New Fortress Energy LLC (NFE) CEO Wes Edens on Business Update Conference Call (Transcript)

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About: New Fortress Energy LLC (NFE)
by: SA Transcripts
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New Fortress Energy LLC (NASDAQ:NFE) Business Update Conference Call March 18, 2019 8:30 AM ET

Company Participants

Lee Evans - Head of Investor Relations

Wes Edens - CEO

Chris Guinta - CFO

Brannen McElmurray - Chief Development Officer

Conference Call Participants

Sean Morgan - Evercore

Fotis Giannakoulis - Morgan Stanley

Ben Nolan - Stifel

Devin Ryan - JMP Securities

Ryan Levine - Citi

Craig Shere - Tuohy Brothers

Operator

Good day, ladies and gentleman. Welcome to New Fortress Energy Update Call. At this time, all participants are in a listen only mode. Later we will conduct a question-and-answer session and instructions will follow at that time [Operator Instructions]. As a reminder, today’s call is being recorded.

I would now like to turn conference call to Lee Evans, Head of Investor Relations. You may begin.

Lee Evans

Thank you. Good morning, and welcome to New Fortress Energy Business Updated Call. Here today are CEO, Wes Edens; CFO, Chris Guinta; and Chief Development Officer, Brannen McElmurray.

Before I turn the call over to Wes, I would like to remind you that certain statements made today maybe forward looking statements, which are subject to many risks, uncertainties and contingencies. We expect that events described in these forward-looking statements may not occur as expected or at all. I encourage you to review the forward-looking statement disclaimer in our Investor supplement posted on our Web site and the risk factors and other disclosures that will be in our annual report filed with the SEC, which we will file this week. In addition, speakers will discuss illustrative financial information. Please review the cautionary statements regarding illustrative information, which are included in our supplement.

Now, I would like to turn the call over to Wes.

Wes Edens

Thanks, Lee and thanks everyone for calling in. Hopefully you have in front of you the supplement that we put out here this morning, so I was just speaking to that. And I will go through the first couple of pages, turn it over to Chris Guinta who is our CFO to go through some of the financial stuff. Brannen to walk through development update and obviously, lot going on that, and I've give a few concluding statements. So let’s start at the top.

So, our Page 2, the highlights of the company since we have been public, which is only six weeks ago, have been terrific; commercial activity that is robust; committed volume at the time of IPO 2.2 million gallons per day; today it stands at 2.45 millions, so it's about 12% over the last six weeks; pipeline even more robust, so 10.2 million gallons in the pipeline at the time we went public 14.4 million today. Notable events, we signed the definitive PREPA agreement two weeks ago. Last Friday, we were all in San Juan and sunshine down there with a ground breaking ceremony with the Governor and with the CEO, PREPA and others, there were exciting moments so that is very good. And the ceremony is a groundbreaking. We've got a little bit late, because the ground has all been built and that project is well underway. So I will leave it to Brannen to talk about that.

Development is largely on time and budget. The current business today if you look at the company is becoming clear by the minute. So there are four terminals they will be completed this year. The two in Jamalco that are up and running now, the one Puerto Rico that we broke ground and we’re paused terminal in Mexico. One liquefier FID expected to be done in about two years from now. So at the end of next year expect to be substantially complete. But I will leave it to Brennan to talk about it.

Committed volumes translate into $240 million in run rate terminal cash flows that’s the metric that we pay a lot of attention to. So it can be rolled forward to the end of the year annualized the first quarter metric $240 million, taking that plus the pipeline and converting that into actual committed customers has a huge impact on it. So we show a range, I’m going to let Chris speak to this of 25% to 50% of the pipeline converting. Historically, we have actually converted quite a bit more than that now they are admittedly on small volumes into that history. But our estimate is we're close to 80% of our pipeline has actually converted. But if you use 25% to 50%, you basically end up doubling or tripling the levels of cash flow at the terminal, so very, very robust and a great bright future for this year.

