereby grants to Optionee a stock option (the “Stock Option”) to purchase from the Company, at the Exercise Price set forth in the Grant Notice, the number of Option Shares set forth in the Grant Notice. This Option is intended to be an Incentive Stock Option or a Nonstatutory Stock Option as set forth on the Grant Notice. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan or the Grant Notice.
2. Incentive Stock Option. If, and only to the extent, that this Stock Option is identified as an Incentive Stock Option on the Grant Notice, it is intended to qualify as an “incentive stock option” under Section 422 of the United States Internal Revenue Code of 1986, as amended (the “Code”) provided, however (a) this Stock Option shall cease to qualify as an Incentive Stock Option under the Code to the extent it is exercised (i) more than three months after the date the Optionee ceases to be an Employee for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code), (ii) more than 12 months after the date the Optionee ceases to be an Employee by reason of such permanent and total disability or (iii) after the Optionee has been on a leave of absence for more than three months, unless the Optionee’s reemployment rights are guaranteed by statute or by contract; and (b) to the extent that the Stock Option (together with all other Company Incentive Stock Options held by Optionee) becomes exercisable for the first time during any calendar year for shares having a Fair Market Value (determined as of the Grant Date) greater than $100,000, the portion of such options which exceeds such amount will be treated as Nonstatutory Stock Options. If the Code is amended to provide for a different limitation from that set forth in this Section, such different limitation shall be deemed incorporated herein effective as of the date required or permitted by such amendment to the Code.
3. Accelerated Vesting; Expiration of Stock Option. The Stock Option shall expire and cease to be exercisable as of the earlier of (i) the Expiration Date set forth in the Grant Notice or (ii) the date specified below in connection with the Optionee’s Termination of Employment:
(a) Death; Disability. If the Optionee’s Termination of Employment is by reason of death or Disability, any unvested portion of the Stock Option shall accelerate and vest in full effective as of the date of such Termination of Employment and the Optionee (or the Optionee’s estate, beneficiary or legal representative, as applicable) may exercise any portion of the Stock Option until the date that is twelve (12) months following the date of such termination.
(b) CIC Termination. If the Optionee’s Termination of Employment is by the Company without Cause [or by the Optionee for Good Reason] and[, in either case] occurs within the period commencing on the date a Change in Control is consummated and ending on the 24-month anniversary thereof (a “CIC Termination”), any unvested portion of the Stock Option shall accelerate and vest in full effective as of the date of such Termination of Employment and the Optionee may exercise any portion of the Stock Option until the date that is twelve (12) months following the date of such termination (or, if this Stock Option is identified as an Incentive Stock Option on the Grant Notice, the date that is three (3) months following the date of such termination).
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[As used herein, “Good Reason” has the meaning given to such term in the Excelerate Energy, Inc. Change in Control Severance Plan.]
(c) Termination for Cause. If the Optionee’s Termination of Employment is as a result of a termination by the Company for Cause, the entire Stock Option, whether or not then vested and exercisable, shall be immediately forfeited and canceled as of the date of such termination.
(d) Any Other Termination of Employment. If the Optionee’s experiences a Termination of Employment for any reason other than death, Disability, a CIC Termination, or Cause, the Optionee may exercise any portion of the Stock Option that is vested and exercisable at the time of such termination until the date that is three (3) months following the date of such termination. Any portion of the Stock Option that is not vested and exercisable at the time of such termination shall be forfeited and canceled as of the date of such termination.
4. Exercise.
4.1 Exercisability. Subject to the terms and conditions of this Stock Option Agreement, the Stock Option shall become exercisable at such time or times, during such period and for such number of Option Shares as is set forth in the Grant Notice. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the Stock Option term, the Stock Option shall terminate and cease to be outstanding for any Option Shares for which the Stock Option has not been exercised.
4.2 Exercise Agreement. Optionee may exercise the Stock Option by delivering to the Company, either in person or by certified or registered mail or such other manner as approved by the Company, a duly executed exercise agreement in a form approved by the Company from time to time for such exercises (the “Exercise Agreement”), and payment in full of the purchase price as provided in Section 4.3 of this Stock Option Agreement. A copy of the Exercise Agreement will be provided by the Company to Optionee upon request (including through any third-party stock plan administrator website), and no exercise of this Stock Option may be effected without the Optionee’s execution of such Exercise Agreement in the form approved by the Company and containing the provisions noted above.
4.3 Payment of Purchase Price. The purchase price for any Option Shares for which this Stock Option is exercised shall be paid in full in United States dollars at the time Optionee delivers to the Company the Exercise Agreement. The purchase price shall be paid in one or a combination of the following: (a) cash, check, bank draft or money order payable to the Company; (b) Common Stock; (c) through the delivery of a notice that Optionee has placed a market sell order with a broker acceptable to the Company with respect to shares of Common Stock then issuable upon exercise of the Stock Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the purchase price; provided that payment of such proceeds is then made to the Company at such time as may be required by the Company, but in any event not later than the settlement of such sale; or (d) net exercise (solely in the case of a Nonstatutory Stock Option). In addition to the purchase price, the Optionee shall pay the amount of tax required to be withheld (if any) by the Company or any Affiliate or Subsidiary as a result of the exercise of the Stock Option. The Optionee acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the exercise of the Stock Option from any amounts payable by it to the Optionee (including, without limitation, future cash wages).
4.4 Issuance of Shares. Fractional shares may not be exercised. Shares of Common Stock will be issued as soon as practical after exercise. Notwithstanding the above, the
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Company shall not be obligated to deliver any shares of Common Stock during any period when the Company determines that the exercisability of the Stock Option or the delivery of shares of Common Stock hereunder would violate any federal, state or other applicable laws.
5. Change in Control. Unless otherwise provided in a Separate Agreement, upon the occurrence of a Change in Control, the provisions of Section 16(c) of the Plan and Section 3(c) above shall control.
6. Restrictions on Resales. The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Optionee or other subsequent transfers by the Optionee of any shares of Common Stock issued as a result of the exercise of the Stock Option, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Optionee and other optionholders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
7. Rights as a Stockholder. Optionee shall have no rights as a stockholder of the Company with respect to any Option Shares until the issuance of the Common Stock subject to the Stock Option has been entered into the books and records of the Company.
