Excelerate Energy, Inc. - Quarter Report: 2023 June (Form 10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-41352

Excelerate Energy, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	87-2878691
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2445 Technology Forest Blvd., Level 6 The Woodlands, TX	77381
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (832) 813-7100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.001 par value per share

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2023, there were 26,254,167 shares of Excelerate Energy, Inc.'s Class A Common Stock, $0.001 par value per share, and 82,021,389 shares of Excelerate Energy, Inc.’s Class B Common Stock, par value $0.001 per share, outstanding.

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Income	6
	Consolidated Statements of Comprehensive Income	7
	Consolidated Statements of Changes in Equity	8
	Consolidated Statements of Cash Flows	10
	Notes to Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
	Signatures	48

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about Excelerate Energy, Inc. (“Excelerate” and together with its subsidiaries, “we,” “us,” “our” or the “Company”) and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact including, without limitation, statements regarding our future results of operations or financial condition, business strategy and plans, expansion plans and strategy, economic conditions, both generally and in particular in the regions in which we operate or plan to operate, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “consider,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described under “Risk Factors” in Excelerate’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”), this Form 10-Q and our other filings with the Securities and Exchange Commission (the “SEC”), including, but not limited to, the following:

•

our ability to enter into or extend contracts with customers and our customers’ failure to perform their contractual obligations;

•

customer termination rights in our contracts;

•

the risks inherent in operating our floating storage and regasification units (“FSRUs”) and other liquefied natural gas (“LNG”) infrastructure assets;

•

the technical complexity of our FSRUs and LNG import terminals and related operational problems;

•

cancellations, time delays, unforeseen expenses, cost inflation, materials or labor shortages and other complications while developing our projects;

•

our inability to develop a project successfully and our customers’ failure to fulfill their payment obligations to us following our capital investment in a project;

•

the failure of regasification terminals and other facilities to operate as expected or be completed;

•

our need for substantial expenditures to maintain and replace, over the long-term, the operating capacity of our fleet, regasification terminals and associated assets, pipelines and downstream infrastructure;

•

our reliance on our engineering, procurement and construction contractors and other contractors for the successful completion of our energy-related infrastructure;

•

shortages of qualified officers and crew impairing our ability to operate or increasing the cost of crewing our vessels;

•

uncertainty related to construction costs, development timelines, third-party subcontractors and equipment manufacturers required to perform our development services;

•

our ability to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the design, construction and operation of our facilities and provision of our services;

•

our ability to maintain relationships with our customers and existing suppliers, source new suppliers for LNG and critical components of our projects and complete building out our supply chain;

•

our ability to connect with third-party pipelines, power plants and other facilities that provide gas receipt and delivery downstream of our integrated terminals;

•

our ability to purchase or receive physical delivery of LNG in sufficient quantities to satisfy our delivery obligations under gas sales agreements or at attractive prices;

•

changes in the demand for and price of LNG and natural gas and LNG regasification capacity;

•

the competitive market for LNG regasification services;

•

fluctuations in hire rates for FSRUs;

•

infrastructure constraints and community and political group resistance to existing and new LNG and natural gas infrastructure over concerns about the environment, safety and terrorism;

•

outbreaks of epidemic and pandemic diseases and governmental responses thereto;

•

our ability to access financing sources on favorable terms;

•

our debt level and finance lease liabilities, which may limit our flexibility in obtaining additional financing or refinancing credit facilities upon maturity;

•

the effects of international conflicts, including sanctions, retaliatory measures and changes in the availability and market prices of LNG, natural gas and oil resulting from the Russia-Ukraine war, on our business, customers, industry and outlook;

•

volatility of the global financial markets and uncertain economic conditions, such as energy costs, geopolitical issues, supply chain disruptions, and the availability and cost of credit;

•

the impact of increased inflation and related governmental monetary policy actions on the Company, its customers, markets and general economic activity;

•

our financing agreements, which include financial restrictions and covenants and are secured by certain of our vessels;

•

compliance with various international treaties and conventions and national and local environmental, health, safety and maritime conduct laws that affect our operations;

•

our dependence upon distributions from our subsidiaries to pay dividends, if any, taxes and other expenses and make payments under the TRA (as defined herein);

•

the requirement that we pay over to the TRA Beneficiaries (as defined herein) most of the tax benefits we receive;

•

payments under the TRA being accelerated and/or significantly exceeding the tax benefits, if any, that we actually realize;

•

the possibility that Excelerate Energy Limited Partnership (“EELP”) will be required to make distributions to us and the other partners of EELP;

•

Kaiser (as defined herein) having the ability to direct the voting of a majority of the voting power of our Common Stock, and his interests possibly conflicting with those of our other stockholders;

•

our ability to pay dividends on our Class A Common Stock, $0.001 par value per share (the “Class A Common Stock”);

•

other risks and uncertainties inherent in our business; and

•

other risks, uncertainties and factors set forth in the 2022 Annual Report, this Form 10-Q and our other filings with the SEC, if applicable, including those set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-Q. For example, the current global economic uncertainty and geopolitical climate, including the Russia-Ukraine war, may give rise to risks that are currently unknown or amplify the risks associated with many of the foregoing events or factors. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

PART I – FINANCIAL INFORMATION

Excelerate Energy, Inc.

Consolidated Balance Sheets
As of June 30, 2023 and December 31, 2022


	June 30, 2023		December 31, 2022
	(Unaudited)
ASSETS	(In thousands)
Current assets
Cash and cash equivalents	$	462,001	$	516,659
Current portion of restricted cash		2,638		2,614
Accounts receivable, net		145,608		82,289
Inventories		28,072		173,603
Current portion of net investments in sales-type leases		13,980		13,344
Other current assets		36,629		35,026
Total current assets		688,928		823,535
Restricted cash		19,482		18,698
Property and equipment, net		1,685,705		1,455,683
Operating lease right-of-use assets		10,252		78,611
Net investments in sales-type leases		392,007		399,564
Investment in equity method investee		25,096		24,522
Deferred tax assets, net		37,741		39,867
Other assets		40,681		26,342
Total assets	$	2,899,892	$	2,866,822
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	46,991	$	96,824
Accrued liabilities and other liabilities		59,710		66,888
Current portion of deferred revenue		21,972		144,807
Current portion of long-term debt		29,507		20,913
Current portion of long-term debt – related party		8,003		7,661
Current portion of operating lease liabilities		5,982		33,612
Current portion of finance lease liabilities		21,408		20,804
Total current liabilities		193,573		391,509
Derivative liabilities		598		—
Long-term debt, net		420,310		193,396
Long-term debt, net – related party		176,345		180,772
Operating lease liabilities		5,316		48,373
Finance lease liabilities		200,276		210,354
TRA liability		72,951		72,951
Asset retirement obligations		40,800		39,823
Long-term deferred revenue		35,007		32,947
Total liabilities	$	1,145,176	$	1,170,125
Commitments and contingencies (Note 20)
Class A Common Stock ($0.001 par value, 300,000,000 shares authorized, 26,254,167 shares issued and outstanding as of June 30, 2023 and December 31, 2022)		26		26
Class B Common Stock ($0.001 par value, 150,000,000 shares authorized and 82,021,389 shares issued and outstanding as of June 30, 2023 and December 31, 2022)		82		82
Additional paid-in capital		465,067		464,721
Retained earnings		23,489		12,009
Accumulated other comprehensive income		1,257		515
Non-controlling interest		1,264,795		1,219,344
Total equity		1,754,716		1,696,697
Total liabilities and equity	$	2,899,892	$	2,866,822

The accompanying notes are an integral part of these consolidated financial statements.

Excelerate Energy, Inc.

Consolidated Statements of Income (Unaudited)
For the Three and Six Months Ended June 30, 2023 and 2022


	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
	(In thousands, except share and per share amounts)
Revenues
FSRU and terminal services	$	125,462		$	110,072		$	244,039		$	207,664
Gas sales		306,910			512,857			399,389			1,006,938
Total revenues		432,372			622,929			643,428			1,214,602
Operating expenses
Cost of revenue and vessel operating expenses (exclusive of items below)		48,664			58,673			107,456			108,736
Direct cost of gas sales		277,693			485,023			332,878			948,375
Depreciation and amortization		30,772			24,296			55,965			48,039
Selling, general and administrative expenses		21,563			13,064			43,880			25,698
Restructuring, transition and transaction expenses		—			2,582			—			5,335
Total operating expenses		378,692			583,638			540,179			1,136,183
Operating income		53,680			39,291			103,249			78,419
Other income (expense)
Interest expense		(13,479	)		(7,800	)		(25,434	)		(14,854	)
Interest expense – related party		(3,593	)		(5,493	)		(7,185	)		(17,666	)
Earnings from equity method investment		392			732			808			1,510
Early extinguishment of lease liability on vessel acquisition		—			(21,834	)		—			(21,834	)
Other income (expense), net		2,268			(1,086	)		6,172			(5,202	)
Income before income taxes		39,268			3,810			77,610			20,373
Provision for income taxes		(9,712	)		(7,800	)		(17,315	)		(11,519	)
Net income (loss)		29,556			(3,990	)		60,295			8,854
Less net income (loss) attributable to non-controlling interest		23,588			(831	)		47,483			(1,647	)
Less net loss attributable to non-controlling interest – ENE Onshore		—			(181	)		—			(418	)
Less pre-IPO net income (loss) attributable to EELP		—			(947	)		—			12,950
Net income (loss) attributable to shareholders	$	5,968		$	(2,031	)	$	12,812		$	(2,031	)

Net income (loss) per common share – basic	$	0.23		$	(0.08	)	$	0.49		$	(0.08	)
Net income (loss) per common share – diluted	$	0.23		$	(0.08	)	$	0.49		$	(0.08	)
Weighted average shares outstanding – basic		26,254,167			26,254,167			26,254,167			26,254,167
Weighted average shares outstanding – diluted		26,266,312			26,254,167			26,272,890			26,254,167

The accompanying notes are an integral part of these consolidated financial statements.

