How will the 20‑year, 1.5 MTPA off‑take agreement affect NextDecade’s projected cash flows and EBITDA?

The 20‑year, 1.5 MTPA SPA creates a stable, long‑dated revenue floor for NextDecade once Train 5 reaches FID and ultimately enters service. Because the contract is priced on a Henry Hub index, cash‑flow generation will track North‑American gas price movements rather than a fixed‑price contract, giving the company up‑side to earnings in a rising‑price environment and head‑up risk if the hub weakens. Nonetheless, the sheer length of the deal (40 Mt of LNG locked in over two decades) markedly improves the predictability of future cash inflows, which in turn lifts the EBITDA profile of the project by front‑loading a recurring revenue stream against the heavy capital spend required to build Train 5.

From a fundamentals standpoint, the SPA dramatically reduces financing risk – lenders and equity investors now have a verifiable counter‑party commitment for the bulk of the plant’s throughput. This should lighten the debt‑service burden, support a higher mid‑term leverage capacity and compress the discount rate applied to the project’s cash‑flow model, narrowing the spread between Net Asset Value and market pricing. The upside is amplified when gas markets are bullish (e.g., tighter supply globally, higher Henry Hub spreads), as the indexed price flows directly into EBITDA, while a prolonged low‑price period could compress margins but will still be partially offset by the contract’s “free on board” nature that passes shipping‑costs to EQT.

Trading implications – With the off‑take agreement in place, NextDecade’s equity is now more sensitive to the trajectory of Henry Hub and the cadence of the FID decision. In a scenario where gas fundamentals stay strong and the FID proceeds on schedule, the stock can price in a structural EBITDA uplift and may sustain a premium to peers lacking comparable long‑term contracts. Conversely, any delay in Train 5’s FID or a sustained drop in Henry Hub could temper the upside and keep the share’s upside more modest. Practically, a long‑position on NEXT with a tight stop just below recent swing‑low levels is justified if you expect gas prices to hold or rise and the FID to be confirmed within the next 3–6 months; otherwise, remain on the sidelines until the FID milestone clears, as that event will be the catalyst that fully embeds the SPA’s cash‑flow benefits into the company’s earnings trajectory.