8. No Transfer of Stock Option. Except as permitted by the Board or as permitted under the Plan, the Optionee may not assign or transfer the Stock Option to anyone other than by will or the laws of descent and distribution and the Stock Option shall be exercisable only by the Optionee during his or her lifetime.
9. Other Agreements Superseded. The Grant Notice, this Stock Option Agreement, the Plan and any Separate Agreement, if applicable, constitute the entire understanding between the Optionee and the Company regarding the Stock Option. Any prior agreements, commitments or negotiations concerning the Stock Option are superseded.
10. Limitation in Interest in Shares Subject to Stock Option. Neither the Optionee (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Optionee shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or this Stock Option Agreement except as to such shares of Common Stock, if any, as shall have been issued to such person upon exercise of the Stock Option or any part of it. Nothing in the Plan, in the Grant Notice, this Stock Option Agreement or any other instrument executed pursuant to the Plan shall confer upon the Optionee any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Optionee’s employment or other service at any time for any reason.
11. No Liability of Company. The Company and any Affiliate or Subsidiary which is in existence or hereafter comes into existence shall not be liable to the Optionee or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and (b) any tax consequence expected, but not realized, by the Optionee or other person due to the receipt, exercise or settlement of any Stock Option granted hereunder.
12. General Provisions.
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12.1 Tax Withholding. Whenever Option Shares are to be issued hereunder, the Company may require the Optionee to remit to the Company an amount sufficient to satisfy any national, state and local or other withholding tax requirements prior to the delivery of Option Shares.
12.2 Governing Plan Document. The Stock Option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of the Stock Option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan.
12.3 Governing Law. This Stock Option Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflicts of law.
12.4 Electronic Delivery. By executing the Grant Notice, the Optionee hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Optionee pursuant to applicable securities laws) regarding the Company and its Affiliates or Subsidiaries, the Plan, the Stock Option and the Common Stock via Company web site or other electronic delivery.
12.5 Notices. Any notice required or permitted to be delivered under this Stock Option Agreement shall be in writing (which shall include electronic transmission) and shall be deemed received (i) the business day following electronic verification of receipt if sent electronically, (ii) upon personal delivery to the party to whom the notice is directed or (iii) the business day following deposit with a reputable overnight courier (or the second business day following deposit in the case of an international delivery). Notice shall be addressed to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company. The recipient may acknowledge actual receipt at a time earlier than the deemed receipt set forth herein or by a means other than that set forth herein.
12.6 Successors/Assigns. This Stock Option Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
12.7 Severability. If one or more provisions of this Stock Option Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Stock Option Agreement, and the balance of the Stock Option Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. The parties agree to replace such illegal, void, invalid or unenforceable provision of this Stock Option Agreement with a legal, valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such illegal, void, invalid or unenforceable provision.
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EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
NOTICE OF GRANT OF AWARD OF RESTRICTED STOCK UNITS
Notice of Grant
Excelerate Energy, Inc. (the “Company”) hereby grants to the Participant named below the number of restricted stock units specified below (the “Award” or the “Restricted Stock Units”). Each restricted stock unit represents the right to receive one share of the Company’s Class A common stock of the Company, par value $0.001 per share (the “Common Stock”), upon the terms and subject to the conditions set forth in this Grant Notice, the Excelerate Energy, Inc. Long-Term Incentive Plan (the “Plan”) and the Restricted Stock Unit Award Agreement (the “Award Agreement”) promulgated under such Plan, each as amended from time to time. This Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Award Agreement.
Participant Name:
Grant Date:
Number of Restricted Stock Units:
Vesting Schedule:
The Restricted Stock Units shall become vested on the following basis:
provided that the Participant has not experienced a Termination of Employment from the Grant Date through such vesting date. If the Participant experiences a Termination of Employment for any or no reason before the Participant vests in any portion of the Restricted Stock Units, the unvested Restricted Stock Units will immediately terminate. However, notwithstanding anything herein to the contrary, the vesting of the Restricted Stock Units shall be subject to any vesting acceleration provisions applicable to the Restricted Stock Units contained in the Plan, the Award Agreement and/or any employment or service agreement, offer letter, severance agreement, or any other agreement between the Participant and the Company or any Affiliate or Subsidiary (such agreement, a “Separate Agreement”).
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Agreements
By your signature and the Company’s signature below, you and the Company agree that this Award is granted under and governed by the terms of the Plan and the Award Agreement, all of which are attached hereto and incorporated herein by this reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or the Award Agreement, as the case may be.
You further acknowledge that your rights to any Restricted Stock Units will be earned and become vested only as you provide services to the Company over time, that the grant of this Award is not consideration for service you rendered to the Company prior to the Grant Date, and that nothing herein or the attached documents confers upon you any right to continue your employment or other service relationship with the Company or any Affiliate or Subsidiary for any period of time, nor does it interfere in any way with your right or the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate that relationship at any time, for any reason or no reason, with or without Cause, and with or without advance notice, except as may be required by the terms of a Separate Agreement or in compliance with governing public law.
“COMPANY”
Excelerate Energy, Inc.
Name: Title: |
“PARTICIPANT”
Name
Signature
Address
Address |
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EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
This Award Agreement is made and entered into by and between Excelerate Energy, Inc., a Delaware corporation (“Company”), and the Participant identified in the Notice of Grant of Award of Restricted Stock Units (“Grant Notice”) which is attached hereto (the “Participant”).
1. Grant of Restricted Stock Units. The Company hereby grants to the Participant named in the Grant Notice an award of Restricted Stock Units, subject to all of the terms and conditions in this Award Agreement and the Plan, which are incorporated herein by reference. Restricted Stock Units issued pursuant to a Grant Notice and this Award Agreement are referred to in this Agreement as “Restricted Stock Units” or “RSUs.” Each Restricted Stock Unit represents the right to receive payment in the form of one share of the Company’s Common Stock (each, a “Share” and collectively, the “Shares”). Prior to actual payment of a Share on any vested Restricted Stock Unit, such Restricted Stock Unit will represent an unsecured obligation of the Company, for which there is no trust and no obligation other than to issue Shares as contemplated by this Award Agreement and the Plan.