Excelerate Energy, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)
For the Three and Six Months Ended June 30, 2023 and 2022


	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
	(In thousands)
Net income (loss)	$	29,556		$	(3,990	)	$	60,295		$	8,854
Other comprehensive income (loss)
Cumulative translation adjustment		315			—			(105	)		—
Change in unrealized gains on cash flow hedges		3,516			1,250			3,408			4,294
Share of other comprehensive income (loss) of equity method investee		504			793			(233	)		3,207
Other comprehensive loss attributable to non-controlling interest		(3,286	)		(1,342	)		(2,328	)		(1,342	)
Pre-IPO other comprehensive income attributable to EELP		—			—			—			(5,458	)
Comprehensive income (loss)		30,605			(3,289	)		61,037			9,555
Less comprehensive income (loss) attributable to non-controlling interest		23,588			(831	)		47,483			(1,647	)
Less comprehensive loss attributable to non-controlling interest – ENE Onshore		—			(181	)		—			(418	)
Less pre-IPO net income (loss) attributable to EELP		—			(947	)		—			12,950
Comprehensive income (loss) attributable to shareholders	$	7,017		$	(1,330	)	$	13,554		$	(1,330	)

The accompanying notes are an integral part of these consolidated financial statements.

Excelerate Energy, Inc.

Consolidated Statements of Changes in Equity (Unaudited)
For the Three and Six Months Ended June 30, 2023 and 2022


																								Non-
																Related		Accumulated						controlling
	Class A				Class B									Additional		party		other			Non-			interest –
	Common Stock				Common Stock				Equity		Retained			paid-in		note		comprehensive			controlling			ENE		Total
(In thousands, except shares)	Shares		Amount		Shares		Amount		interest		earnings			capital		receivable		income (loss)			interest			Onshore		equity
Balance at January 1, 2023		26,254,167	$	26		82,021,389	$	82	$	—	$	12,009		$	464,721	$	—	$	515		$	1,219,344		$	—	$	1,696,697
Net income		—		—		—		—		—		6,844			—		—		—			23,895			—		30,739
Other comprehensive loss		—		—		—		—		—		—			—		—		(307	)		(958	)		—		(1,265	)
Long-term incentive compensation		—		—		—		—		—		—			86		—		—			271			—		357
Class A dividends – $0.025 per share		—		—		—		—		—		(663	)		—		—		—			—			—		(663	)
EELP distributions to Class B interests		—		—		—		—		—		—			—		—		—			(2,051	)		—		(2,051	)
Minority owner contribution – Albania Power Project		—		—		—		—		—		—			—		—		—			337			—		337
Balance at March 31, 2023		26,254,167	$	26		82,021,389	$	82	$	—	$	18,190		$	464,807	$	—	$	208		$	1,240,838		$	—	$	1,724,151
Net income		—		—		—		—		—		5,968			—		—		—			23,588			—		29,556
Other comprehensive income		—		—		—		—		—		—			—		—		1,049			3,286			—		4,335
Long-term incentive compensation		—		—		—		—		—		—			260		—		—			814			—		1,074
Class A dividends – $0.025 per share		—		—		—		—		—		(669	)		—		—		—			—			—		(669	)
EELP distributions to Class B interests		—		—		—		—		—		—			—		—		—			(2,051	)		—		(2,051	)
Minority owner contribution – Albania Power Project		—		—		—		—		—		—			—		—		—			320			—		320
Distributions		—		—		—		—		—		—			—		—		—			(2,000	)		—		(2,000	)
Balance at June 30, 2023		26,254,167	$	26		82,021,389	$	82	$	—	$	23,489		$	465,067	$	—	$	1,257		$	1,264,795		$	—	$	1,754,716

The accompanying notes are an integral part of these consolidated financial statements.

Excelerate Energy, Inc.

Consolidated Statements of Changes in Equity (Unaudited)
For the Three and Six Months Ended June 30, 2023 and 2022


																											Non-
																		Related			Accumulated						controlling
	Class A				Class B										Additional			party			other			Non-			interest –
	Common Stock				Common Stock				Equity			Retained			paid-in			note			comprehensive			controlling			ENE			Total
(In thousands, except shares)	Shares		Amount		Shares		Amount		interest			earnings			capital			receivable			income (loss)			interest			Onshore			equity
Balance at January 1, 2022		—	$	—		—	$	—	$	1,135,769		$	—		$	—		$	(6,759	)	$	(9,178	)	$	14,376		$	(130,282	)	$	1,003,926
Net income (loss)		—		—		—		—		13,897			—			—			—			—			(816	)		(237	)		12,844
Related party note receivable		—		—		—		—		—			—			—			6,600			—			—			—			6,600
Other comprehensive income		—		—		—		—		—			—			—			—			5,458			—			—			5,458
Balance at March 31, 2022		—	$	—		—	$	—	$	1,149,666		$	—		$	—		$	(159	)	$	(3,720	)	$	13,560		$	(130,519	)	$	1,028,828
Net loss prior to IPO		—		—		—		—		(947	)		—			—			—			—			—			—			(947	)
Pre-IPO capital contribution		—		—		—		—		—			—			1,574			—			—			—			—			1,574
Effect of the reorganization transactions		—		—		82,021,389		82		(1,148,719	)		—			—			—			2,820			1,145,817			—			—
Issuance of common stock – IPO		18,400,000		18		—		—		—			—			408,272			—			—			—			—			408,290
Vessel acquisition		7,854,167		8		—		—		—			—			188,492			—			—			—			—			188,500
Tax receivable agreement		—		—		—		—		—			—			(14,939	)		—			—			—			—			(14,939	)
Long-term incentive compensation		—		—		—		—		—			—			270			—			—			—			—			270
Other comprehensive income		—		—		—		—		—			—			—			—			701			1,342			—			2,043
Net loss subsequent to IPO		—		—		—		—		—			(2,031	)		—			—			—			(831	)		(181	)		(3,043	)
Balance at June 30, 2022		26,254,167	$	26		82,021,389	$	82	$	—		$	(2,031	)	$	583,669		$	(159	)	$	(199	)	$	1,159,888		$	(130,700	)	$	1,610,576

The accompanying notes are an integral part of these consolidated financial statements.

Excelerate Energy, Inc.

Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2023 and 2022


	Six months ended June 30,
	2023			2022
Cash flows from operating activities	(In thousands)
Net income	$	60,295		$	8,854
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization		55,965			48,039
Amortization of operating lease right-of-use assets		9,674			15,447
ARO accretion expense		877			738
Amortization of debt issuance costs		3,983			620
Deferred income taxes		1,980			(5,552	)
Share of net earnings in equity method investee		(808	)		(1,510	)
Distributions from equity method investee		—			2,700
Long-term incentive compensation expense		1,431			270
Early extinguishment of lease liability on vessel acquisition		—			21,834
Non-cash restructuring expense		—			1,574
(Gain)/loss on non-cash items		1,747			—
Changes in operating assets and liabilities:
Accounts receivable		(67,420	)		76,399
Inventories		144,529			40,028
Other current assets and other assets		(13,889	)		(2,302	)
Accounts payable and accrued liabilities		(50,251	)		(211,287	)
Derivative liabilities		193			1,295
Current portion of deferred revenue		(122,835	)		(1,669	)
Net investments in sales-type leases		6,921			5,790
Operating lease assets and liabilities		(9,973	)		(14,040	)
Other long-term liabilities		2,060			3,273
Net cash provided by (used in) operating activities	$	24,479		$	(9,499	)

Cash flows from investing activities
Purchases of property and equipment		(292,788	)		(42,030	)
Sales of property and equipment		4,101			—
Net cash used in investing activities	$	(288,687	)	$	(42,030	)

Cash flows from financing activities
Proceeds from issuance of common stock, net		—			412,183
Proceeds from long-term debt – related party		—			649,400
Repayments of long-term debt – related party		(4,085	)		(648,126	)
Repayments of long-term debt		(10,925	)		(9,561	)
Proceeds from revolving credit facility		—			140,000
Repayments of revolving credit facility		—			(140,000	)
Proceeds from Term Loan Facility		250,000			—
Payment of debt issuance costs		(7,018	)		(5,512	)
Collections of related party note receivables		—			6,600
Settlement of finance lease liability – related party		—			(25,000	)
Principal payments under finance lease liabilities		(10,752	)		(10,806	)
Principal payments under finance lease liabilities – related party		—			(2,912	)
Dividends paid		(1,313	)		—
Distributions		(6,101	)		—
Minority owner contribution – Albania Power Project		657			—
Net cash provided by financing activities	$	210,463		$	366,266

Effect of exchange rate on cash, cash equivalents, and restricted cash		(105	)		—

Net increase (decrease) in cash, cash equivalents and restricted cash		(53,850	)		314,737

Cash, cash equivalents and restricted cash
Beginning of period	$	537,971		$	90,964
End of period	$	484,121		$	405,701

The accompanying notes are an integral part of these consolidated financial statements.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

General business information

Excelerate Energy, Inc. (“Excelerate” and together with its subsidiaries, “we,” “us,” “our” or the “Company”) offers flexible liquefied natural gas (“LNG”) solutions, providing integrated services along the LNG value chain. We offer a full range of flexible regasification services, from floating storage and regasification units (“FSRUs”) to infrastructure development, to LNG and natural gas supply. Excelerate was incorporated on September 10, 2021 as a Delaware corporation. Excelerate was formed as a holding company to own, as its sole material asset, a controlling equity interest in Excelerate Energy Limited Partnership (“EELP”), a Delaware limited partnership formed in December 2003 by George B. Kaiser (together with his affiliates other than the Company, “Kaiser”). On April 18, 2022, Excelerate closed its initial public offering (the “IPO”) of 18,400,000 shares of the Company’s Class A Common Stock, $0.001 par value per share (the “Class A Common Stock”), at an offering price of $24.00 per share, pursuant to the Company’s registration statement on Form S-1 (File No. 333-262065), and its prospectus (the “Prospectus”), dated April 12, 2022 and filed on April 14, 2022 with the Securities and Exchange Commission pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended. The IPO generated gross proceeds of $441.6 million before deducting underwriting discounts and commissions of $25.4 million and IPO-related expenses of $7.6 million.