Looking at Page Number 3, we've had increase in the volumes than recently. But I went back also look at the same period from a year-ago. So one year ago first quarter committed volumes 960,000, that grew to 2.2 million at the time of the IPO, 2.45 million, today, it's up about 2.5 times from same period a year-ago. Pipeline even more pronounced, the 950,000 gallons per day was a pipeline year ago. It grew dramatically through the IPO of 10.2 million gallons but stands at 14.4 million gallons per day so up 15 times from where we were just a year ago.

On Page 3, just aggregating this little bit to not just look at the volumes but also the number of customers, that has also grown substantially. So we've got 41 agreements and did work with our outstanding across the terminal. That increase of clients increases our diversity of credit as it increases our diversity of type of clients and is a great measure of the company's health and well being of the business.

Page 4 or Page 5, I'm going to turn it over to Chris to walk you through some of the numbers. Chris?

Chris Guinta

Yes, thanks Wes. What this page is really showing us the company's anticipated ramp-up of volumes and our blended margins. When these volumes come online, we expect we can achieve the results in the line with illustrative run rate terminal cash flows. As a reminder, the contracted volumes that you are seeing here serve base load power, and they will be amongst the cheapest, cleanest and most efficient fuel source available on the markets that they serve. The 2.5 million gallons of targeted volumes we have contracted will rapidly be placed in the production with substantially all of these volumes expected to come online in the next 12 months.

As Wes mentioned, we have four terminals in operation or under development plus our Miami liquefier, which facilitate this growth without the volumes by each. As you can see even at market rate LNG supply, these targeted contracted cash flow or cash flow engines generating about $55 million at quarter once the projects ramp-up. Once the Pennsylvania liquefier is online, we expect you could see an economic uplift from our low cost LNG of approximately $200 million annually. And while we have a material base load and foundation of customers our pipeline is multiples of what we pay for today. At the bottom of the page, we demonstrate that if we convert only 50% of the 14 million gallons of volumes in our discussion pipeline, we're looking at business that sells almost 10 million gallons a day. Assuming you source LNG from the open market and at prevailing rates thus using average margin of about 250. These in discussion volumes could add an additional $275 million or greater annually.

Brannen McElmurray

Good morning. We've had six week since IPO, so I want to take this opportunity just update the group on what we've done to-date and getting ready to do in the ensuing months. To-date we've completed 14 projects about $245 million largely on time and with on budget with the latest being our Old Harbour project that we actually delivered early. In terms of the go forward, we have about 1.2 billion of infrastructure projects underway that are also largely in line with our expectations and on-schedule and on budget.

What I would point you to is Page 6 in the materials that we've presenting. And what we're trying to do here is just show you the scorecard of what we have done and what we've got in the queue as well. And as you'll see from a historical perspective, we have way more winners than we have losers for sure. From the historical perspective, the Mo Bay terminal is one of the ones we've highlighted, which was a little bit late but in fact we end up doing that in 13 months and then we followed that up with old harbor, which we just delivered sending our first guest and the customer on March 4th.

In terms of what we're doing in terms of underway, we have 14 projects under development for 1.2 billion approximately four of them are large scale projects, including a combined heat and power plant, the liquefier and two hybrid fuel handling facilities and 10 small scale projects, including industrial, transportation and commercial customers and a couple of those that we just wanted to take time to highlight here. Since our last discussion since our IPO as I mentioned before, we completed our Old Harbor terminal, which we delivered first gas on March 4, 2019 and we expect to do first fire here at the end of the month.

From our PR project which Wes touched on at the beginning of the call, we had our ground breaking on Friday. We drove our first pile. And we expect that project to be completed middle of this year. In terms of our Jamalco project, which is our first project, which is a combined heat and power project. We have set the combustion turbine, as well as the steam generators. And we expect that the pipeline will be completed middle of this year and that we'll be delivering first gas in Q1 of 2020. And then in terms of Pennsylvania, we have submitted all of our permits and we're making good progress on getting those completed. We have ordered our major equipment and we're getting ready to start to move there during the construction season of this year.

Wes Edens

Well, couple other things I want to talk about. When you look at the business you could have told me at the time of the IPO that until now we would have number one substantial increases in terms of the commitments on the books. Number two and even more substantial increase in pipeline but we would sign the contract definitely in Puerto Rico, break ground and get that underway and have the general atmosphere around our business as positive it was. And then as result of all that, the stock publicly would trade down, I wouldn't have believed you. Obviously, what has happened is that without intending to our conversations on debt as we've looked at different alternatives and the market have created an anxiety and uncertainty, and that’s impacted us and I just want to talk about that now.