2. Settlement of Restricted Stock Units.
(a) No Deferral Election. With respect to any RSUs that vest hereunder that are not subject to a Deferral Election (as defined below), such RSUs shall be settled as soon as practicable following, and in all events within sixty (60) days following, the date such RSUs vest.
(b) Deferral Election. With respect to any RSUs that vest hereunder that are subject to a validly made election to defer the settlement thereof on a form provided by the Company (a “Deferral Election”), such RSUs shall be settled or commence to be settled upon the designated payment date set forth in the Deferral Election, or, if earlier, as set forth in Section 4 below.
3. Vesting of Award. The Award shall not be vested as of the Grant Date set forth in the Grant Notice and shall be forfeitable unless and until otherwise vested pursuant to the terms of the Grant Notice and this Award Agreement. After the Grant Date, subject to termination or acceleration as provided in this Award Agreement or any Separate Agreement, the Award shall become vested as described in the Grant Notice with respect to that number of Restricted Stock Units as set forth in the Grant Notice. Restricted Stock Units that have vested and are no longer subject to forfeiture are referred to herein as “Vested RSUs.” Restricted Stock Units awarded hereunder that are not vested and remain subject to forfeiture are referred to herein as “Unvested RSUs.” Except as set forth in Section 4 below, upon the Participant’s Termination of Employment, any then Unvested RSUs held by the Participant shall be forfeited and canceled as of the date of such termination.
4. Accelerated Vesting Events.
(a) Change in Control. Subject to the Participant’s continued service through the date of a Change in Control, all unvested RSUs shall accelerate and immediately become fully vested effective as of immediately prior to the consummation of such Change in Control. Such RSUs shall be settled as soon as practicable following, and in all events within sixty (60) days following, the date of such Change in Control.
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(b) Death or Disability. In the event the Participant experiences a Termination of Employment as a result of death or Disability, all unvested RSUs shall accelerate and immediately become fully vested effective as of immediately prior to such Termination of Employment. Such RSUs shall be settled as soon as practicable following, and in all events within sixty (60) days following, the date such Termination of Employment.
5. Restrictions on Resales. The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued pursuant to Vested RSUs, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
6. Rights as a Stockholder. The Participant shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any RSUs unless and until shares of Common Stock settled for such RSUs shall have been issued by the Company to the Participant (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). Notwithstanding the foregoing, from and after the Grant Date and until the earlier of (a) the time when the RSUs are settled in accordance with the terms hereof or (b) the time when the Participant’s right to receive Common Stock upon payment of RSUs is forfeited, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Participant shall be entitled to a dividend equivalent which shall be paid, as determined in the sole discretion of the Committee on or prior to the date such dividend is declared, in the form of a cash accrual on a bookkeeping account or, alternatively, a number of additional whole RSUs determined by dividing (i) the product of (A) the dollar amount of the cash dividend paid per share of Common Stock on such date and (B) the total number of RSUs (including dividend equivalents paid thereon) previously credited to the Participant as of such date, by (ii) the Fair Market Value per share of Common Stock on such date. Such dividend equivalents (if any) shall be subject to the same terms and conditions and shall be settled or forfeited and at the same time as the RSUs to which the dividend equivalents were credited.
7. Withholding Taxes. To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the grant or vesting of the RSUs. The Company shall not be required to issue shares or to recognize the disposition of such shares until such obligations are satisfied. The Participant acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the settlement of Vested RSUs from any amounts payable by it to the Participant (including, without limitation, withholding shares otherwise issuable under the Award or any other future cash wages).
8. Non-Transferability of Award. The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan or as permitted by the Board, the Award may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of other than by will or the laws of descent and distribution.
9. Other Agreements Superseded. The Grant Notice, this Award Agreement, the Plan and any Separate Agreement, if applicable, constitute the entire understanding between the Participant and the Company regarding the Award. Any prior agreements, commitments or negotiations concerning the Award are superseded.
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10. Limitation in Interest in Shares Subject to Restricted Stock Units. Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or this Award Agreement except as to such shares of Common Stock, if any, as shall have been issued to such person in connection with the Award. Nothing in the Plan, in the Grant Notice, this Award Agreement or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate the Participant’s employment or other service at any time for any reason.
11. No Liability of Company. The Company and any Affiliate or Subsidiary which is in existence or hereafter comes into existence shall not be liable to the Participant or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and (b) any tax consequence expected, but not realized, by the Participant or other person due to the receipt or settlement of any Restricted Stock Units granted hereunder.
12. General.
(a) Governing Plan Document. The Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of the Award, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan.
(b) Governing Law. This Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflicts of law.
(c) Electronic Delivery. By executing the Grant Notice, the Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and its Affiliates or Subsidiaries, the Plan, the Award and the Common Stock via Company web site or other electronic delivery.
(d) Notices. Any notice required or permitted to be delivered under this Award Agreement shall be in writing (which shall include electronic transmission) and shall be deemed received (i) the business day following electronic verification of receipt if sent electronically, (ii) upon personal delivery to the party to whom the notice is directed, or (iii) the business day following deposit with a reputable overnight courier (or the second business day following deposit in the case of an international delivery). Notice shall be addressed to the Company at its principal executive office and to the Participant at the address that he or she most recently provided to the Company. The recipient may acknowledge actual receipt at a time earlier than the deemed receipt set forth herein or by a means other than that set forth herein.
(e) Successors/Assigns. This Award Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
(f) Severability. If one or more provisions of this Award Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Award Agreement, and the balance of the Award Agreement shall be interpreted as if such provision were so excluded and shall be
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enforceable in accordance with its terms. The parties agree to replace such illegal, void, invalid or unenforceable provision of this Award Agreement with a legal, valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such illegal, void, invalid or unenforceable provision.
