NextDecade (NEXT) Q3 2026 earnings review
Train 1 arrives early, but NextDecade's debt needs high prices
NextDecade's first LNG train should start a quarter early, but the company still earns no revenue. The developer of the Rio Grande LNG export plant in south Texas said Trains 1 and 2 are nearly four-fifths built. Chief executive Matt Schatzman now expects first LNG in the second quarter of 2027. The project also moved $4.1 billion of bank debt into long-dated bonds.
| Trains 1 and 2 construction completion | 79.7% 74.0% in June |
|---|---|
| Expected Train 1 handover | 3Q 2027 contract guarantees 4Q 2027 |
| Project bonds issued in the quarter | $4.1 billion about $700 million of Phase 1 bank debt left drawn |
| Implied margin on unsold cargoes | over $6 per MMBtu $5 base case |
⚖️ Verdict: 🟢 Bullish
The story got better because the schedule moved earlier and project borrowing became cheaper, not because any cash arrived. One caution: the plan to cut parent-level debt to about $2 billion rests on margins above $6 per MMBtu. NextDecade has not locked those in with sales.
The question now is whether NextDecade sells more of its unsold early cargoes before Train 1 starts or keeps them open to the spot market. Selling would make the debt plan safer but cap the upside; holding ties it to the Middle East. The year-end update will tell.
🐂 Bull Case
Train 1 Now Expected a Quarter Early
NextDecade is building five liquefaction trains, the units that chill natural gas into liquid for export, near Brownsville, Texas. It earns nothing until the first one runs, so the start date matters most. Chief executive Matt Schatzman said work continued "safely, on budget, and ahead of schedule".
Schatzman now expects first LNG from Train 1 in the second quarter of 2027 and handover in the third. That is "a quarter ahead of the guaranteed completion schedule under our EPC contract with Bechtel", the builder. Trains 2 and 3 should also finish about a quarter early, the slides say.
- Trains 1 and 2 overall completion: 79.7%, up 5.7 points since June
- Construction scope on Trains 1 and 2: 68.8%, up 9.9 points
- Commissioning scope: 4.9%, from 0.6% in June
- Site works: Bay Runner gas pipeline in service, gas inlet ready for start-up, dredging complete
This matters because every quarter gained is a quarter of cargoes sold into a tight market before fixed-fee deliveries begin. But commissioning, the testing of systems with real gas, has barely started, and that is where start-up problems appear.
What to watch: first gas into the plant, which NextDecade still expects before the end of 2026. A slip into 2027 would put the second-quarter start at risk before Train 1 has produced a single cargo.
Project Debt Moved Into Bonds at Lower Rates
Phase 1 of Rio Grande LNG borrowed from banks to build, and NextDecade wants long-dated bonds to replace those loans before the plant earns. Bank loans fall due within a few years; the new notes mature between 2031 and 2047.
In July the project sold $3.5 billion of senior secured notes. In September it placed another $575 million due 2047. It used the proceeds, plus a swap settlement, to repay Phase 1 bank debt. About $700 million remained drawn at the end of September.
This matters because most Phase 1 debt now carries investment-grade pricing, so plant-level refinancing risk fell. But nothing changed at NextDecade's own level, where the loans that funded its equity still accrue double-digit interest in kind.
What to watch: the Train 4 bank facility, about $900 million drawn at September 30, and whether a bond deal terms it out before Train 1 starts. That would show the strategy reaches beyond Phase 1.
Regulators Approved More Capacity and Train 6 Permits
LNG export plants need licences from the Federal Energy Regulatory Commission (FERC) and permits from the U.S. Army Corps of Engineers for work on waterways. Both agencies moved in NextDecade's favour this quarter.
In September FERC lifted the authorized capacity of the first five trains to 30.15 million tonnes a year, by our math 11.7% more than before. The Army Corps authorized Train 6 "in record time", Schatzman said. FERC also set June 25, 2027 for Train 6's final environmental statement.
