The Offering

Company Overview

Excelerate Energy, Inc. (hereinafter referred to as “Excelerate Energy” or “The Company”) operates in the energy sector and is primarily focused on providing flexible liquefied natural gas (“LNG”) solutions to emerging markets. The company was incorporated in Delaware on September 10, 2021, aiming for cleaner, affordable, and reliable energy sources through regasified natural gas. The group has regional offices in eight countries and functions in the United States, Brazil, Argentina, Israel, United Arab Emirates, Pakistan, and Bangladesh. The firm is working towards decarbonization by limiting the usage of coal as a primary energy source and improving economic growth and the quality of life.

Source: IPO Prospectus

Key Highlights

Use of Proceeds: The company estimates that the net proceeds from this offering will be in the range of $340.2 million or $391.2 million, assuming an initial public offering price of $22.50 per share of Class A Common Stock. This estimate is post deduction of underwriting discounts and commissions but before deducting expenses of the offering and the reorganization payable. The company intends to use these proceeds for the following:

• Around $281.0 million of the net proceeds of this offering will be used to fund its growth strategy, mainly in Brazil, Philippines and Bangladesh.
• Around $50.0 million of the net proceeds of this offering will be used to fund in part Excelerate Energy Limited Partnership (EELP's) purchase of the Foundation Vessels in connection with the Reorganization.
• Around $9.2 million will be used in other expenses incurred by the firm during this offering and Reorganization.

Dividend Policy: The company intends to pay an annualized cash dividend of $0.10 per share on a quarterly basis for Class A common stock. This quarterly dividend will commence in the second quarter of 2022 and will be paid in the third quarter of 2022. EELP will fund the dividend from the quarterly distribution amount of $0.6 million.

Experienced LNG Leader: The company is a renowned player in the LNG industry with a remarkable experience of 20 years in the development, construction, and operations, making it the most accomplished, reliable, and capable LNG company within the industry. This experience aided the firm in sourcing and aggregating LNG from the global market for delivery downstream, ensuring long-term stability and reliability. The firm also leverages its expertise and understanding of LNG market dynamics to create significant value via portfolio optimization and incremental cash flow.

Largest FSRU Owners: The company owns and operates one of the industry's largest fleets of Floating Storage and Regasification Units (FSRUs). This enables the company to adjust its production in response to changes in energy demand. This adaptable approach enables production optimization by swapping smaller Floating Storage and Regasification Units (FSRUs) for larger ones.

Pursuing Downstream Opportunities: To ensure the success of the new floating LNG terminals, the company is investing in new products and technologies. With decarbonization initiatives and rising electricity demand, natural gas has emerged as a potential alternative fuel source. This would be a significant opportunity for the company, in addition to product diversification and its goals of obtaining a cleaner, more affordable, and reliable energy source.

LNG- Recent Trends and Outlook

Rising LNG Demand: The global LNG demand is estimated at around 720 metric tons (MT) in 2040 from 360 MT in 2020, driven by strong demand from the Asian markets. Also, stability and transparency in the LNG price, coupled with readily available cargos, have made LNG an attractive source of fuel for commercial, industrial and transportation industries. The industrial usage of natural gas is expected to grow by approximately 33% from 2020 to 2050.

Appetite for Clean Fuel: Rising aspirations for carbon neutrality and curbing coal usage allow countries to switch to lower-carbon fuels such as LNG. Also, the current volatility in the energy market further reinforces LNG as a reliable and sustainable fuel source.

Financial Highlights

Source: IPO Prospectus

• Increase in Revenues: The company’s revenue for FY 2021 increased to $888.55 million, compared with $430.84 million in FY 2020. The increase was attributable to the newly introduced Gas Sales revenue of $420.52 million during the period.

• Rise in Operating Expenses: During FY 2021, the total operating expenses increased to $749.21 million, against $297.58 million in FY 2020, mainly due to higher cost of gas sales.

• Increasing Operating Income: Primarily, on the back of elevated revenue, the company’s operating income increased to $139.34 million in FY 2021, against $133.25 million in FY 2020.

• Elevated Net Income: The company’s net income swelled to $41.18 million in FY 2021, against $32.89 million in FY 2020 mainly due to higher operating income, coupled with lower interest expenses.

• Improved Adjusted EBITDA and EBITDAR: During FY 2021, the adjusted EBITDA increased to $262.05 million, against $240.42 million in FY 2020, while the Adjusted EBITDAR rose to $291.05 million in FY 2021 from $256.19 million in FY 2020.

Key Management Highlights

Associated Risk (High)

Investment in the IPO of "EE" is exposed to a variety of risks such as:

• Intense Competition: The market for LNG regasification services is highly competitive, mainly in securing long-term contracts. Any fierce competitor could offer lower rates and modern fleets, which would deteriorate the firm’s profitability and lead to a price war.
• Price Volatility: The LNG market is correlated to the worldwide natural gas prices and energy markets. An extended decline in natural gas prices leads to reduced investment in new liquefaction facilities, which could adversely impact the company.
• Mechanical Risks: The operation of the Floating Storage and Regasification Unit (FSRU) and LNG import terminal is complex and technically challenging. Any damage/operational problem in the vessels may lead to revenue loss and higher operating expenses.
• Other Risks: The company’s success will depend, in part, on its ability to enhance product offerings with advanced technology and regulatory changes and emerging industry standards and practices.

Conclusion

Excelerate Energy has reported significant revenue growth of $888.55 million in FY21, and the management is optimistic about its future growth. The company is continuously expanding its operations through strategic diversification and acquisitions. Moreover, the company has uniquely positioned itself as a pioneer in flexible liquefied natural gas (“LNG”) solutions and working toward decarbonization.

However, given the uncertainty in the LNG demand and volatility in the worldwide natural gas prices and energy markets, there are significant uncertainties associated with forecasting the future revenues and expenses of the company.

Therefore, based on the above rationales, we have assigned the IPO of Excelerate Energy, Inc. with an “Attractive” rating. This IPO is only suitable for investors with a high-risk appetite given the associated risks and the current market scenario [basis further evaluation].

*Please note that an IPO can be postponed or put on Hold at the discretion of the company or regulatory authority.