The current situation of our debt is we are incredibly well financed. We have $500 million facility. We have a $100 million in cash and we have $280 million drawn thus far. We run out our liquidity by month over the next couple of years, in no period we go to less than $250 million in any one period. So the funding issue is not an issue. And when you look at the asset value that we've created at the terminals, in particular with the cash flows that we've locked in, we should be in a great place. I mean, what we did and this is the background and I will take the fall for this, because it seem like such a simple thing to do, is we said post IPO, let’s go out to the marketplace and see if we can increase our debt from $500 million to $750 million in the ordinary course under largely the same terms of the assets that we have.

Now, there has been a lot of work done on this. And we have a fully committed deal that was presented to us on Friday, but it's not the terms that we want, either in terms of the rates of it, which were higher than we wanted as well as just the restricted nature of the terms, the non-callability battle, all the kinds of things that we think are not great. I do greatly appreciate the efforts of the debt investors who spent a lot of time on this. I mean our own team who spent a lot of time on it. But it is simply not a debt financing that we want to do right now. And the [debtpocalypse] or whatever we have like sale or sell into here, we’re going to put to an end right now. And say we will go pursue financing in the ordinary course. Our facility right now is LIBOR plus 400 with no floors it’s a very good facility. I think that in hindsight what was probably the mistake that we made is that we went to go talk to the Term Loan B market, which is a good corporate financing markets but for an asset base businesses such as ourselves, I think we're just in the wrong venue. And so as a result that's just not something that we need to talk about. And we're in a great place around it.

And when you talk about asset base financing, so I want to talk about what I think about the business in terms of what -- how we actually think about what are those. And I really think that the comparables that are relevant for our businesses is really infrastructure business, because that's what we've got. I mean, our terminals are assets and they are very similar. I mean in respects to ports and to other terminals. When you look at the characteristics of them, both in terms of committed capital, the positions that they occupy in these markets, the growth of them they are actually superior in many if not all the respects of all those. Those assets have traded historically at actually quite impressive margins. BTTI was a transaction, it was done at the liquids ports' terminal, our portfolio was sold last November I believe 11.9 times multiple $2.5 billion purchase price. One of the assets is the propane terminals we've no doubt, well done at the same time, but there's a lot of characteristics around that. And when you look at the cash flow from terminals, so that's what we really hang our hat on; $240 million today; $275 million to $550 million in growth if we just execute that pipeline over the remainder of the year; another $250 million coming from when the liquefier comes on. You're looking at cash flows at terminals of $750 million to $1 billion.

So, obviously, an incredible amount of cash flow to go finance your business. The ports and liquefier business, ports and terminals business we looked at tend to get financed heavily equitized with 50% loan to value. But if you took -- again, our cash flow is multiple on terms that, you look at those loan-to-value you can see we've got a tremendous amount of headroom on the finance side. So all I can say about it is, sorry we certainly didn’t intend to do it. We had a lot of the right intentions what we're trying to do. But as much I've said, I'd rather look stupid than actually be stupid. So the financing is not actually what we want to do in that. So I think really the conclusion of it is this first period has been a very good one. When I look at the business, as excited as I get about what we have been doing and the numbers that are generated by it, I can equally or more excited about the money that we're saving to our customers.

The conversion from distillate fuels, the conversion from diesel has massive impacts on these economies, hundreds and hundreds of millions of dollars of investment save that they can go deploy that capital in other ways in those communities. I came back from the APA trip to Africa the last week. There is a handful of countries there. I'm extremely optimistic about the prospects there, because of the countries that are dominated by distillate fuels. They've got big issues in terms of the cost of those fuels, they have big issues in terms of contamination in some of those cases and they’ve got big issues in terms of the environmental impact of it. So we feel great about it and we're excited about where the business is. So I think that stuff has been a distraction, and I apologize for that. But in terms of the core business, we feel great and we look forward to talking to you guys again in May when we have the line.