The proceeds of the IPO were used in part (a) to purchase an approximately 24.2% ownership interest in EELP at a per-interest price equal to the IPO price of $24.00 per share, and (b) to fund a $50.0 million cash payment as part of EELP’s purchase of all of the issued and outstanding membership interests in Excelsior, LLC and FSRU Vessel (Excellence), LLC (f/k/a Excellence, LLC), (collectively, the “Foundation Vessels”) ((a) and (b) collectively with the IPO, the “IPO Transaction”). See further discussion of the Foundation Vessels in Note 8 – Property and equipment. Following the IPO and as of June 30, 2023, Kaiser owned directly or indirectly the remaining approximately 75.8% of the ownership interests in EELP. The IPO Transaction, whereby Excelerate began to consolidate EELP in its consolidated financial statements, was accounted for as a reorganization of entities under common control. As a result, the consolidated financial statements of Excelerate recognized the assets and liabilities received from EELP in the reorganization at their historical carrying amounts and retroactively reflected them in the Company’s consolidated financial statements as of the earliest period presented.

In October 2022, Excelerate Energy Holdings, LLC (“EE Holdings”), the indirect sole member of Excelerate New England Onshore, LLC (“ENE Onshore”), and EELP, the sole member of ENE Lateral, entered into a merger agreement, pursuant to which ENE Onshore was merged with and into ENE Lateral (the “ENE Onshore Merger”). ENE Lateral was the surviving entity and ENE Onshore ceased to exist as a separate entity. EE Holdings retained responsibility for all liabilities and obligations of ENE Onshore arising prior to the ENE Onshore Merger. Prior to the ENE Onshore Merger, Excelerate consolidated ENE Onshore as a variable interest entity (“VIE”) as Excelerate was determined to be the primary beneficiary of ENE Onshore. As a result of the ENE Onshore Merger, Excelerate no longer has a non-controlling interest related to ENE Onshore. See Note 18 – Related party transactions for more details on this merger.

Basis of Presentation

These consolidated financial statements and related notes include the assets, liabilities and results of operations of Excelerate and its consolidated subsidiaries and have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. All transactions among Excelerate and its consolidated subsidiaries have been eliminated in consolidation. In management’s opinion, all adjustments necessary for a fair statement are reflected in the interim periods. The year-end consolidated balance sheet data was derived from audited financial statements, but the consolidated balance sheet data does not include all disclosures required by GAAP. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Excelerate and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year or any future period.

Summary of significant accounting policies

A summary of the Company's significant accounting policies can be found in Note 2 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements of the 2022 Annual Report. Other than the updates noted below, there were no significant updates or revisions to our accounting policies during the six months ended June 30, 2023.

Recent accounting pronouncements

Accounting standards recently issued but not yet adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848) – Scope” (“ASU 2021-01”), which permits entities to apply optional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform. ASU 2020-04 became effective upon issuance and may be applied prospectively to contract modifications made on or before December 31, 2022. ASU 2021-01 became effective upon issuance and may be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively for contract modifications made on or before December 31, 2022. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” (“ASU 2022-06”), which extended the effective date of the original guidance to December 31, 2024.

During the second quarter of 2023, the Company began transitioning its contracts that referenced LIBOR, as described in Note 10 – Long-term debt. As of June 30, 2023, the Company has other contracts which continue to reference LIBOR. As part of amending our hedging arrangements, we plan to apply the ASU 2021-01 practical expedient. Our adoption of this standard has not had a material impact on our Consolidated Financial Statements and is not expected to for the remaining contracts that are still to be amended.

Fair value of financial instruments

Recurring Fair Value Measurements

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of significance for a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and the placement within the fair value hierarchy levels.

The following table presents the Company’s financial assets and liabilities by level within the fair value hierarchy that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):


		June 30, 2023			December 31, 2022
Financial assets
Derivative financial instruments	Level 2	$	5,823		$	2,444
Financial liabilities
Derivative financial instruments	Level 2	$	(789	)	$	(630	)

As of June 30, 2023 and December 31, 2022, all derivatives were determined to be classified as Level 2 fair value instruments. No cash collateral has been posted or held as of June 30, 2023 or December 31, 2022. This table excludes cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. The carrying amounts of other financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other accrued liabilities approximate fair value due to their short maturities. The carrying value of long-term debt approximates fair value due to the variable rate nature of these financial instruments.

The determination of the fair values above incorporate factors including not only the credit standing of the counterparties involved, but also the impact of the Company’s nonperformance risks on its liabilities.

The values of the Level 2 interest rate swaps were determined using expected cash flow models based on observable market inputs, including published and quoted interest rate data from public data sources. Specifically, the fair values of the interest rate swaps on the 2017 Bank Loans (as defined herein) were derived from the implied forward LIBOR yield curve for the same period as the future interest rate swap settlements. The fair values of the interest rate swaps on the Term Loan Facility (as defined herein) were derived from the implied forward SOFR yield curve for the same period as the future interest rate swap settlements. The Company has not changed its valuation techniques or Level 2 inputs during the three and six months ended June 30, 2023 and 2022.

Non-Recurring Fair Value Measures

Certain non-financial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as equity investments or long-lived assets subject to impairment. For assets and liabilities measured on a non-recurring basis during the year, separate quantitative disclosures about the fair value measurements would be required for each major category. The Company did not record any material impairments on the equity investments or long-lived assets during the three and six months ended June 30, 2023 and 2022.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Accounts receivable, net

As of June 30, 2023 and December 31, 2022, accounts receivable, net consisted of the following (in thousands):


	June 30, 2023			December 31, 2022
Trade receivables	$	140,929		$	74,980
Accrued revenue		4,792			5,307
Amounts receivable from related party		443			2,595
Allowance for doubtful accounts		(556	)		(593	)
Accounts receivable, net	$	145,608		$	82,289

Derivative financial instruments

The following table summarizes the notional values related to the Company’s derivative instruments outstanding at June 30, 2023 (in thousands):


	June 30, 2023
Interest rate swaps (1)	$	310,721

(1)

Number of open positions and gross notional values do not measure the Company’s risk of loss, quantify risk or represent assets or liabilities of the Company. Instead, they indicate the relative size of the derivative instruments and are used in the calculation of the amounts to be exchanged between counterparties upon settlements.

The following table presents the fair value of each classification of the Company’s derivative instruments designated as hedging instruments as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023			December 31, 2022
Cash flow hedges
Current assets	$	4,668		$	1,211
Non-current assets		1,155			1,233
Current liabilities		(191	)		(630	)
Non-current liabilities		(598	)		—
Net derivative assets	$	5,034		$	1,814

The current and non-current portions of derivative assets are included within other current assets and other assets, respectively, on the consolidated balance sheets. The current portion of derivative liabilities is included within accrued liabilities and other liabilities on the consolidated balance sheets.

Derivatives Accounted for as Cash Flow Hedges

The Company’s cash flow hedges include interest rate swaps that are hedges of variability in forecasted interest payments due to changes in the interest rate on LIBOR- and SOFR-based borrowings, a summary which includes the following designations:

•

In 2018, the Company entered into two long-term interest rate swap agreements with a major financial institution. The swaps, which became effective in October 2018 and expire in April 2030, are used to hedge approximately 70% of the variability in interest payments/interest risk on the 2017 Bank Loans (as defined herein).

•

In 2023, the Company entered into long-term interest rate swap agreements with multiple major financial institutions. This arrangement is used to hedge the variability of the interest payments/interest risk on the Term Loan Facility (as defined herein) and will expire in March 2027.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

The following table presents the gains and losses from the Company’s derivative instruments designated in a cash flow hedging relationship recognized in the consolidated statements of income and comprehensive income for the three and six months ended June 30, 2023 and 2022 (in thousands):


Derivatives Designated in Cash Flow Hedging Relationship		Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives
		For the three months ended June 30,					For the six months ended June 30,
		2023		2022			2023		2022
Interest rate swaps		$	4,194	$	806		$	4,583	$	3,764

Derivatives Designated in Cash Flow Hedging Relationship	Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
		For the three months ended June 30,					For the six months ended June 30,
		2023		2022			2023		2022
Interest rate swaps	Interest expense	$	678	$	(444	)	$	1,175	$	(530	)

The amount of gain (loss) recognized in other comprehensive income as of June 30, 2023 and expected to be reclassified within the next 12 months is $4.7 million.

Inventories

As of June 30, 2023 and December 31, 2022, inventories consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
LNG	$	25,447	$	171,578
Bunker fuel		2,625		2,025
Inventories	$	28,072	$	173,603

For the six months ended June 30, 2023 we recorded a lower of cost or net realizable value write-down of $1.0 million, which is included in Direct cost of gas sales on our consolidated statements of income. No impairments were recorded during the three and six months ended June 30, 2022.