This matters because the uprate turns a production assumption into a licensed limit, so the volume behind the cash-flow projections no longer depends on a pending request. For Train 6 the permits clear one of three conditions for a build decision; customers and financing remain.
What to watch: the FERC pre-filing for Trains 7 and 8, due before year-end. Filing on time keeps the 60 million tonne site plan on the timetable Schatzman has set.
🐻 Bear Case
Parent Debt Plan Depends on Spot LNG Prices
NextDecade funded its share of Trains 4 and 5 with parent-level loans rather than new shares. Much of their interest accrues in kind, so the balances grow instead of cash going out. This quarter it set a dollar goal: parent-level debt of about $2.0 to $2.25 billion once five trains run, repaid from early cargo sales.
- Parent-level loans at issue: $2.94 billion by our math, before interest paid in kind
- Gap to the middle of the target: about $0.8 billion by our math
- Repayment source: early cargo cash, over $2.4 billion only at margins above $6 per MMBtu
- Volumes still unsold through mid-2031: 1,100 TBtu
The slides say "Current forward curves support achieving debt target", and Schatzman put implied margins "more than $1 per MMBtu above our base case". But a forward curve is today's quote, not a price NextDecade has sold at. It sold no new cargoes this quarter and does not expect to need more long-term contracts on Trains 4 or 5. So the target leans harder on spot prices.
What to watch: the September 30 SuperFinCo balance in the quarterly filing, and any new forward sale. A larger balance with no sale would widen the gap while nothing locks in the assumed prices.
Train 6 Still Lacks Customers and Funding
Train 6 is the first of three expansion trains NextDecade owns outright, and it targets a final investment decision, the point where it commits to build, in the second half of 2027.
Permits advanced this quarter, but the release says only that NextDecade is "progressing discussions with high credit quality potential counterparties". It signed no sale and purchase agreement, the long-term contract a train needs to borrow, and the equity funding route stays unnamed for a third quarter.
This matters because the environmental statement lands in June 2027, leaving by our math about six months to sign customers, fix the Bechtel price and close financing. Last year NextDecade signed over 7 million tonnes of contracts; this year, none.
What to watch: a signed Train 6 contract before the first-quarter update. Nothing by then would leave little time for a decision NextDecade still dates to late 2027.
Risks This Quarter Didn't Answer
NextDecade issued a business update rather than full results, so four standing concerns got no new numbers; the quarterly filing will carry most of them, and each has a reading that would move the case.
- Parent-level cash and loss: not in the update; the filing's cash balance and income statement will show the burn before first revenue.
- Interest paid in kind: no September balances for the SuperFinCo and Super Holdings loans; the filing's debt note will show how much they grew.
- Court challenge: the update does not mention the intervenors' D.C. Circuit appeal of FERC's order on Trains 1-5; the filing's permits section will give its status.
- Train 6 cost: no Bechtel price disclosed; a figure above the roughly $6.7 billion of each of Trains 4 and 5 would raise the equity NextDecade must find.
👓 Other Themes
Quarterly Financial Statements Come With the Filing
The October 29 release is a business update without an income statement, balance sheet or cash flow, so this article reads construction, financing and regulatory figures only. The quarterly filing will show the loss, the interest cost and consolidated debt, which stood near $23 billion in March including project-level borrowings.
💲 Other KPIs
Both later trains moved faster this quarter. Train 4 gained 7.0 points, after 4.9 last quarter. Foundation pours for its main cryogenic rack began. Train 5 added 4.6 points, after 2.6, as soil stabilization started. NextDecade says both run in line with the guaranteed completion dates, unlike Phase 1, which runs ahead.
Unchanged since February, when NextDecade sold about 175 TBtu, a third of the uncontracted Phase 1 volumes before Train 3 contract deliveries, at a fixed fee with a margin above $3 per MMBtu. The slides now point to "Potential additional sales closer to Train 1 operations", so the next sale may wait until 2027.