And so with that, I'll pause and we'll take questions. Lee?

Lee Evans

Operator, we are ready to start the Q&A.

Question-and-Answer Session

[Operator Instructions] Our first question comes from Jon Chapelle with Evercore.

Q - Sean Morgan

This is Sean Morgan on for Jon. Just to clarify, I wasn’t sure I totally got where we stand with facility. So you said you have the $500 million facility signed up at terms you find it acceptable, or you are planning on not accepting that $500 million facility at all and trying to come up with a different financing solution and being more reliant on the cash flows of the projects you have coming online?

Wes Edens

We are not going to take the financing we've been talking about I told the guys at the banks that on Friday. And again, well I appreciate the amount of effort that they've gone through. I just think it was in the wrong place. And frankly, we’re in the position as the company where we're transferring from being a development company to an operating company. The committed cash flows is purest ways of looking at that. And again our expectation by the end of this year you’re looking at 240 times two or three. And what you've got, you’ve got lots of different options to finance yourself and the asset bases. So we feel really good about that.

Sean Morgan

And are there any projects that you could -- like which projects you have flexibility to also be delayed to reduce CapEx in the event that cash flows aren’t ramping fast enough.

Wes Edens

We don’t have any expectation of reducing it. Right now I would say that the company today we have four terminals that we've been operating or being built. So two in Jamaica, the one in Puerto Rico, the one in La Paz that’s committed. We've got obviously a great position in Ireland. We've got we think a very good position in Dominican Republic that we're excited about. And without being specific, I just don’t want to about for competitive reasons. We think one of the places that we spent time with last week in Africa has got a short-term opportunity that is very exciting, so each one of those would be incremental amounts of capital. We've got as we said in no period over the next couple of years, we go to less than $250 million. So we've got lots of liquidity with respect to those terminals. The liquid fire itself is $800 million project roughly that generates $250 in cash flow. So it’s at a 30% development yield, you've got many, many options in terms of financing that. We've actually got a bunch of unsolicited interest and people asking about the thing. So we will just go finance that in the ordinary term, that’s what we report on and we do it.

Operator

Our next question comes from Fotis Giannakoulis with Morgan Stanley.

Fotis Giannakoulis

Can you give us again some numbers about the remaining CapEx. Is still at $1.3 billion? And also an update about the anticipated sale of the Jamalco power plant after its completion?

Wes Edens

So I'll let Chris walk through the numbers. But take the brand and it went through the current status of the different developments. And we'll have Chris just go through that.

Chris Guinta

There is over $440 million of cash on hand. When you pro forma for the debt draw down Fotis, and we do hold the same numbers that we discussed at the IPO constant for the terminal CapEx, which is approximately $400 million. And then it's still about $750 million remaining, little under that remaining be spent on the liquefier.

Wes Edens

And then on the Jamalco asset, there is the pretty picture that we include there that shows how that is coming along, but it’s basically proceeding actually really well. This summer so I'd say late second quarter, third quarter that’s the time to really get focused on both financing and selling that asset. You can produce obviously a high percentage of our expected proceeds from simply financing it. There is a lot of interest and financing that asset. It's got a 20 year PPA. It's got tremendous growth prospect. So it's a very, very attractive infrastructure asset. But the time to really go and complete that transaction as we get little bit closer to the completion of it. So I think probably not by May do I expect to have a real update, because I would say the quarter after that is likely we have something material to report on.

Fotis Giannakoulis

So just to clarify, there hasn’t been any change in your pipeline of downstream projects. Is there any update since the IPO about the Dominican Republic project and what is going on there?

Wes Edens

No, I mean as I said, we've got four that we are committed that we're actually building. We then have three terminals that I think are all high probability and it's just the question of timing to make publicly one of those. And just as we are reporting matter, we'll about those specifically on these calls and where they have gone from a potential project to an actual committed project. So I think that's a good opportunity on one or more of these for them to convert in the near-term, but hard to predict the future obviously.

Fotis Giannakoulis

And one last question about the procurement of gas ahead of completion of the liquefier. How much of your volume that you need you have already contracted and if you can give us the approximate pricing? And also after the completion of the La Paz and potentially the Los Cabos project. At what price do you expect that you will be buying the LNG from third parties?