Other current assets

As of June 30, 2023 and December 31, 2022, other current assets consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Prepaid expenses	$	15,133	$	18,635
Prepaid expenses – related party		2,098		2,205
Tax receivables		11,963		10,594
Other receivables		7,435		3,592
Other current assets	$	36,629	$	35,026

Property and equipment

As of June 30, 2023 and December 31, 2022, the Company’s property and equipment, net consisted of the following (in thousands):


	June 30, 2023			December 31, 2022
Vessels	$	2,500,062		$	2,225,123
Buoy and pipeline		15,568			17,130
Finance lease right-of-use assets		40,007			40,007
Other equipment		17,392			17,469
Assets in progress		83,109			77,983
Less accumulated depreciation		(970,433	)		(922,029	)
Property and equipment, net	$	1,685,705		$	1,455,683

Depreciation expense for the three months ended June 30, 2023 and 2022 was $29.9 million and $23.5 million, respectively. For the six months ended June 30, 2023 and 2022, depreciation expense was $54.2 million and $46.7 million, respectively.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Sequoia Acquisition

In March 2023, we exercised our option to purchase the FSRU Sequoia for a purchase price of $265 million (the “Sequoia Purchase”), which at December 31, 2022, was under a bareboat charter with a third party and accounted for as an operating lease. We closed the Sequoia Purchase in April 2023 using proceeds from the Term Loan Facility and cash on hand.

Vessel Acquisition

As part of the IPO Transaction, in exchange for (i) 7,854,167 shares of Class A Common Stock with a fair market value (based on the IPO price) of $188.5 million, (ii) a cash payment of $50.0 million and (iii) $21.5 million of estimated future payments under the TRA, EELP purchased from Maya Maritime LLC, a wholly owned subsidiary of the Foundation, all of the issued and outstanding membership interests in the Foundation Vessels. The acquisition of both the Excelsior and the Excellence vessels were accounted for as asset acquisitions in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. In accordance with ASC 805, the accumulated cost of the vessel acquisitions, including Class A Common Stock and contingent consideration related to the TRA, were allocated to the assets acquired based on relative fair value. In 2018, EELP entered into an agreement with a customer to lease the Excellence vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. Historically, EELP, as a lessor, had accounted for the Excellence vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with ASC 842, Leases. The Excellence vessel continues to be accounted for as a sales-type lease and thus did not result in an adjustment to property and equipment.

Accrued liabilities

As of June 30, 2023 and December 31, 2022, accrued liabilities consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Accrued vessel and cargo expenses	$	21,063	$	17,571
Payroll and related liabilities		11,668		14,637
Accrued turnover taxes		4,407		8,091
Current portion of TRA liability		3,704		3,704
Other accrued liabilities		18,868		22,885
Accrued liabilities	$	59,710	$	66,888

10.

Long-term debt

The Company’s long-term debt consists of the following (in thousands):


	June 30, 2023			December 31, 2022
Experience Vessel Financing	$	129,938		$	136,119
2017 Bank Loans		78,896			83,640
EE Revolver		—			—
Term Loan Facility		250,000			—
Total debt		458,834			219,759
Less unamortized debt issuance costs		(9,017	)		(5,450	)
Total debt, net		449,817			214,309
Less current portion, net		(29,507	)		(20,913	)
Total long-term debt, net	$	420,310		$	193,396

The following table shows the range of interest rates and weighted average interest rates incurred on our variable-rate debt obligations during the six months ended June 30, 2023.


	For the six months ended June 30, 2023
	Range	Weighted Average
Experience Vessel Financing	8% – 8.2%	8.1%
2017 Bank Loans	7% – 9.8%	8.7%
Term Loan Facility	7.8% – 8.3%	8.1%

Experience Vessel Financing

In December 2016, we entered into a sale leaseback agreement with a third party to provide $247.5 million of financing for the Experience vessel (the “Experience Vessel Financing”). Due to our requirement to repurchase the vessel at the end of the term, the transaction was accounted for as a failed sale leaseback (a financing transaction). Under the Experience Vessel Financing agreement,

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

the Company makes quarterly principal payments of $3.1 million and interest payments at the 3-month SOFR plus 3.4% through the loan’s maturity in December 2033.

In the second quarter of 2023, we executed an amendment to convert the reference rate in the Experience Vessel Financing from LIBOR to the SOFR yield curve. Prior to the amendment, the Company made interest payments at the 3-month LIBOR plus 3.25%.

2017 Bank Loans

Under the Company's financing agreement for the Moheshkhali LNG terminal in Bangladesh (the “2017 Bank Loans”), the Company entered into two loan agreements with external banks. Under the first agreement, the Company borrowed $32.8 million, makes semi-annual payments and accrues interest at the 6-month LIBOR plus 2.42% through the loan maturity date of October 15, 2029.

Under the second agreement, the Company borrowed $92.8 million, makes quarterly payments and accrues interest at the 3-month LIBOR plus 4.50% through the loan maturity date of October 15, 2029.

As of June 30, 2023, we have not entered into amendments to transition the 2017 Bank Loans from LIBOR to the SOFR yield curve. In April 2023, the Financial Conduct Authority of the United Kingdom announced its decision to require the publication of unrepresentative synthetic LIBOR rates. As such, the 2017 Bank Loans will continue to accrue interest based on the synthetic LIBOR rates until the 2017 Bank Loans are amended.

Revolving Credit Facility and Term Loan Facility

On April 18, 2022, EELP entered into a senior secured revolving credit agreement (“Credit Agreement”), by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the lenders and issuing banks thereunder made available a revolving credit facility (the “EE Revolver”), including a letter of credit sub-facility, to EELP. The EE Revolver enabled us to borrow up to $350 million over a three-year term originally set to expire in April 2025.

On March 17, 2023, EELP entered into an amended and restated senior secured credit agreement (“Amended Credit Agreement”), by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent. The Amended Credit Agreement provides for, among other things (i) a new $250 million term loan facility (the “Term Loan Facility” and, together with the EE Revolver, the “EE Facilities”), (ii) an extension of the maturity date of the EE Revolver, (iii) an increase in the maximum consolidated total leverage by 0.50x to 3.50x, provided that, if the aggregate value of all unsecured debt is equal to or greater than $250 million, maximum consolidated total leverage increases to 4.25x, and (iv) collateral vessel maintenance coverage to be not less than the greater of (a) $750 million and (b) 130% of the sum of the total credit exposure under the Amended Credit Agreement. Proceeds from the Term Loan Facility were used for the acquisition of the FSRU Sequoia in April 2023. The EE Facilities mature in March 2027. Proceeds from the EE Revolver are intended to be used for letters of credit, working capital and other general corporate purposes.

Borrowings under the EE Revolver bear interest at a per annum rate equal to the term SOFR reference rate for such period plus an applicable margin, which applicable margin is based on EELP’s consolidated total leverage ratio as defined and calculated under the Amended Credit Agreement. The unused portion of the EE Facilities is subject to an unused commitment fee calculated at a rate per annum ranging from 0.375% to 0.50% based on EELP’s consolidated total leverage ratio.

As of June 30, 2023, the Company had issued $80.9 million in letters of credit under the EE Revolver and was in compliance with the covenants under its debt facilities. As a result of the EE Revolver’s financial ratio covenants and after taking into account the outstanding letters of credit issued under the facility, all of the $269.1 million of undrawn capacity was available for additional borrowings as of June 30, 2023.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Maturities

Future principal payments on long-term debt outstanding as of June 30, 2023 are as follows (in thousands):


Remainder of 2023	$	11,077
2024		22,693
2025		23,435
2026		24,239
2027		275,081
Thereafter		102,309
Total debt, net	$	458,834

11.

Long-term debt – related party

The Company’s related party long-term debt consists of the following (in thousands):


	June 30, 2023			December 31, 2022
Exquisite Vessel Financing	$	184,348		$	188,433
Less current portion		(8,003	)		(7,661	)
Total long-term related party debt	$	176,345		$	180,772

Exquisite Vessel Financing

In June 2018, the Company entered into a sale leaseback agreement with Nakilat Excelerate LLC, its equity method investment (“Nakilat JV”), to provide $220.0 million of financing for the Exquisite vessel at 7.73% (the “Exquisite Vessel Financing”). The agreement was recognized as a failed sale leaseback transaction and was treated as financing due to the Company’s lease of the vessel.

12.

Equity

Amended and Restated Limited Partnership Agreement

Prior to the IPO, EE Holdings was the limited partner of EELP, with a 99% ownership interest in EELP as of March 31, 2022. In connection with the IPO, EE Holdings amended and restated the limited partnership agreement of EELP (the “EELP Limited Partnership Agreement”) whereby all of the outstanding interests of EELP were recapitalized into Class B interests and EELP was authorized to issue Class A interests. Subject to certain limitations, the EELP Limited Partnership Agreement permits Class B interests to be exchanged for shares of Class A Common Stock on a one-for-one basis or, at Excelerate’s election, for cash. Also in connection with the IPO, Excelerate became the general partner of EELP. In May 2023, the EELP Limited Partnership Agreement was amended to clarify certain non-material administrative items.

Excelerate Energy, LLC (“EELLC”) was the general partner of EELP prior to the IPO, with a 1% ownership interest in EELP as of March 31, 2022. In connection with the IPO, EELLC distributed to EE Holdings all of its interest in EELP. EE Holdings then contributed to EELP all of its interests in EELLC. As anticipated, EELLC was dissolved in October 2022.

Initial Public Offering

In connection with the IPO, in exchange for $441.6 million in gross proceeds before deducting underwriting discounts and commissions of $25.4 million and IPO-related expenses of $7.6 million, EELP issued 26,254,167 Class A interests to Excelerate, representing approximately 24.2% of the EELP interests, and 82,021,389 Class B interests to EE Holdings, representing approximately 75.8% of the EELP interests. In connection with the closing of the IPO, the Company amended and restated its certificate of incorporation in its entirety to, among other things: (i) authorize 300 million shares of Class A Common Stock; (ii) 150 million shares of Class B Common Stock, $0.001 par value per share (the “Class B Common Stock”); and (iii) 25 million shares of “blank check” preferred stock, $0.001 par value per share.

As of June 30, 2023, there were 26,254,167 shares of Class A Common Stock and 82,021,389 shares of Class B Common Stock outstanding.