Complete. The final $150 million installment arrived in October, after $100 million in July. That finishes the program agreed at the Train 5 investment decision a year ago. The notes carry 6.56% and mature in 2050. The Train 5 bank facility stayed undrawn at the end of September.
🔮 Guidance
Narrowed. The plan still puts first LNG inside the first half of 2027, now pinned to the second quarter. Commissioning on Train 1 covers electrical, mechanical and utility scopes, the work that precedes first gas. Every update on this milestone this year has held the date or moved it earlier.
Raised. NextDecade now expects Bechtel to hand over each Phase 1 train about a quarter before the contract requires. Substantial completion starts deliveries under the long-term contracts, so an early handover pulls forward the fixed fees that service the project debt and feed the parent. Trains 4 and 5 remain on their guaranteed dates of 3Q 2030 and 2Q 2031.
Unchanged. Gas should enter the plant for the first time before the end of December. The physical path now exists: the gas inlet facilities are ready for start-up and the Bay Runner pipeline is in service. This is the first milestone that tests start-up rather than construction.
Raised. Using forward LNG and U.S. gas prices from October 22, the implied margin on cargoes NextDecade has not yet sold averages above $6 per MMBtu across the ramp-up period. That is over 20% above the $5 base case, and the cause is the loss of Middle East supply since February. This is a market reading, not a sale, so the figure moves with the curve.
Raised. At the current curve the company projects more than $2.4 billion for its share of distributable cash flow between the first cargo and the start of Train 5 contract deliveries, about $0.4 billion above the base case. The driver is the margin reading above. Each $1 per MMBtu change moves the figure by $350–400 million. NextDecade plans to use the cash to repay the FinCo and SuperFinCo loans.
Unchanged in substance, now stated in dollars. The slides translate the standing leverage target into about $2.0 to $2.25 billion of parent-level debt once five trains run. NextDecade says current forward curves support reaching it. The underlying target of 3.0 to 3.5 times earnings before interest, tax and depreciation stands, and the company does not expect to need more long-term contracts on Trains 4 or 5 to get there.
Reaffirmed. Once all five trains deliver under contract, NextDecade expects $0.5 billion a year for itself, rising to $0.8 billion after its partners in Trains 4 and 5 earn their target returns. The step-up is written into the partnership agreements. Each $0.50 per MMBtu change in margin moves the lower figure by about $45 million. The alternative case with two extra million tonnes of contracts also stands.
Unchanged. NextDecade still targets the second half of 2027, conditional on the Bechtel contract, long-term customers and financing. The environmental statement date of June 25, 2027 fits that window with little room. Permits advanced this quarter; customers and funding did not.
Unchanged. NextDecade finalized the location on the western end of the site and expects to open the FERC process before year-end. Pre-filing starts the environmental review; for Train 6, by our math, formal application to a scheduled statement date took about 13 months, so the timing matters for the 60 million tonne goal.
❓ Key Questions
What is NextDecade's own cash balance and burn rate?
The business update carries no financial statements. Parent-level cash must cover corporate costs and Train 6 development until first cargoes in 2027, so the runway before any new raise matters.
How will NextDecade fund its Train 6 equity?
Trains 1-5 used partner equity and parent term loans. Train 6 is wholly owned, so the equity per train is larger; the mix of loans, partners or new shares decides dilution.
When is the next forward sale of early cargoes?
Only the volumes sold in February are locked in, and the slides point to sales nearer Train 1 start. The timing and margin of the next sale decide how much of the debt plan rests on firm prices.
What is the status of the D.C. Circuit appeal?
Intervenors asked the court to review FERC's order reaffirming Trains 1-5. The update does not mention it; a decision against the order would reopen a permitting question investors treat as closed.
What do the SuperFinCo and Super Holdings loans now total?
Both accrue interest in kind at 13% or more, so the balances rise every quarter. The September figures show how far parent-level debt sits from the new $2.0–2.25 billion target.