Wes Edens

Well, the first questions and I guess is what we have contracted for thus far is 100% of the volumes. And we spend a lot of time in this, but I'm happy to go -- we're not going to get through now. But the general tenure of the gas as we bought largely fixed price basis of $2.50. There is some indexation of that and what not. But we have sourced 100% of the gas that we need for the first liquefier…

Fotis Giannakoulis

I'm asking more about the LNG until the liquefier is ready. As you can benefit from the recent drop in the LNG prices?

Wes Edens

So we are contracted right now at an average price of $7.13 to $7.18. Was it Chris?

Chris Guinta

$0.13…

Wes Edens

$0.19 for the volumes that are in place right now. As we get growth and we do expect a material amount of growth, we would then go and buy additional cargos for that. But current spot pricing has gone down somewhat at least for the short-term. And so there would be a benefit for that for sure. But for the financial model, the numbers that we run we basically just roll forward the average price, which we have used thus far. And so to the extent that there is a benefit that is an unexpected surprise but their market prices have come down a little bit.

Operator

Our next question comes from Ben Nolan with Stifel.

Ben Nolan

So circling back around to the financing questions, because it's something that I know I've got a lot of questions about. And Wes, I think you may be mentioned this and I just missed it. But how much availability under your existing facilities you currently have assuming you are not taking the new…

Wes Edens

We've drawn $280 million of the $500, so we have $220 million in additional capacity right now.

Ben Nolan

And then with respect to the 4.2 million gallons that are now under discussion that has been added in the last six weeks or so. Just curious if you could maybe frame that in a little bit. How much of that per say would come from a single customer, or is this pretty broad-based level of incremental potential demand?

Wes Edens

It’s really broad based actually. The core customers tend to be power users but there are utilities or ITP, or what not so people are actually are either burning diesel or burning gas and looking for alternatives but there is lots of industrial customers. When I look at the page that we lay out the 41 different customers, we've got that is in addition to just the core numbers being great. That reflects I think accurately the robust nature of all the different counterparties we’re looking at. And I think that number is going to grow dramatically over the course of the year. So, it really comes from a bunch of different places. About half of it is with existing terminals, about half of it is with the terminals that we have yet to go beyond, so that’s roughly what it is but it's a good robust mix of people not a single user or anything close to that.

Ben Nolan

And then lastly for me just specifically on Pennsylvania facility. Could you remind me of what permits you need to finalize? And any color as to when you might would expect to get approval for those that you can breakdown?

Wes Edens

So technically, we can break ground today some has levels on that just in terms of where our permitting path is. I think the most significant one that you're probably focused on, which we focused on is the air permit, which is a state level permit to what you think is a minor source permit, so in the big scheme of things not that big of a deal. I met actually with the EP probably about a week ago. My expectation is that we will actually see something on that within the next two to three weeks, which we've been be able to update folks on. So we are on plan to slightly ahead of that in terms of what we’re looking at. But I think what you’re focused on is the air permit is along the long lead, so to speak, but we’re well on our path. And in fact actually I will update our filing today and then we expect to probably have a material movement in that the next three weeks.

Ben Nolan

And at which point construction would begin, is that a fair assumption?

Wes Edens

Well, I think at this point, we can begin construction, because we can move there and things like that on the site, air permits again because I need to deploy the foundations for the turbines ahead of the planned procedure, that’s why I focus on it.

Operator

Our next question comes from Devin Ryan with JMP Securities.

Devin Ryan

Most of my questions have been asked, but just to come back on the asset level financing. Just want to get a sense of the timeline or expected timeline. And also just with respect to be Pennsylvania liquefier. Any sense of what terms could look like based on some of that initial query and just more broadly, what those markets look like?

Wes Edens

On the first point, I think the timing for more of an asset level finance is probably the second half of the year as these terminals get fully ramped. So, we have delivered first into the Jamaica project that gets ramped up over the course this spring. I think we’re expecting full launch sometime in May [Multiple Speakers]. Puerto Rico, we've got an aggressive schedule booked for ourselves and for the authority just given the dimensions of like what they are going to say. So we’re both very focused on that. I think that we expect that that’s going to come together in the third quarter. And I think when those two things come online then you have I think lots of potential on the asset base financing side and again to put a little bit of dimensions around it.