(g) Section 409A. This Award Agreement is intended to be interpreted and applied so that the payments and benefits set forth herein shall, as applicable, comply with or be exempt from the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted, this Award Agreement shall be interpreted to the fullest extent possible to reflect and implement such intent. Notwithstanding anything in this Award Agreement to the contrary and to the extent the payments and benefits set forth herein are subject to Code Section 409A, a Termination of Employment shall not be deemed to have occurred for purposes of any provision of this Award Agreement unless such termination is also a “separation from service” within the meaning of Code Section 409A. Notwithstanding any provision in this Award Agreement to the contrary, if on his or her termination of service, the Participant is deemed to be a “specified employee” within the meaning of Code Section 409A, any payments or benefits due upon such Termination of Employment that constitute a “deferral of compensation” within the meaning of Code Section 409A and which do not otherwise qualify under the exemptions under Treas. Reg. § 1.409A-1 (including without limitation, the short-term deferral exemption and the permitted payments under Treas. Reg. § 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided to the Participant on the earlier of a date within 10 days after the date that is six (6) months after the Participant’s separation from service or, if earlier, the date of the Participant’s death.
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EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
NOTICE OF GRANT OF AWARD OF RESTRICTED STOCK UNITS
Notice of Grant
Excelerate Energy, Inc. (the “Company”) hereby grants to the Participant named below the number of restricted stock units specified below (the “Award” or the “Restricted Stock Units”). Each Restricted Stock Unit represents the right to receive one share of the Company’s Class A common stock, par value $0.001 per share (the “Common Stock”), upon the terms and subject to the conditions set forth in this Grant Notice, the Excelerate Energy, Inc. Long-Term Incentive Plan (the “Plan”) and the Restricted Stock Unit Award Agreement (the “Award Agreement”) promulgated under such Plan, each as amended from time to time. This Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Award Agreement.
Participant Name:
Grant Date:
Number of Restricted Stock Units:
Vesting Schedule:
Provided that the Participant has not experienced a Termination of Employment from the Grant Date through such vesting date, and subject to the terms and conditions of the Plan and the Award Agreement, all of the Restricted Stock Units shall vest on the first anniversary of the Grant Date.
Agreements
By your signature and the Company’s signature below, you and the Company agree that this Award is granted under and governed by the terms of the Plan and the Award Agreement, all of which are attached hereto and incorporated herein by this reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or the Award Agreement, as the case may be.
You further acknowledge that your rights to any Restricted Stock Units will be earned and become vested only as you provide services to the Company over time, that the grant of this Award is not consideration for service you rendered to the Company prior to the Grant Date, and that nothing herein or in the attached documents confers upon you any right to continue your employment or other service relationship with the Company or any Affiliate or Subsidiary for any period of time, nor does it interfere in any way with your right or the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate that relationship at any time, for any reason or no reason, with or without Cause, and with or without advance notice, except as may be required by the terms of any employment or service agreement, offer letter, severance agreement, or any other agreement between the Participant and the Company or any Affiliate or Subsidiary (such agreement, a “Separate Agreement”) or in compliance with governing public law.
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“COMPANY”
Excelerate Energy, Inc.
Name: Title: |
“PARTICIPANT”
Name
Signature
Address
Address |
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EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
This Award Agreement is made and entered into by and between Excelerate Energy, Inc., a Delaware corporation (“Company”), and the Participant identified in the Notice of Grant of Award of Restricted Stock Units (“Grant Notice”) which is attached hereto (the “Participant”).
1. Grant of Restricted Stock Units. The Company hereby grants to the Participant named in the Grant Notice an award of Restricted Stock Units, subject to all of the terms and conditions in this Award Agreement and the Plan, which are incorporated herein by reference. Restricted Stock Units issued pursuant to a Grant Notice and this Award Agreement are referred to in this Agreement as “Restricted Stock Units” or “RSUs.” Each Restricted Stock Unit represents the right to receive payment in the form of one share of the Company’s Common Stock (each, a “Share” and collectively, the “Shares”). Prior to actual payment of a Share on any vested Restricted Stock Unit, such Restricted Stock Unit will represent an unsecured obligation of the Company, for which there is no trust and no obligation other than to issue Shares as contemplated by this Award Agreement and the Plan.
2. Settlement of Restricted Stock Units.
(a) No Deferral Election. With respect to any RSUs that vest hereunder that are not subject to a Deferral Election (as defined below), such RSUs shall be settled as soon as practicable following, and in all events within sixty (60) days following, the date such RSUs vest.
(b) Deferral Election. With respect to any RSUs that vest hereunder that are subject to a validly made election to defer the settlement thereof on a form provided by the Company (a “Deferral Election”), such RSUs shall be settled or commence to be settled upon the designated payment date set forth in the Deferral Election, or, if earlier, as set forth in Section 4 below.
3. Vesting of Award. The Award shall not be vested as of the Grant Date set forth in the Grant Notice and shall be forfeitable unless and until otherwise vested pursuant to the terms of the Grant Notice and this Award Agreement. After the Grant Date, subject to termination or acceleration as provided in this Award Agreement or any Separate Agreement, the Award shall become vested as described in the Grant Notice with respect to that number of Restricted Stock Units as set forth in the Grant Notice. Restricted Stock Units that have vested and are no longer subject to forfeiture are referred to herein as “Vested RSUs.” Restricted Stock Units awarded hereunder that are not vested and remain subject to forfeiture are referred to herein as “Unvested RSUs.” Except as set forth in Section 4 below, upon the Participant’s Termination of Employment, any then Unvested RSUs held by the Participant shall be forfeited and canceled as of the date of such termination.
4. Accelerated Vesting Events; Forfeiture. Except as set forth in this Section 4, upon the Participant’s Termination of Employment, any then Unvested RSUs held by the Participant shall be forfeited and canceled as of the date of such termination.
(a) Change in Control. Subject to the Participant’s continued service through the date of a Change in Control, all unvested RSUs shall accelerate and immediately become fully vested effective as of immediately prior to the consummation of such Change in Control. Such RSUs shall be settled as soon as practicable following, and in all events within sixty (60) days following the date of such Change in Control.
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(b) Death; Disability. If the Participant’s Termination of Employment is by reason of death or Disability, any Unvested RSUs shall accelerate and vest in full effective as of the date of such Termination of Employment.
(c) Cause Termination. If the Participant’s Termination of Employment is as a result of a termination by the Company for Cause, all outstanding Restricted Stock Units that have not yet been settled, whether Vested or Unvested, shall be immediately forfeited and canceled as of the date of such termination.
