New Fortress Energy Shares Plummet Amid Puerto Rico LNG Deal Collapse

New Fortress Energy (NFE) shares have fallen 10.86% after Puerto Rico withdrew from a $20 billion liquefied natural gas (LNG) contract. The deal was crucial for NFE's financial strategy, and its collapse has led to a sell-off. NFE faces financial challenges, including a low Altman Z-score and heavy long-term debt issuance. Despite its business model remaining intact, operating income has recorded losses and return on invested capital is below the weighted average cost of capital.

New Fortress Energy (NFE) shares have fallen 10.86% following Puerto Rico's withdrawal from a $20 billion liquefied natural gas (LNG) contract. The deal, which was crucial for NFE's financial strategy, has led to a significant sell-off. The collapse of the agreement has raised concerns about NFE's financial health, as the company faces challenges including a low Altman Z-score and heavy long-term debt issuance [1].

The deal, which was expected to cover LNG imports for a period of up to 25 years, was formally canceled by the Puerto Rico government despite the company's dominant position in the island's LNG market. The Financial Oversight and Management Board for Puerto Rico declined to approve the contract, citing concerns about cost, duration, and long-term fuel dependency [2].

Despite the setback, NFE's business model remains intact. However, the company has been recording operating income losses and has a return on invested capital below the weighted average cost of capital. These financial challenges have contributed to the recent decline in NFE's stock price.

The collapse of the deal leaves a significant vacuum in Puerto Rico's energy planning. According to the U.S. Energy Information Administration (EIA), natural gas, primarily LNG, accounted for a significant portion of the island's energy mix. The withdrawal of the LNG contract raises questions about Puerto Rico's energy transition and the future of its energy supply.

In conclusion, the withdrawal of the $20 billion LNG contract has had a significant impact on NFE's financial health and stock price. The company faces financial challenges, but its business model remains intact. Investors should closely monitor NFE's financial performance and the potential impact of the canceled deal on its future prospects.

References:
[1] https://www.marketscreener.com/news/excelerate-energy-raises-fy-2025-guidance-and-reports-jamaica-acquisition-pro-forma-financial-result-ce7c5fdedd80f721
[2] https://oilprice.com/Energy/Natural-Gas/Puerto-Rico-Abandons-20-Billion-LNG-Deal.html