But if you used $300 million as a run rate member for the terminals and as I said I think it could be something higher than that. But $300 and then you look at the asset value versus the other transactions that have happened recently at 12 times is 300 times to 12, 3.6 billion, 50% debt against that would be $1.8 billion, obviously, dimensionally very different than the $500 million that exists right now. So I think on the asset base side, there are lots, and lots, and lots of comparables of ports and terminals that are highly relevant. And so we just need our terminal base to grow. We need the assets to start the cash flow and then I think we will go and finance on it.

With respect to the liquefier, we're going to turn our attention to that now and there is I think many, many different options in terms of financing that and when we finalize that structure we'll come back to you. I mean the bulk of the capital for that is spent at the end of this year and the first part of next year. So we've got real time before we have to sort out precisely, but that's something that’s obviously something we're going to focus on here now.

Devin Ryan

And then I guess just following up on the last question around the $4 million increase in volumes since the IPO is obviously a sizeable step-up, and I think validates your model and what you guys do. I want to just get a sense of whether you guys are seeing I guess more demand from new parties. Was that 4 million existing relationships that is just coming to light? Or is that all brand-new demand or reverse inquiry? And then similar and not to put the cart before the horse here, but where do you see the long-term capacity for the Pennsylvania liquefier? And what else or where else would you'd be able to expand the capacity if need to be?

Wes Edens

The first answer is that the former, it's basically for the most part, all new demand. And there is certainly some incremental demand we think from some of the customers but in our numbers these are people that we have recently come across or we have actually had advance conversations to move them from general conversations to the in discussion bracket that we take very seriously. And there the list of industrial customers, the list of power users and I think what is also becoming clear the list of potential transportation customers, there's a lot of discussions around that as well is a very, very robust. And I just think the more terminals that you can have in the right places in the world where there is a market demand that needs to be met, the better off we are.

And as I say as our company with have four terminals one liquefier today, I don’t I'd be satisfied, because I'm not easily satisfied. But I'd be happy if at the end of the year, we had gone from four to five with this six to seven and double the number of liquefiers outstanding that obviously would be a tremendous period of time, but that's what we want to do. I mean what's very clear and this is from my trip last week is that people desperately are focused on saving money. And in all these markets you've got diesel prices of $16, $17, $18, $20 MMBtu. And so we are at huge discount to that and we're cleaner, and we're all the renewables, all the things that there is, so there the model is crystal clear that it actually really works. And we just got to execute on that side. And then on the liquefier side, we think if there is multiple sites in the region where the first that one is to be done, so we are excited about that. We have already started to set our site on other parts of the country, because we think there's other really interesting ones to do, and to speculate about that but we think it’s the list of options is really good one.

Operator

Our next question comes from Ryan Levine with Citi.

Ryan Levine

On the financing plan given what you laid out of that asset based solution. Can you update us as to the timeline in terms of executing that, more specifically how much cash do you -- at what point would you run out of cash base off of the current plan if you're unable to secure Pennsylvania liquefaction debt or project level financing?

Wes Edens

Well, as I said, we run out our cash flows by month over the next couple of years. We never go less than $250 million of the assets that are committed right now. So that obviously is a lot of liquidity and a lot of -- we’re not remotely close to running online with that. Pennsylvania is something that we need to go finance independently. Again, when you think of financing a development, the development yields is a highly relevant topic. If we're looking to finance an office building at a development yield of 8%, we would need a high level of financing at a relatively low cost to make that work. When you start with a 30% unleveraged return, the options expand geometrically. So, there's lots and lots, and lots, and lots of different ways that we can look at it. And we have just started to focus on that now and I’m highly confident that we’re going to be successful in figuring that out. So we’re incredibly well financed.