Class A Common Stock

The Class A Common Stock outstanding represents 100% of the rights of the holders of all classes of our outstanding common stock to share in distributions from Excelerate, except for the right of Class B stockholders to receive the par value of the Class B Common Stock upon our liquidation, dissolution or winding up or an exchange of Class B interests of EELP.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Class B Common Stock

Following the completion of the IPO, EE Holdings, a company controlled directly and indirectly by Kaiser, holds all of the shares of our outstanding Class B Common Stock. The Class B Common Stock entitles the holder to one vote for each share of Class B Common Stock. Holders of shares of our Class B Common Stock vote together with holders of our Class A Common Stock as a single class on all matters on which stockholders are entitled to vote generally, except as otherwise provided in our amended and restated certificate of incorporation or required by law.

As the only Class B stockholder following the completion of the IPO, EE Holdings has 75.8% of the combined voting power of our common stock. The EELP Limited Partnership Agreement entitles partners (and certain permitted transferees thereof) to exchange their Class B interests for shares of Class A Common Stock on a one-for-one basis or, at our election, for cash. When a Class B interest is exchanged for a share of Class A Common Stock, the corresponding share of Class B Common Stock will automatically be canceled. The EELP Limited Partnership Agreement permits the Class B limited partners to exercise their exchange rights subject to certain timing and other conditions. When a Class B interest is surrendered for exchange, it will not be available for reissuance.

EELP Distribution Rights

The Company, as the general partner of EELP, has the right to determine when distributions will be made to holders of interests and the amount of any such distributions. If a distribution is authorized, such distribution will be made to the holders of Class A interests and Class B interests on a pro rata basis in accordance with the number of interests held by such holder.

Dividends and Distributions

During the six months ended June 30, 2023, EELP declared distributions to all interest holders, including Excelerate. Excelerate will use proceeds from the distribution to pay dividends to holders of Class A Common Stock. The following table details the distributions and dividends for the periods presented.


		Class B Interests		Class A Common Stock
Dividend and distribution for the quarter ended	Date Paid or To Be Paid	Distributions Paid or To Be Paid		Total Dividends Declared		Dividend Declared per Share
		(in thousands)
June 30, 2023	September 7, 2023	$	2,051	$	667	$	0.025
March 31, 2023	June 8, 2023	$	2,051	$	669	$	0.025
December 31, 2022	April 27, 2023	$	2,051	$	663	$	0.025

EELP has made or plans to make a corresponding distribution of $0.025 per interest to holders of Class B interests on the same dates as the dividend payments set forth in the table above.

Albania Power Project

In April 2022, Excelerate established an entity to provide a temporary power solution in Albania. Excelerate is a 90% owner of the project and has received $2.6 million in cash contributions from the minority owner as of June 30, 2023. The Albania Power Project is fully consolidated in our financial statements.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

13.

Earnings per share

The following table presents the computation of earnings per share for the three and six months ended June 30, 2023 and the period from April 13 to June 30, 2022 (in thousands, except share and per share amounts):


	For the three months ended June 30,		For the period from April 13 – June 30,			For the six months ended June 30,		For the period from April 13 – June 30,
	2023		2022			2023		2022
Net income	$	29,556	$	(3,043	)	$	60,295	$	(3,043	)
Less net income attributable to non-controlling interest		23,588		(831	)		47,483		(831	)
Less net loss attributable to non-controlling interest – ENE Onshore		—		(181	)		—		(181	)
Net income attributable to shareholders – basic and diluted	$	5,968	$	(2,031	)	$	12,812	$	(2,031	)

Weighted average shares outstanding – basic		26,254,167		26,254,167			26,254,167		26,254,167
Dilutive effect of unvested restricted common stock		11,884		—			17,454		—
Dilutive effect of unvested performance stock units		261		—			1,269		—
Class B Common Stock converted to Class A Common Stock		—		—			—		—
Weighted average shares outstanding – diluted		26,266,312		26,254,167			26,272,890		26,254,167

Earnings per share
Basic	$	0.23	$	(0.08	)	$	0.49	$	(0.08	)
Diluted	$	0.23	$	(0.08	)	$	0.49	$	(0.08	)

The following table presents the common stock shares equivalents excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2023 and the period from April 13 to June 30, 2022, as they would have had an antidilutive effect:


	For the three months ended June 30,		For the period from April 13 – June 30,		For the six months ended June 30,		For the period from April 13 – June 30,
	2023		2022		2023		2022
Stock options		—		338,935		—		338,935
Restricted common stock		404		20,832		508		20,832
Performance stock units		1,156		—		—		—
Class B Common Stock		82,021,389		82,021,389		82,021,389		82,021,389

14.

Leases

Lessee arrangements

Finance leases

Certain enforceable vessel charters and pipeline capacity agreements are classified as finance leases, and the right-of-use assets are included in property and equipment. Lease obligations are recognized based on the rate implicit in the lease or the Company’s incremental borrowing rate at lease commencement.

As of June 30, 2023, the Company was a lessee in finance lease arrangements on one pipeline capacity agreement and one tugboat. The pipeline capacity agreement and tugboat lease were determined to be finance leases as their terms represent the majority of the economic life of their respective assets.

In connection with the IPO, EELP purchased two vessels previously leased and accounted for as related party finance leases. In 2018, EELP entered into an agreement with a customer to lease the Excellence vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. EELP, as a lessor, accounts for the Excellence vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with ASC 842. For more information regarding the purchase of the vessels, see Note 8 – Property and equipment.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Finance lease liabilities as of June 30, 2023 and December 31, 2022 consisted of the following (in thousands):


	June 30, 2023			December 31, 2022
External leases:
Finance lease liabilities	$	221,684		$	231,158
Less current portion of finance lease liabilities		(21,408	)		(20,804	)
Finance lease liabilities, long-term	$	200,276		$	210,354

Operating leases

As of June 30, 2023, the Company was a lessee in a terminal use lease, which is accounted for as an operating lease.

Additionally, the Company has operating leases for offices in various locations in which operations are performed. Such leases will often include options to extend the lease and the Company will include option periods that, on commencement date, it is reasonably certain the Company will exercise. Variable lease costs relate to certain lease agreements, which include payments that vary for items such as inflation adjustments, or common area charges. Variable lease costs that are not dependent on an index are excluded from the lease payments that comprise the operating lease liability and are expensed in the period in which they are incurred. None of the Company's operating leases contain any residual value guarantees.

In March 2023, Excelerate exercised its option to purchase the FSRU Sequoia and the purchase was executed in April 2023. As of December 31, 2022, Sequoia was recorded as an operating lease. See Note 8 – Property and equipment for further information about the purchase.

A maturity analysis of the Company’s operating and finance lease liabilities (excluding short-term leases) at June 30, 2023 is as follows (in thousands):


Year	Operating			Finance
Remainder of 2023	$	5,482		$	16,618
2024		1,818			33,248
2025		1,515			33,235
2026		937			33,235
2027		911			33,235
Thereafter		1,335			141,120
Total lease payments	$	11,998		$	290,691
Less: imputed interest		(700	)		(69,007	)
Carrying value of lease liabilities		11,298			221,684
Less: current portion		(5,982	)		(21,408	)
Carrying value of long-term lease liabilities	$	5,316		$	200,276

As of June 30, 2023, the Company’s weighted average remaining lease term for operating and finance leases was 3.1 years and 9.6 years, respectively, with a weighted average discount rate of 5.5% and 6.3%, respectively. As of December 31, 2022, the Company’s weighted average remaining lease term for operating and finance leases was 2.6 years and 10.1 years, respectively, with a weighted average discount rate of 5.9% and 6.3%, respectively.

The Company's total lease costs for the three and six months ended June 30, 2023 and 2022 recognized in the consolidated statements of income consisted of the following (in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Amortization of finance lease right-of-use assets – related party	$	—	$	—	$	—	$	1,226
Amortization of finance lease right-of-use assets – external		1,166		653		2,183		1,305
Interest on finance lease liabilities – related party		—		—		—		7,006
Interest on finance lease liabilities – external		4,188		3,836		8,273		7,755
Operating lease expense		2,388		9,392		10,842		18,867
Short-term lease expense		91		219		265		606
Total lease costs	$	7,833	$	14,100	$	21,563	$	36,765

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Other information related to leases for the three and six months ended June 30, 2023 and 2022 are as follows (in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Operating cash flows for finance leases	$	4,188	$	3,836	$	8,273	$	7,755
Operating cash flows for finance leases – related party		—		—		—		7,006
Financing cash flow for finance leases		5,455		5,460		10,752		10,805
Financing cash flow for finance leases – related party		—		—		—		2,912
Operating cash flows for operating leases		2,863		9,238		11,177		18,075
Right-of-use assets obtained in exchange for new operating lease liabilities		—		937		—		1,156

15.

Revenue

The following table presents the Company’s revenue for the three and six months ended June 30, 2023 and 2022 (in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Revenue from leases	$	86,307	$	81,895	$	167,855	$	155,957
Revenue from contracts with customers
Time charter, regasification and other services		39,155		28,177		76,184		51,707
Gas sales		306,910		512,857		399,389		1,006,938
Total revenue	$	432,372	$	622,929	$	643,428	$	1,214,602

Lease revenue

The Company’s time charter contracts are accounted for as operating or sales-type leases. The Company's revenue from leases is presented within revenues in the consolidated statements of income and for the three and six months ended June 30, 2023 and 2022 consists of the following (in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Operating lease income	$	68,025	$	63,027	$	131,335	$	118,301
Sales-type lease income		18,282		18,868		36,520		37,656
Total revenue from leases	$	86,307	$	81,895	$	167,855	$	155,957

Sales-type leases

Sales-type lease income is interest income that is presented within lease revenues on the consolidated statements of income. The Company leased two vessels and a terminal under sales-type leases as it is reasonably certain that the ownership of these assets will transfer to the customer at the end of the term. For the three and six months ended June 30, 2023, the Company recorded lease income from the net investment in the leases within revenue from lease contracts of $18.3 million and $36.5 million, respectively, compared to $18.9 million and $37.7 million for the three and six months ended June 30, 2022, respectively.