5. Restrictions on Resales. The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued pursuant to Vested RSUs, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
6. Rights as a Stockholder. The Participant shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any RSUs unless and until shares of Common Stock settled for such RSUs shall have been issued by the Company to the Participant (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). Notwithstanding the foregoing, from and after the Grant Date and until the earlier of (a) the time when the RSUs are settled in accordance with the terms hereof or (b) the time when the Participant’s right to receive Common Stock upon payment of RSUs is forfeited, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Participant shall be entitled to a dividend equivalent which shall be paid in the form of a cash accrual on a bookkeeping account. Such dividend equivalents (if any) shall be subject to the same terms and conditions and shall be settled or forfeited and at the same time as the RSUs to which the dividend equivalents were credited.
7. Withholding Taxes. To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the grant or vesting of the RSUs. The Company shall not be required to issue shares or to recognize the disposition of such shares until such obligations are satisfied. The Participant acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the settlement of Vested RSUs from any amounts payable by it to the Participant (including, without limitation, withholding shares otherwise issuable under the Award or any other future cash wages).
8. Non-Transferability of Award. The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan or as permitted by the Board, the Award may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of other than by will or the laws of descent and distribution.
9. Other Agreements Superseded. The Grant Notice, this Award Agreement, the Plan and any Separate Agreement, if applicable, constitute the entire understanding between the Participant and the Company regarding the Award. Any prior agreements, commitments or negotiations concerning the Award are superseded.
10. Limitation in Interest in Shares Subject to Restricted Stock Units. Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or this Award Agreement
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except as to such shares of Common Stock, if any, as shall have been issued to such person in connection with the Award. Nothing in the Plan, in the Grant Notice, this Award Agreement or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate the Participant’s employment or other service at any time for any reason.
11. No Liability of Company. The Company and any Affiliate or Subsidiary which is in existence or hereafter comes into existence shall not be liable to the Participant or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and (b) any tax consequence expected, but not realized, by the Participant or other person due to the receipt or settlement of any Restricted Stock Units granted hereunder.
12. General.
(a) Governing Plan Document. The Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of the Award, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan.
(b) Governing Law. This Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflicts of law.
(c) Electronic Delivery. By executing the Grant Notice, the Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and its Affiliates or Subsidiaries, the Plan, the Award and the Common Stock via Company web site or other electronic delivery.
(d) Notices. Any notice required or permitted to be delivered under this Award Agreement shall be in writing (which shall include electronic transmission) and shall be deemed received (i) the business day following electronic verification of receipt if sent electronically, (ii) upon personal delivery to the party to whom the notice is directed, or (iii) the business day following deposit with a reputable overnight courier (or the second business day following deposit in the case of an international delivery). Notice shall be addressed to the Company at its principal executive office and to the Participant at the address that he or she most recently provided to the Company. The recipient may acknowledge actual receipt at a time earlier than the deemed receipt set forth herein or by a means other than that set forth herein.
(e) Successors/Assigns. This Award Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
(f) Severability. If one or more provisions of this Award Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Award Agreement, and the balance of the Award Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. The parties agree to replace such illegal, void, invalid or unenforceable provision of this Award Agreement with a legal, valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such illegal, void, invalid or unenforceable provision.
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(g) Section 409A. This Award Agreement is intended to be interpreted and applied so that the payments and benefits set forth herein shall, as applicable, comply with or be exempt from the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted, this Award Agreement shall be interpreted to the fullest extent possible to reflect and implement such intent. Notwithstanding anything in this Award Agreement to the contrary and to the extent the payments and benefits set forth herein are subject to Code Section 409A, a Termination of Employment shall not be deemed to have occurred for purposes of any provision of this Award Agreement unless such termination is also a “separation from service” within the meaning of Code Section 409A. Notwithstanding any provision in this Award Agreement to the contrary, if on his or her termination of service, the Participant is deemed to be a “specified employee” within the meaning of Code Section 409A, any payments or benefits due upon such Termination of Employment that constitute a “deferral of compensation” within the meaning of Code Section 409A and which do not otherwise qualify under the exemptions under Treas. Reg. § 1.409A-1 (including without limitation, the short-term deferral exemption and the permitted payments under Treas. Reg. § 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided to the Participant on the earlier of a date within 10 days after the date that is six (6) months after the Participant’s separation from service or, if earlier, the date of the Participant’s death.
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EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
NOTICE OF GRANT OF AWARD OF RESTRICTED STOCK UNITS
Notice of Grant
Excelerate Energy, Inc. (the “Company”) hereby grants to the Participant named below the number of restricted stock units specified below (the “Award” or the “Restricted Stock Units”). Each Restricted Stock Unit represents the right to receive one share of the Company’s Class A common stock, par value $0.001 per share (the “Common Stock”), upon the terms and subject to the conditions set forth in this Grant Notice, the Excelerate Energy, Inc. Long-Term Incentive Plan (the “Plan”) and the Restricted Stock Unit Award Agreement (the “Award Agreement”) promulgated under such Plan, each as amended from time to time. This Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Award Agreement.
Participant Name:
Grant Date:
Vesting Commencement Date:
Number of Restricted Stock Units:
Vesting Schedule:
Provided that the Participant has not experienced a Termination of Employment from the Grant Date through each such vesting date, and subject to the terms and conditions of the Plan and the Award Agreement, the Restricted Stock Units shall become vested as follows:
Agreements
By your signature and the Company’s signature below, you and the Company agree that this Award is granted under and governed by the terms of the Plan and the Award Agreement, all of which are attached hereto and incorporated herein by this reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or the Award Agreement, as the case may be.
You further acknowledge that your rights to any Restricted Stock Units will be earned and become vested only as you provide services to the Company over time, that the grant of this Award is not consideration for service you rendered to the Company prior to the Grant Date, and that nothing herein or in the attached documents confers upon you any right to continue your employment or other service relationship with the Company or any Affiliate or Subsidiary for any period of time, nor does it interfere in any way with your right or the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate that relationship at any time, for any reason or no reason, with or without Cause, and with or without advance notice, except as may be required by the terms of any employment or service agreement, offer letter, severance agreement, or any
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other agreement between the Participant and the Company or any Affiliate or Subsidiary (such agreement, a “Separate Agreement”) or in compliance with governing public law.