And so really I was trying to do something, we're trying to something we thought was really excessively conservative in terms of looking to potentially upsize the facility, extend the term, et cetera and it just didn’t really -- we’re just not talking to the right customer base. So I actually think what it's worth, this may sound a bit strange analogy. But it actually has really resonates with me and what happen to us when we look at the cell power business 18 years ago. But there was a corporate financing market for us that was antiquated and it was very, very restrictive and very difficult. We converted it to an asset base financing. The cost of financing dropped precipitously, everybody became a REIT, I mean it changed dimension of the entire market. Very, very clear that that’s going to be the same thing that’s going to happen here at least it's clear in my view.

Ryan Levine

Are you planning to also look at the securitization market?

Wes Edens

I mean, secured financing -- securitization is just a fancy word for secured lending. So, I think what lends itself, while this is where the 41 customers is a material issue. The more diversity you have in terms of customer base, the more diversity you have in terms of number of terminals that are up and online, the greater the options are the secure financing in a number of different ways. As a firm, we probably done a couple hundred billion dollars in securitizations over the years. So the technology of those different businesses, speaking to Fortress obviously not New Fortress, but we've obviously have seen a lot of different assets. These are clearly assets that can easily be financed in that structure given the right tenure of cash flows, diversity of base, etcetera. So again, that’s probably more of a second half of the year issue then a first half of the year. So you need to get things through the development pipeline.

I mean, I want to say some good words. I mean Bran and his team have done a very good job of trying to produce clarity, and it's something that is reasonably hard to get clarity about. And so we came up with this whole notion of the development scorecard to show the good and the bad and the ugly with this to give people our best sense to communicate how we’re doing just given the amount of development activity around the place. And frankly when I look at the score card stuff over the last number of days, I’m happy as to see the ones that didn’t work, because those are the ones that point out the things that you could have done differently. And we have very high standards in terms of the timelines and commit to and what not. We have some of our early ones where we had some slippages in terms of time and budgets, and then the most recent stuff has been bringing money on it.

And it's our attempt to share with you analysts, you investors, anybody else who wants to look at it how we're doing and as cleaner way as possible. So I hope to take to what it's worth and we'll try and continue to improve how we do that, because I think that’s' a big part of the story of the company.

Ryan Levine

And lastly, how does the existing credit structure treat the potential project financing and if your existing capital structure has to be amended?

Wes Edens

It's hard to answer that specifically, because we don’t know what the form it would take. I mean it would be there. In certain case, it might have to be amended in certain cases, it wouldn’t be, another cases it would probably go refinance. I mean, I think as I said at some point, I think we will definitely mean towards a secured financing structure and when that happens, we will probably replace this capital structure and its entirety, which frankly the call ability of it. One of the things that when we look at the new facility, the one thing that probably of all the things that stood out to me was the investors are very focused on non-call ability. And what they are really saying is we think you are going to do well. We think you are going to perform well and we want your debt to be locked-in for a longer period of time so we can benefit from that. That's their job, and I understand that. That doesn’t really fit with what we want to do as a company. So that was probably the one most material aspect of it that we just said that that’s we're probably not in the right place on this.

Operator

Our next question comes from Craig Shere with Tuohy Brothers.

Craig Shere

I just want to follow-up on Fortress question first. You've locked in all volumes needed for the forward downstream loan commitments in advance for the PA liquefier coming online first quarter 2021. And that third party supply is that fixed pricing providing a note spread against your downstream contracts? And that furthermore that spread has not benefited from the recent fall in LNG pricing. I guess it's the warm Asian winter. But did you sign any new growth with that or from that?

Wes Edens

To start with your answer -- at the end that’s exactly what it is. We try to run as close as we can to a pretty matchbook in terms of what we along and then what want to go, or what we're sure to our customers and then what we want to go supply for. And so what we have done as a business matter is we have purchased cargos that match-up with what the volume are. So the first 18 cargos that we bought were all fixed price, and 19 thorough 28 were Henry Hub linked. The vast majority of our contracts are Henry Hub linked where we actually lock-in a spread on that as well. But specifically if we were to extend more volumes today, we would benefit from the lower spot price today. And obviously that number bounces around a little bit. Our $7 number historically is a pretty good proxy for his average in the last number of years, but there has been some volatility up and down that we just don’t want to expose ourselves to that unnecessarily.