Operating leases

Revenue from time charter contracts accounted for as operating leases is recognized by the Company on a straight-line basis over the term of the contract. As of June 30, 2023, the Company is the lessor to time charter agreements with customers on seven of its vessels. The following represents the amount of property and equipment that is leased to customers as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023			December 31, 2022
Property and equipment	$	2,182,087		$	2,034,183
Accumulated depreciation		(900,106	)		(823,942	)
Property and equipment, net	$	1,281,981		$	1,210,241

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

The future minimum revenues presented in the table below should not be construed to reflect total charter hire revenues for any of the years presented. Minimum future revenues included below are based on the fixed components and do not include variable or contingent revenue. Additionally, revenue generated from short-term charters are not included as the duration of the contracts are less than a year. As of June 30, 2023, the minimum contractual future revenues to be received under the time charters during the next five years and thereafter are as follows (in thousands):


Year	Sales-type			Operating
Remainder of 2023	$	36,049		$	136,851
2024		84,295			269,944
2025		87,612			210,545
2026		87,612			213,730
2027		87,612			224,227
Thereafter		492,354			702,050
Total undiscounted	$	875,534		$	1,757,347
Less: imputed interest		(469,547	)
Net investment in sales-type leases		405,987
Less: current portion		(13,980	)
Non-current net investment in sales-type leases	$	392,007

Revenue from contracts with customers

The following tables show disaggregated revenues from customers attributable to the country in which the revenues were derived (in thousands). Revenues from external customers are attributed to the country in which the party to the applicable agreement has its principal place of business.


	For the three months ended June 30, 2023
			Revenue from contracts with customers
	Revenue from		TCP, Regas		Gas		Total
	leases		and other		sales		revenue
Brazil	$	13,051	$	2,076	$	225,977	$	241,104
Bangladesh		18,003		10,422		80,933		109,358
UAE		17,700		5,882		—		23,582
United States		—		1,212		—		1,212
Argentina		16,748		13,772		—		30,520
Pakistan		11,002		2,993		—		13,995
Germany		248		—		—		248
Finland		9,555		2,769		—		12,324
Other		—		29		—		29
Total revenue	$	86,307	$	39,155	$	306,910	$	432,372


	For the three months ended June 30, 2022
			Revenue from contracts with customers
	Revenue from		TCP, Regas		Gas		Total
	leases		and other		sales		revenue
Brazil	$	13,051	$	1,873	$	512,857	$	527,781
Bangladesh		18,626		9,453		—		28,079
UAE		16,253		5,380		—		21,633
United States		—		1,259		—		1,259
Argentina		13,391		5,870		—		19,261
Pakistan		11,003		2,853		—		13,856
Israel		9,571		1,459		—		11,030
Other		—		30		—		30
Total revenue	$	81,895	$	28,177	$	512,857	$	622,929

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)


	For the six months ended June 30, 2023
			Revenue from contracts with customers
	Revenue from		TCP, Regas		Gas		Total
	leases		and other		sales		revenue
Brazil	$	25,958	$	4,031	$	296,230	$	326,219
Bangladesh		35,993		21,089		80,933		138,015
UAE		34,541		11,452		—		45,993
United States		—		6,080		—		6,080
Argentina		26,123		19,590		—		45,713
Pakistan		21,884		5,807		—		27,691
Germany		4,351		2,650		—		7,001
Finland		19,005		5,400		22,226		46,631
Other		—		85		—		85
Total revenue	$	167,855	$	76,184	$	399,389	$	643,428


	For the six months ended June 30, 2022
			Revenue from contracts with customers
	Revenue from		TCP, Regas		Gas		Total
	leases		and other		sales		revenue
Brazil	$	25,958	$	3,534	$	932,839	$	962,331
Bangladesh		37,414		18,728		—		56,142
UAE		28,991		8,262		—		37,253
United States		—		2,358		74,099		76,457
Argentina		22,766		10,022		—		32,788
Pakistan		21,885		5,337		—		27,222
Israel		18,943		3,113		—		22,056
Other		—		353		—		353
Total revenue	$	155,957	$	51,707	$	1,006,938	$	1,214,602

Assets and liabilities related to contracts with customers

Under most gas sales contracts, invoicing occurs once the Company’s performance obligations have been satisfied, at which point payment is unconditional. Invoicing timing for time charter party (“TCP”), regas and other services varies and occurs according to the contract. As of June 30, 2023, and December 31, 2022, receivables from contracts with customers associated with revenue from services was $118.0 million and $14.9 million, respectively. These amounts are presented within accounts receivable, net on the consolidated balance sheets. In addition, revenue for services recognized in excess of the invoiced amounts, or accrued revenue, outstanding at June 30, 2023 and December 31, 2022, was $4.8 million and $5.3 million, respectively. Accrued revenue represents current contract assets that will turn into accounts receivable within the next 12 months and be collected during the Company’s normal business operating cycle. Accrued revenue is presented in accounts receivable, net on the consolidated balance sheets. Other items included in accounts receivable, net represent receivables associated with leases, which are accounted for in accordance with the leasing standard. There were no write downs of trade receivables for lease or time charter services or contract assets for the six months ended June 30, 2023 and 2022.

Contract liabilities from advance payments in excess of revenue recognized from services as of June 30, 2023 and December 31, 2022 were $1.4 million and $134.3 million, respectively. If the performance obligations are expected to be satisfied during the next 12 months, and the contract liabilities are classified within current portion of deferred revenue on the consolidated balance sheets. Amounts to be recognized in revenue after 12 months are recorded in long-term deferred revenue. The remaining portion of current deferred revenue relates to the lease component of the Company’s time charter contracts, which are accounted for in accordance with the leasing standard. Noncurrent deferred revenue presented in other long-term liabilities on the consolidated balance sheets represents payments allocated to the Company’s performance obligation for drydocking services within time charter contracts in which the lease component is accounted for as a sales-type lease. Revenue will be recognized once the performance obligation is complete and occurs every five years.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

The following table reflects the changes in our contract liabilities related to long-term contracts with customers as of June 30, 2023 (in thousands):


	For the six months ended June 30, 2023
Deferred revenues, beginning of period	$	177,754
Cash received but not yet recognized		24,789
Revenue recognized from prior period deferral		(145,564	)
Deferred revenues, end of period	$	56,979

Some of the Company’s contracts are short-term in nature with a contract term of less than a year. The Company applied the optional exemption not to report any unfulfilled performance obligations related to these contracts.

The Company has long-term arrangements with customers in which the Company provides regasification and other services as part of time charter party contracts. The price under these agreements is typically stated in the contracts. The fixed transaction price allocated to the remaining performance obligations under these arrangements is $868.7 million as of June 30, 2023. The Company expects to recognize revenue from contracts exceeding one year over the following time periods (in thousands):


Remainder of 2023	$	61,673
2024		107,200
2025		88,557
2026		87,652
2027		90,030
Thereafter		433,627
	$	868,739

16.

Long-Term Incentive Compensation

In April 2022, Excelerate adopted the Excelerate Long-Term Incentive Plan (the “LTI Plan”). The LTI Plan was adopted to promote and closely align the interests of Excelerate's employees, officers, non-employee directors and other service providers and its stockholders by providing stock-based compensation and other performance-based compensation. The LTI Plan allows for the initial grant of up to 10.8 million shares, stock options, stock appreciation rights, alone or in conjunction with other awards; restricted stock and restricted stock units, including performance vested units; incentive bonuses, which may be paid in cash, stock or a combination thereof; and other stock-based awards. The share pool will be increased on January 1st of each calendar year beginning in 2023 by a number of shares equal to 4% of the outstanding shares of Class A Common Stock on the preceding December 31st. The LTI Plan is administered by the Compensation Committee of the Company’s board of directors.

The Company’s stock option and restricted stock unit awards both qualify as equity awards and are amortized into “Selling, general and administrative expense” and “Cost of revenue and vessel operating expenses” on the Consolidated Statements of Income on a straight-line basis. Stock options were granted to certain employees of Excelerate and vest over five years and expire ten years from the date of grant. The Company also issued restricted stock units to directors and certain employees that vest ratably over either one or three years. In 2023, the Company issued performance units to certain employees that cliff vest in three years. The performance units contain both a market condition related to Excelerate’s relative Total Shareholder Return as compared to its peer group and a performance condition related to the Company’s EBITDA.

For the three and six months ended June 30, 2023 and 2022, the Company recognized long-term incentive compensation expense for both its stock options and restricted stock unit awards as shown below (in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Stock-based compensation expense	$	1,074	$	270	$	1,431	$	270

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Stock options

The following table summarizes stock option activity for the six months ended June 30, 2023 and provides information for outstanding and exercisable options as of June 30, 2023:


	Number of Options			Weighted Average Exercise Price
				(per share)
Outstanding at January 1, 2023		323,023		$	24.00
Granted		—			—
Exercised		—			—
Forfeited or expired		(4,338	)		24.00
Outstanding at June 30, 2023		318,685		$	24.00
Exercisable at June 30, 2023		64,581		$	24.00

As of June 30, 2023, the Company had $3.2 million in unrecognized compensation costs related to its stock options that it expects to recognize over a weighted average period of 3.8 years.

Restricted stock unit awards

The following table summarizes restricted stock unit activity for the six months ended June 30, 2023 and provides information for unvested shares as of June 30, 2023:


	Number of Shares			Weighted Average Fair Value
				(per share)
Unvested at January 1, 2023		37,754		$	23.61
Granted		264,801			21.61
Vested		—			—
Forfeited		(1,388	)		21.62
Unvested at June 30, 2023		301,167		$	21.86

As of June 30, 2023 the Company had $5.5 million in unrecognized compensation costs related to its restricted stock unit awards that it expects to recognize over a weighted average period of 2.5 years.