“COMPANY”
Excelerate Energy, Inc.
Name: Title: |
“PARTICIPANT”
Name
Signature
Address
Address |
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EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
This Award Agreement is made and entered into by and between Excelerate Energy, Inc., a Delaware corporation (“Company”), and the Participant identified in the Notice of Grant of Award of Restricted Stock Units (“Grant Notice”) which is attached hereto (the “Participant”).
1. Grant of Restricted Stock Units. The Company hereby grants to the Participant named in the Grant Notice an award of Restricted Stock Units, subject to all of the terms and conditions in this Award Agreement and the Plan, which are incorporated herein by reference. Restricted Stock Units issued pursuant to a Grant Notice and this Award Agreement are referred to in this Agreement as “Restricted Stock Units” or “RSUs.”
2. Company’s Obligation to Pay; Settlement. Each Restricted Stock Unit represents the right to receive payment as soon as practicable following, and in all events within sixty (60) days following, the date it vests in the form of one share of the Company’s Common Stock (each, a “Share” and collectively, the “Shares”). The Participant will have no right to payment of any Shares on any Restricted Stock Units unless and until the Restricted Stock Units have vested in the manner set forth in the Grant Notice and this Award Agreement. Prior to actual payment of a Share on any vested Restricted Stock Unit, such Restricted Stock Unit will represent an unsecured obligation of the Company, for which there is no trust and no obligation other than to issue Shares as contemplated by this Award Agreement and the Plan.
3. Vesting of Award. The Award shall not be vested as of the Grant Date set forth in the Grant Notice and shall be forfeitable unless and until otherwise vested pursuant to the terms of the Grant Notice and this Award Agreement. After the Grant Date, subject to termination or acceleration as provided in this Award Agreement or any Separate Agreement, the Award shall become vested as described in the Grant Notice with respect to that number of Restricted Stock Units as set forth in the Grant Notice. Restricted Stock Units that have vested and are no longer subject to forfeiture are referred to herein as “Vested RSUs.” Restricted Stock Units awarded hereunder that are not vested and remain subject to forfeiture are referred to herein as “Unvested RSUs.”
4. Accelerated Vesting; Forfeiture. Except as set forth in this Section 4, upon the Participant’s Termination of Employment, any then Unvested RSUs held by the Participant shall be forfeited and canceled as of the date of such termination.
(a) Death; Disability. If the Participant’s Termination of Employment is by reason of death or Disability, any Unvested RSUs shall accelerate and vest in full effective as of the date of such Termination of Employment.
(b) CIC Termination. If the Participant’s Termination of Employment is by the Company without Cause or by the Participant for Good Reason and, in either case such Termination of Employment occurs within the period commencing on the date a Change in Control is consummated and ending on the 24-month anniversary thereof (a “CIC Termination”), any then Unvested RSUs shall accelerate and vest in full effective as of the date of such Termination of Employment. As used herein, “Good Reason” has the meaning given to such term in the Excelerate Energy, Inc. Change in Control Severance Plan.
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(c) Cause Termination. If the Participant’s Termination of Employment is as a result of a termination by the Company for Cause, all outstanding Restricted Stock Units that have not yet been settled, whether Vested or Unvested, shall be immediately forfeited and canceled as of the date of such termination.
5. Restrictions on Resales. The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued pursuant to Vested RSUs, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
6. Rights as a Stockholder. The Participant shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any RSUs unless and until shares of Common Stock settled for such RSUs shall have been issued by the Company to the Participant (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). Notwithstanding the foregoing, from and after the Grant Date and until the earlier of (a) the time when the RSUs are settled in accordance with the terms hereof or (b) the time when the Participant’s right to receive Common Stock upon payment of RSUs is forfeited, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Participant shall be entitled to a dividend equivalent which shall be paid in the form of a cash accrual on a bookkeeping account. Such dividend equivalents (if any) shall be subject to the same terms and conditions and shall be settled or forfeited and at the same time as the RSUs to which the dividend equivalents were credited.
7. Withholding Taxes. To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the grant or vesting of the RSUs. The Company shall not be required to issue shares or to recognize the disposition of such shares until such obligations are satisfied. The Participant acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the settlement of Vested RSUs from any amounts payable by it to the Participant (including, without limitation, withholding shares otherwise issuable under the Award or any other future cash wages).
8. Non-Transferability of Award. The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan or as permitted by the Board, the Award may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of other than by will or the laws of descent and distribution.
9. Other Agreements Superseded. The Grant Notice, this Award Agreement, the Plan and any Separate Agreement, if applicable, constitute the entire understanding between the Participant and the Company regarding the Award. Any prior agreements, commitments or negotiations concerning the Award are superseded.
10. Limitation in Interest in Shares Subject to Restricted Stock Units. Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or this Award Agreement except as to such shares of Common Stock, if any, as shall have been issued to such person in connection with the Award. Nothing in the Plan, in the Grant Notice, this Award Agreement or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s
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employ or service nor limit in any way the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate the Participant’s employment or other service at any time for any reason.
11. No Liability of Company. The Company and any Affiliate or Subsidiary which is in existence or hereafter comes into existence shall not be liable to the Participant or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and (b) any tax consequence expected, but not realized, by the Participant or other person due to the receipt or settlement of any Restricted Stock Units granted hereunder.
12. General.
(a) Governing Plan Document. The Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of the Award, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan.
(b) Governing Law. This Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflicts of law.
(c) Electronic Delivery. By executing the Grant Notice, the Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and its Affiliates or Subsidiaries, the Plan, the Award and the Common Stock via Company web site or other electronic delivery.
(d) Notices. Any notice required or permitted to be delivered under this Award Agreement shall be in writing (which shall include electronic transmission) and shall be deemed received (i) the business day following electronic verification of receipt if sent electronically, (ii) upon personal delivery to the party to whom the notice is directed, or (iii) the business day following deposit with a reputable overnight courier (or the second business day following deposit in the case of an international delivery). Notice shall be addressed to the Company at its principal executive office and to the Participant at the address that he or she most recently provided to the Company. The recipient may acknowledge actual receipt at a time earlier than the deemed receipt set forth herein or by a means other than that set forth herein.