Craig Shere

And I just want to clarify maybe I'm just on base here, the La Paz 400 revolver. Does that mature at the end of the year?

Wes Edens

No, it matures at the end of 2020.

Craig Shere

So when do you say through 2020 your $200 million minimum liquidity based on what you've got in place counting the liquefier being separately financed, you are not assuming any issues with having to -- that's outstanding that whole time and you have to just be able to at the end of 2020?

Wes Edens

That's right or in between now and then. I mean, given the pace of activity and the level of cash flow that is committed already and prospects for growth, we'll have many, many, many different options in terms of figuring how to fund the right way.

Craig Shere

Last question, I understand you've got this great runway. I understand cash flows are rising and you've got contracted positions with known spreads. And I understand that the Pennsylvania liquefier is extremely profitable and should be imminently financeable. However, it is a groundbreaking project. I'm not aware of other infield liquefaction before. Are you hearing from anyone or do you have a concern that lenders would have any pause, because it's a new technology or business strategy?

Wes Edens

Well, I guess the first thing I would say is there is 260 liquefiers in the country, the vast majority are [indiscernible] liquefiers. So there is -- the size and scale business of this is different and the transportation associated with that is different. But the liquefier itself and the EPC contract from a single A rated enterprise all the measure we've done to make it the incredibly financeable we feel really good about. And I think we've heard from a bunch of different people unsolicited that talk about both financing, as well as partnership or as I mentioned in our road show, there's net lease concepts, there is a lot of difference. And I think the underlying dynamic is gas producers are clamoring for this kind of an outcome. And we think that there is a huge market for it, separate and apart from our terminals business. I mean, it matches up well with the terminals business, because then we go from third party supply to be able to vertically integrate and have our own supply, but they are different businesses for sure. But no, I think that will -- I know we will all have many different options on how to fund it. And the core business is incredibly well funded. And as I said, the used capital values on actual terminals has been sold, you will see that we have -- even the debt that we have right now is quite low LTV versus what we expect very low LTV. So this will not be hard to fund.

Operator


Our next question comes from [Nick Linney] with [indiscernible].

Unidentified Analyst

Just a few more around existing line facility. Can you just clarify what assets from the collateral backing for that facility and what, apart from the Pennsylvania liquefier, is outside that facility? Second question, you mentioned by the end of 2020 you expect this -- maybe I’m looking at an old copy. But it says it expires December 2019 that has two extension options. So has the term changed or you just including the extension options?

Wes Edens

No, maybe [42.56] incorrect. It’s a 2019 maturity with a one year extension at our option. So 2020 is actually the potential term for it. And the answer is that it’s a corporate financing so it basically is covered by essentially all the assets of the company. So it's got priority claim on everything. And again the way I would look at it, I mean what I think is the most conservative way to look at it. If you took $240 million internal level of cash flows multiple that times 12 didn’t actually have another piece of business in the firm, it have many billions of dollars in asset value in the $500 million facility. It’s just not. I mean, we created this whole financing issue, the [debtpocalypse] like talking about the facility when in fact it is just not a big deal. Of the financing things that I have been quite involved in over the years, I've been involved in many. This is on paper about the simplest thing in the world of the finance. I think it's purely a function of we're in the development period on a handful of these things. When we are through that development period and brand, finishes his work and all these things turn on. I think that financing will be the last thing we talk about.

Unidentified Analyst

And does the debt facility allow you to incur more senior obligations against any individual assets? Or essentially if you want to get additional money at the asset level that effectively means tucking out the existing facility?

Wes Edens

There is -- I mean, just finding out the right form for you and you can talk to Chris later. There are buckets, there's different ways that you can actually finance out. It's very ordinary course finance. It's not restricted in a lease and it's entirely pre-payable. But I mean I'd be happy if you can call Chris directly and go through, it's probably not the right way to go through our loan agreements. So maybe try to wait your question…

Operator

Ladies and gentlemen, this does conclude the Q&A portion of today's call. I'd like to turn the call back over to our host.

Wes Edens

Great. Well, thanks again everyone. I appreciate your interest in dialing-in and we look forward to seeing you soon. Thanks much.

Operator

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.