Performance units

The performance units entitle the holder to between zero and two shares of the Company’s Class A Common Stock based on results as compared to performance and market conditions. The performance condition relates to the Company’s EBITDA and the market condition relates to Excelerate’s relative Total Shareholder Return as compared to its peer group. Changes in the Company’s expected EBITDA performance as compared to award metrics will be recorded to the consolidated statement of income over the vesting period.

The fair value of the Company’s performance units is calculated based on a Monte Carlo simulation of the grant’s market condition, which requires management to make assumptions regarding the risk-free interest rates, expected dividend yields and the expected volatility of the Company’s stock calculated based on a period of time generally commensurate with the expected term of the award. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the median of the historical volatility of the companies that comprise the Vanguard Energy ETF market index as of January 1, 2023 over the expected life of the granted units. The Company uses estimates of forfeitures to estimate the expected term of the units grants. The reversal of any expense due to forfeitures is accounted for as they occur.


	2023
Risk-free interest rate		3.9	%
Expected volatility		58.0	%
Expected term	2.76 years

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

The following table summarizes performance unit activity for the six months ended June 30, 2023 and provides information for unvested performance units (reflected at target performance) as of June 30, 2023:


	Number of Units		Weighted Average Fair Value
			(per unit)
Unvested at January 1, 2023		—	$	—
Granted		84,699		28.16
Vested		—		—
Forfeited		—		—
Unvested at June 30, 2023		84,699	$	28.16

As of June 30, 2023, the Company had $2.2 million in unrecognized compensation costs related to its performance units that it expects to recognize over a weighted average period of 2.6 years.

17.

Income taxes

In computing the provision for income taxes for interim periods, the Company estimates the annual effective tax rate for the full year, which is then applied to the actual year-to-date ordinary income (loss) and reflects the tax effects of discrete items in its provision for income taxes as they occur.

The provision for income taxes for the three months ended June 30, 2023 and 2022 was $9.7 million and $7.8 million, respectively. The provision for income taxes for the six months ended June 30, 2023 and 2022 was $17.3 million and $11.5 million, respectively. The increase was primarily attributable to the year-over-year change in the amount and geographical distribution of income.

The effective tax rate for the three months ended June 30, 2023 and 2022 was 24.7% and 204.7%, respectively. The effective tax rate for the six months ended June 30, 2023 and 2022 was 22.3% and 56.5%, respectively. The decreases are a result of unusual, one-time items which existed in the prior periods. The prior period effective tax rates were increased by the reduction of income before tax due to the loss on early extinguishment of the lease liability on acquisition of the Excellence vessel without a corresponding tax benefit. Additionally, the decrease was driven by the geographical distribution of income and the varying tax regimes of jurisdictions.

Excelerate is a corporation for U.S. federal and state income tax purposes. Excelerate’s accounting predecessor, EELP, is treated as a pass-through entity for U.S. federal income tax purposes and, as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include any provision for U.S. federal income tax for EELP.

The Company has international operations that are also subject to foreign income tax and U.S. corporate subsidiaries subject to U.S. federal tax. Therefore, our effective income tax rate is dependent on many factors, including the Company’s geographical distribution of income, a rate benefit attributable to the portion of the Company’s earnings not subject to corporate level taxes, and the impact of nondeductible items and foreign exchange impacts as well as varying tax regimes of jurisdictions. In one jurisdiction, the Company’s tax rate is significantly less than the applicable statutory rate as a result of a tax holiday that was granted. This tax holiday will expire in 2033 at the same time that our contract and revenue with our customer ends.

18.

Related party transactions

The Company had one debt instrument with related parties as of June 30, 2023. For details on this debt instrument, see Note 11 – Long-term debt – related party. Prior to the ENE Onshore Merger, ENE Onshore and KFMC (as defined herein) were party to the KFMC-ENE Onshore Note (as defined herein) that was settled in full in connection with the merger. Prior to the IPO, EELP, certain of its subsidiaries and other affiliates of Kaiser were guarantors to the Kaiser Credit Line (as defined herein).

Kaiser has, over time, donated significant amounts of money to the Foundation. The Foundation has an independent board and Kaiser does not exert control over or have ownership in the Foundation. However, several of Kaiser’s close family members are on the board of directors of the Foundation and for the purposes of these accounts, where transactions with the Foundation occur, they are reported as related party transactions. As of June 30, 2023 and December 31, 2022, the Company had no outstanding balance with the Foundation. Interest expense in related party finance leases for the three and six months ended June 30, 2022 amounted to $7.0 million and $14.7 million, respectively. As part of the vessel management agreements, EELP provided bookkeeping and other back office administrative services for the Foundation Vessels. EELP purchased the Foundation Vessels from an affiliate of the Foundation in connection with the IPO. For further details on this purchase, see Note 8 – Property and equipment.

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

The following transactions with related parties are included in the accompanying consolidated statements of income (in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Management fees and other expenses with Kaiser	$	65	$	271	$	1,091	$	1,019

The following balances with related parties are included in the accompanying consolidated balance sheets (in thousands):


	June 30, 2023		December 31, 2022
Amounts due from related parties	$	443	$	2,595
Amounts due to related parties	$	132	$	2,054
Prepaid expenses – related party	$	2,098	$	2,205

EELP and certain of its subsidiaries and affiliates entered into certain transactions with Kaiser and affiliates of Kaiser as described below.

Prior to the IPO, as credit support for LNG cargo purchases, Kaiser obtained letters of credit under the Kaiser Credit Line on behalf of Excelerate Gas Marketing Limited Partnership, a subsidiary of EELP, in favor of LNG suppliers. For the six months ended June 30, 2022, letters of credit of approximately $27.3 million were issued. In connection with the IPO, the credit support previously provided for LNG cargo purchases under the Kaiser Credit Line has been replaced by letters of credit obtained under the EE Revolver.

In September 2021, as part of an anticipated reorganization in connection with the IPO, certain entities under common control of Kaiser were contributed to EELP (the “Northeast Gateway Contribution”). These entities include Excelerate New England GP, LLC, Northeast Gateway Energy Bridge, LP and Excelerate New England Lateral, LLC (“ENE Lateral” and, together with Excelerate New England GP, LLC and Northeast Gateway Energy Bridge, LP, the “Northeast Companies”). Since the Northeast Gateway Contribution is considered a transaction with entities under common control, EELP accounted for the Northeast Companies’ assets and liabilities received at their parent carrying values and retroactively reflected them in the Company’s consolidated financial statements as of the earliest period presented.

Prior to the Northeast Gateway Contribution, Kaiser issued a guarantee dated September 11, 2013 (and reaffirmed on December 1, 2015) in favor of Algonquin Gas Transmission, LLC (“AGT”) and Maritimes & Northeast Pipeline, L.L.C. (each a wholly owned subsidiary of Enbridge, Inc.), in respect of all payment obligations owed by ENE Onshore and Excelerate New England Lateral, LLC (“ENE Lateral”) (the “AGT Guarantee”). In addition, Kaiser obtained a letter of credit on behalf of ENE Onshore and ENE Lateral (the “AGT LOC”). As of June 30, 2023, there were no amounts remaining available for drawing under the AGT LOC. In connection with the Northeast Gateway Contribution, EELP agreed to (i) indemnify Kaiser in respect of Kaiser’s obligations related to ENE Lateral under the AGT Guarantee and AGT LOC, (ii) pay an annual fee in the amount of $1.2 million (pro-rated based on the number of days such guarantee remains outstanding in any year (beginning September 17, 2021)) to Kaiser to maintain such AGT Guarantee and (iii) reimburse Kaiser for any fees actually incurred under the AGT LOC (the “Kaiser AGT Indemnity Agreement”). Effective October 20, 2022 and in connection with the ENE Onshore Merger, the Kaiser AGT Indemnity Agreement and the AGT Guarantee were terminated and EELP issued a new guarantee in respect of all payment obligations owed by ENE Lateral to AGT. A final pro-rated payment of $1.0 million was made by EELP to Kaiser in February 2023 in respect of Kaiser maintaining the AGT Guarantee through the Merger.

Also in connection with the Northeast Gateway Contribution during September 2021, EE Holdings made a $57.2 million contribution to the Company to allow it to repay the remaining amount owed on a promissory note between ENE Lateral and KFMC. During September 2021, EE Holdings also made a $16.5 million contribution in the form of a Note Receivable from Kaiser (the “Kaiser Note Receivable”) to provide for funding of certain amounts expected to be paid in the next twelve months, which was repaid in full in February 2022.

In November 2018, the Company entered into a promissory note (the “KFMC Note”) with Kaiser-Francis Management Company, L.L.C. (“KFMC”), an affiliate of Kaiser, as lender. The KFMC Note allowed EELP to draw funds up to $250 million through December 31, 2023 at LIBOR plus 1.55%. Upon consummation of the IPO, the KFMC Note was replaced by the EE Revolver.

In November 2021, KFMC and ENE Onshore entered into a note (the “KFMC-ENE Onshore Note”) with a maximum commitment of $25 million. The KFMC-ENE Onshore Note was settled in full and canceled in connection with the ENE Onshore Merger.

ENE Onshore Merger

In October 2022, EE Holdings, the indirect sole member of ENE Onshore, and EELP, the sole member of ENE Lateral, entered into the ENE Onshore Merger, effective October 31, 2022. ENE Lateral was the surviving entity and ENE Onshore ceased to exist as a

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

separate entity. Prior to the ENE Onshore Merger, Excelerate consolidated ENE Onshore as a VIE as Excelerate was determined to be the primary beneficiary of ENE Onshore. As a result of the ENE Onshore Merger, Excelerate ceased to have a non-controlling interest related to ENE Onshore.