(e) Successors/Assigns. This Award Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
(f) Severability. If one or more provisions of this Award Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Award Agreement, and the balance of the Award Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. The parties agree to replace such illegal, void, invalid or unenforceable provision of this Award Agreement with a legal, valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such illegal, void, invalid or unenforceable provision.
(g) Section 409A. This Award Agreement is intended to be interpreted and applied so that the payments and benefits set forth herein shall, as applicable, comply with or be exempt from the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted, this Award
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Agreement shall be interpreted to the fullest extent possible to reflect and implement such intent. Notwithstanding anything in this Award Agreement to the contrary and to the extent the payments and benefits set forth herein are subject to Code Section 409A, a Termination of Employment shall not be deemed to have occurred for purposes of any provision of this Award Agreement unless such termination is also a “separation from service” within the meaning of Code Section 409A. Notwithstanding any provision in this Award Agreement to the contrary, if on his or her Termination of Employment, the Participant is deemed to be a “specified employee” within the meaning of Code Section 409A, any payments or benefits due upon such Termination of Employment that constitute a “deferral of compensation” within the meaning of Code Section 409A and which do not otherwise qualify under the exemptions under Treas. Reg. § 1.409A-1 (including without limitation, the short-term deferral exemption and the permitted payments under Treas. Reg. § 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided to the Participant on the earlier of a date within 10 days after the date that is six (6) months after the Participant’s separation from service or, if earlier, the date of the Participant’s death.
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EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
NOTICE OF GRANT OF AWARD OF
PERFORMANCE STOCK UNITS
Notice of Grant
Excelerate Energy, Inc. (the “Company”) hereby grants to the Participant named below the number of performance-based restricted stock units specified below (the “Award” or the “Performance Stock Units”). Each Performance Stock Unit represents the right to receive one share of the Company’s Class A common stock, par value $0.001 per share (the “Common Stock”), upon the terms and subject to the conditions set forth in this Grant Notice, the Excelerate Energy, Inc. Long-Term Incentive Plan (the “Plan”) and the Performance Stock Unit Award Agreement (the “Award Agreement”) promulgated under such Plan, each as amended from time to time. This Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Award Agreement.
Participant Name:
Grant Date:
Target Number of
Performance Stock Units
(“Target Shares”):
Vesting Schedule: Provided that the Participant has not experienced a Termination of Employment from the Grant Date through the applicable vesting date, from [___]% to [___]% of the Target Shares shall vest as determined following completion of the Performance Period in accordance with the performance-vesting provisions contained in Exhibit A to the Award Agreement and the other terms and conditions contained in the Award Agreement.
Agreements
By your signature and the Company’s signature below, you and the Company agree that this Award is granted under and governed by the terms of the Plan and the Award Agreement, all of which are attached hereto and incorporated herein by this reference. Capitalized terms used but not defined herein shall have the meanings given to them in the Plan or the Award Agreement, as the case may be.
You further acknowledge that your rights to any Performance Stock Units will be earned and become vested only as you provide services to the Company over time, subject to the attainment of the performance-vesting provisions contained in Exhibit A to the Award Agreement, that the grant of this Award is not consideration for service you rendered to the Company prior to the Grant Date, and that nothing herein or in the attached documents confers upon you any right to continue your employment or other service relationship with the Company or any Affiliate or Subsidiary for any period of time, nor does it interfere in any way with your right or the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate that relationship at any time, for any reason or no reason, with or without Cause, and with or without advance notice, except as may be
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required by the terms of any employment or service agreement, offer letter, severance agreement, or any other agreement between the Participant and the Company or any Affiliate or Subsidiary (such agreement, a “Separate Agreement”) or in compliance with governing public law.
“COMPANY”
Excelerate Energy, Inc.
Name: Title: |
“PARTICIPANT”
Name
Signature
Address
Address |
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EXCELERATE ENERGY, INC.
LONG-TERM INCENTIVE PLAN
PERFORMANCE STOCK UNIT AWARD AGREEMENT
This Award Agreement is made and entered into by and between Excelerate Energy, Inc., a Delaware corporation (“Company”), and the Participant identified in the Notice of Grant of Award of Performance Stock Units (“Grant Notice”) which is attached hereto (the “Participant”).
1. Grant of Performance Stock Units. The Company hereby grants to the Participant named in the Grant Notice an award of Performance Stock Units, subject to all of the terms and conditions in this Award Agreement and the Plan, which are incorporated herein by reference. Performance Stock Units issued pursuant to a Grant Notice and this Award Agreement are referred to in this Agreement as “Performance Stock Units” or “PSUs.”
2. Vesting of Award; Settlement.
(a) Vesting. The Performance Stock Units shall become earned and vest, if at all, based upon the achievement of one or more predetermined performance goals, as outlined in Exhibit A (the “Performance Goal”), over the period specified on Exhibit A over which attainment of the Performance Goal is to be measured (the “Performance Period”). Performance Stock Units awarded hereunder that are not vested and remain subject to forfeiture are referred to herein as “Unvested PSUs.”
(c) Company’s Obligation to Pay; Settlement. Each Performance Stock Unit represents the right to receive payment as soon as practicable following, and in all events within 2 ½ months following, the earlier of (i) any applicable accelerated vesting date set forth in Section 3 below and (ii) the date on which the Committee certifies the attained level of the Performance Goal (the “Certification Date”), in the form of one share of the Company’s Common Stock (each, a “Share” and collectively, the “Shares”). The Participant will have no right of payment of any Shares until such date. Prior to the actual payment of a Share on any Performance Stock unit, such Performance Stock Unit will represent an unsecured obligation of the Company, for which there is no trust and no obligation other than to issue Shares as contemplated by this Award Agreement and the Plan.
3. Accelerated Vesting; Forfeiture. Except as set forth in this Section 3, upon the Participant’s Termination of Employment prior to the Certification Date, any then Unvested PSUs held by the Participant shall be forfeited and canceled as of the date of such termination.
(a) Death; Disability. If the Participant’s Termination of Employment is by reason of death or Disability, any Unvested PSUs shall accelerate and vest in full at the Target Share level, effective as of the date of such Termination of Employment.
(b) CIC Termination. If the Participant’s Termination of Employment is by the Company without Cause or by the Participant for Good Reason and, in either case such Termination of Employment occurs within the period commencing on the date a Change in Control is consummated and ending on the 24-month anniversary thereof (a “CIC Termination”), all then Unvested PSUs shall accelerate and vest in full with the Performance Goals deemed achieved at the greater of (i) the Target Share level and (ii) the level at which the Performance Goals were attained treating the date of the Change in Control as the last day of the Performance Period. As used herein, “Good Reason” has the meaning given to such term in the Excelerate Energy, Inc. Change in Control Severance Plan.
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(c) Cause Termination. If the Participant’s Termination of Employment is as a result of a termination by the Company for Cause, all outstanding Performance Stock Units that have not yet been settled, whether vested or Unvested, shall be immediately forfeited and canceled as of the date of such termination.
4. Restrictions on Resales. The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued pursuant to the vested PSUs, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
5. Rights as a Stockholder. The Participant shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any PSUs unless and until shares of Common Stock settled for such PSUs shall have been issued by the Company to the Participant (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). Notwithstanding the foregoing, from and after the Grant Date and until the earlier of (a) the time when the PSUs are settled in accordance with the terms hereof or (b) the time when the Participant’s right to receive Common Stock upon payment of PSUs is forfeited, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Participant shall be entitled to a dividend equivalent which shall be paid, in the form of a cash accrual on a bookkeeping account. Such dividend equivalents (if any) shall be subject to the same terms and conditions and shall be settled or forfeited and at the same time as the PSUs to which the dividend equivalents were credited.
6. Withholding Taxes. To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the grant or vesting of the PSUs. The Company shall not be required to issue shares or to recognize the disposition of such shares until such obligations are satisfied. The Participant acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the settlement of PSUs from any amounts payable by it to the Participant (including, without limitation, withholding shares otherwise issuable under the Award or any other future cash wages).
7. Non-Transferability of Award. The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan or as permitted by the Board, the Award may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of other than by will or the laws of descent and distribution.
8. Other Agreements Superseded. The Grant Notice, this Award Agreement, the Plan and any Separate Agreement, if applicable, constitute the entire understanding between the Participant and the Company regarding the Award. Any prior agreements, commitments or negotiations concerning the Award are superseded.
9. Limitation in Interest in Shares Subject to Performance Stock Units. Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or this Award Agreement except as to such shares of Common Stock, if any, as shall have been issued to such person in connection with the Award. Nothing in the Plan, in the Grant Notice, this Award Agreement or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or
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service nor limit in any way the Company’s (or any Affiliate’s or Subsidiary’s) right to terminate the Participant’s employment or other service at any time for any reason.
10. No Liability of Company. The Company and any Affiliate or Subsidiary which is in existence or hereafter comes into existence shall not be liable to the Participant or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and (b) any tax consequence expected, but not realized, by the Participant or other person due to the receipt or settlement of any Performance Stock Units granted hereunder.
11. General.
(a) Governing Plan Document. The Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of the Award, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan.
(b) Governing Law. This Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to principles of conflicts of law.
(c) Electronic Delivery. By executing the Grant Notice, the Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and its Affiliates or Subsidiaries, the Plan, the Award and the Common Stock via Company web site or other electronic delivery.
(d) Notices. Any notice required or permitted to be delivered under this Award Agreement shall be in writing (which shall include electronic transmission) and shall be deemed received (i) the business day following electronic verification of receipt if sent electronically, (ii) upon personal delivery to the party to whom the notice is directed, or (iii) the business day following deposit with a reputable overnight courier (or the second business day following deposit in the case of an international delivery). Notice shall be addressed to the Company at its principal executive office and to the Participant at the address that he or she most recently provided to the Company. The recipient may acknowledge actual receipt at a time earlier than the deemed receipt set forth herein or by a means other than that set forth herein.
(e) Successors/Assigns. This Award Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.
(f) Severability. If one or more provisions of this Award Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Award Agreement, and the balance of the Award Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. The parties agree to replace such illegal, void, invalid or unenforceable provision of this Award Agreement with a legal, valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such illegal, void, invalid or unenforceable provision.
(g) Section 409A. This Award Agreement is intended to be interpreted and applied so that the payments and benefits set forth herein shall, as applicable, comply with or be exempt from the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted, this Award Agreement shall be interpreted to the fullest extent possible to reflect and implement such intent.
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Notwithstanding anything in this Award Agreement to the contrary and to the extent the payments and benefits set forth herein are subject to Code Section 409A, a Termination of Employment shall not be deemed to have occurred for purposes of any provision of this Award Agreement unless such termination is also a “separation from service” within the meaning of Code Section 409A. Notwithstanding any provision in this Award Agreement to the contrary, if on his or her termination of service, the Participant is deemed to be a “specified employee” within the meaning of Code Section 409A, any payments or benefits due upon such Termination of Employment that constitute a “deferral of compensation” within the meaning of Code Section 409A and which do not otherwise qualify under the exemptions under Treas. Reg. § 1.409A-1 (including without limitation, the short-term deferral exemption and the permitted payments under Treas. Reg. § 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided to the Participant on the earlier of a date within 10 days after the date that is six (6) months after the Participant’s separation from service or, if earlier, the date of the Participant’s death.
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EXHIBIT A
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EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Steven Kobos, certify that:
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Date: May 11, 2023 |
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By: |
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/s/ Steven Kobos |
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Steven Kobos |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Dana Armstrong, certify that:
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Date: May 11, 2023 |
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By: |
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/s/ Dana Armstrong |
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Dana Armstrong |
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Executive Vice President and Chief Financial Officer |
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(Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Excelerate Energy, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven Kobos, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
Date: May 11, 2023
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/s/ Steven Kobos |
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Name: |
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Steven Kobos |
Title: |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Excelerate Energy, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dana Armstrong, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
Date: May 11, 2023
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/s/ Dana Armstrong |
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Name: |
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Dana Armstrong |
Title: |
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Executive Vice President and |
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(Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.