In connection with the ENE Onshore Merger, ENE Onshore entered into a Contribution and Note Termination Agreement, pursuant to which ENE Onshore received an equity contribution sufficient to allow it to remit payment to (a) KFMC of the then-outstanding KFMC-ENE Onshore Note and (b) AGT of amounts owed for October 2022 net capacity payments. Subsequently, the KFMC-ENE Onshore Note was terminated. After the contribution, on October 31, 2022, ENE Onshore had no material net assets or liabilities. See the consolidated statements of changes in equity for the full effects of the ENE Onshore Merger.

19.

Concentration risk

The Company is subject to concentrations of credit risk principally from cash and cash equivalents, restricted cash, derivative financial instruments, and accounts receivable. The Company limits the exposure to credit risk with cash and cash equivalents and restricted cash by placing it with highly rated financial institutions. Additionally, the Company evaluates the counterparty risk of potential customers based on credit evaluations, including analysis of the counterparty’s established credit rating or assessment of the counterparty’s creditworthiness based on an analysis of financial condition when a credit rating is not available, historical experience, and other factors.

To manage credit risk associated with the interest rate hedges, the Company selected counterparties based on their credit ratings and limits the exposure to any single counterparty. The counterparties to the derivative contracts are major financial institutions with investment grade credit ratings. The Company periodically monitors the credit risk of the counterparties and adjusts the hedging position as appropriate. The impact of credit risk, as well as the ability of each party to fulfill its obligations under the derivative financial instruments, is considered in determining the fair value of the contracts. Credit risk has not had a significant effect on the fair value of the derivative instruments. The Company does not have any credit risk-related contingent features or collateral requirements associated with the derivative contracts.

The following table shows customers with revenues of 10% or greater of total revenues:


	Six months ended
	June 30,
	2023			2022
Customer A		49	%		78	%
Customer B		19	%		3	%

Certain customers of ours may purchase a high volume of LNG and/or natural gas from us. These purchases can significantly increase such customers’ percentage of our total revenues as compared to those customers who are only FSRU and terminal service customers. This increase in revenue from their purchases is exacerbated in periods of high market pricing of LNG and natural gas. In conjunction with these LNG and natural gas sales, our direct cost of gas sales also increases by a similar percent due to the increase in volume and market pricing of LNG incurred for such revenue. As such, the increase in revenues by customer may be disproportionate to the relative increase in concentration risk within our operations.

Substantially all of the net book value of our long-lived assets are located outside the United States. The Company’s fixed assets are largely comprised of vessels that can be deployed globally due to their mobile nature. As such, the Company is not subject to significant concentration risk of fixed assets.

20.

Commitments and contingencies

The Company may be involved in legal actions in the ordinary course of business, including governmental and administrative investigations, inquiries and proceedings concerning employment, labor, environmental and other claims. The Company will recognize a loss contingency in the consolidated financial statements when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. The Company will disclose any loss contingencies that do not meet both conditions if there is a reasonable possibility that a loss may have been incurred. Gain contingencies are not recorded until realized.

Venture Global SPA

In February 2023, we executed a 20-year LNG sales and purchase agreement with Venture Global LNG (the “Venture Global SPA”). Under the Venture Global SPA, Excelerate will purchase 0.7 million tonnes (“MT”) per annum of LNG on a FOB basis from the Plaquemines LNG facility in Plaquemines Parish, Louisiana. Our purchase commitment will be based on the final settlement price of monthly Henry Hub natural gas futures contracts plus a contractual spread. Using Henry Hub natural gas futures pricing as of June 30,

Excelerate Energy, Inc.

Notes to Consolidated Financial Statements (Unaudited)

2023, our average annual commitment is estimated to be approximately $250 million. The start of this commitment, however, is dependent on the LNG facility becoming operational, which is not expected in the next twelve months.

21.

Supplemental noncash disclosures for consolidated statement of cash flows

Supplemental noncash disclosures for the consolidated statement of cash flows consist of the following (in thousands):


	Six months ended June 30,
	2023			2022
Supplemental cash flow information:
Cash paid for taxes	$	12,790		$	14,767
Cash paid for interest		28,846			31,183
Right-of-use assets obtained in exchange for lease obligations		—			1,156
Increase (decrease) in capital expenditures included in accounts payable		(7,145	)		9,602
Vessel acquisition		—			188,500

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	462,001	$	516,659
Restricted cash – current		2,638		2,614
Restricted cash – non-current		19,482		18,698
Cash, cash equivalents, and restricted cash	$	484,121	$	537,971

22.

Accumulated other comprehensive income (loss)

Changes in components of accumulated other comprehensive income (loss) were (in thousands):


	Cumulative translation adjustment			Qualifying cash flow hedges			Share of OCI in equity method investee			Total
At January 1, 2023	$	(524	)	$	551		$	488		$	515
Other comprehensive income (loss)		(420	)		389			(321	)		(352	)
Reclassification to income		—			(497	)		(416	)		(913	)
Reclassification to NCI		318			81			559			958
At March 31, 2023	$	(626	)	$	524		$	310		$	208
Other comprehensive income		101			4,194			895			5,190
Reclassification to income		214			(678	)		(391	)		(855	)
Reclassification to NCI		(239	)		(2,665	)		(382	)		(3,286	)
At June 30, 2023	$	(550	)	$	1,375		$	432		$	1,257

At January 1, 2022	$	(2,167	)	$	(3,702	)	$	(3,309	)	$	(9,178	)
Other comprehensive income		—			2,958			492			3,450
Reclassification to income		—			86			1,922			2,008
At March 31, 2022	$	(2,167	)	$	(658	)	$	(895	)	$	(3,720	)
Other comprehensive income		—			806			1,325			2,131
Reclassification to income		—			444			(532	)		(88	)
Reclassification to NCI		1,643			(322	)		157			1,478
At June 30, 2022	$	(524	)	$	270		$	55		$	(199	)

23.

Subsequent events

Dividend Declaration

On August 3, 2023, the Company announced that our Board of Directors declared a cash dividend, with respect to the quarter ended June 30, 2023, of $0.025 per share of Class A Common Stock. The dividend is payable on September 7, 2023, to Class A Common Stockholders of record as of the close of business on August 23, 2023. EELP will make a corresponding distribution of $0.025 per interest to holders of Class B interests on the same date of the dividend payment.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included in this Form 10-Q and included in the 2022 Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included in the 2022 Annual Report, this Form 10-Q and our other filings with the SEC. Please also see the section titled “Forward-Looking Statements.”

Overview

Excelerate is changing the way the world accesses cleaner and more reliable energy by delivering regasified natural gas, benefiting hundreds of millions of people around the world. From our founding, we have focused on providing flexible LNG solutions to markets in diverse environments across the globe, providing a lesser emitting form of energy to markets that often rely on coal as their primary energy source. At Excelerate, we believe that access to energy sources such as LNG is critical to assisting markets in their decarbonization efforts, while at the same time promoting economic growth and improving quality of life.

We have grown our business significantly since our first FSRU charter in 2003, and today, we are a profitable energy company with a geographically diversified business model. Our business spans the globe, with regional offices in 11 countries and operations in Argentina, Bangladesh, Brazil, Finland, Pakistan, the United Arab Emirates (the “UAE”) and the United States. We are the largest provider of regasified LNG in Argentina and Bangladesh and one of the largest providers of regasified LNG in Brazil and Pakistan, and we operate the largest FSRU in Brazil. We also lease an LNG terminal in Bahia, Brazil (the “Bahia Terminal”) from Petróleo Brasileiro S.A. (“Petrobras”), which expires in December 2023. Utilizing the Bahia Terminal, we have been importing LNG and selling natural gas to the Brazilian market since December 2021. In December 2022, we began importing and selling natural gas and LNG into Europe via the Inkoo Terminal in Finland. We intend to continue to market natural gas and LNG, which offers a cleaner energy source from which power can be generated consistently. The high value our customers place on our services has resulted in a reliable source of revenues to us, while our global reach helps balance seasonal demand fluctuation among the geographies in which we operate. For the three months ended June 30, 2023, we generated revenues of $432.4 million, net income of $29.6 million and Adjusted EBITDA of $88.6 million. For the three months ended June 30, 2022, we generated revenues of $622.9 million, net loss of $4.0 million and Adjusted EBITDA of $66.5 million. For more information regarding our non-GAAP measure Adjusted EBITDA and a reconciliation to net income, the most comparable U.S. Generally Accepted Accounting Principles (“GAAP”) measure, see “How We Evaluate Our Operations.”

Our business focuses on the integration of the natural gas-to-power LNG value chain, and as part of this value chain, we operate regasification terminals in global economies that utilize our FSRU fleet. Our business is substantially supported by time charter contracts, which are effectively long-term, take-or-pay arrangements and provide consistent revenue and cash flow from our high-quality customer base. As of June 30, 2023, we operate a fleet of ten purpose-built FSRUs, have completed more than 2,600 ship-to-ship transfers of LNG with over 50 LNG operators since we began operations and have safely delivered more than 6,200 billion cubic feet of natural gas through 16 LNG regasification terminals. For the three months ended June 30, 2023 and 2022, we generated revenues of $125.5 million and $110.1 million, respectively, from our FSRU and terminal services businesses, representing approximately 29% and 18% of our total revenues for each of those periods.

We also procure LNG from major producers and sell natural gas through our flexible LNG terminals. For the three months ended June 30, 2023 and 2022 we generated revenues of $306.9 million and $512.9 million, respectively, from LNG and natural gas sales, representing approximately 71% and 82% of our total revenues for each of those periods. We believe that the commercial momentum that we have established in recent years and the increasing need for access to LNG around the world, have resulted in a portfolio of new growth opportunities for us to pursue. In addition to our FSRU and terminal services businesses and natural gas sales, we plan to expand our business to provide customers with an array of products. We are evaluating and pursuing early-stage projects with opportunities in Europe, Asia Pacific, Latin America, and the Middle East.

Recent Trends and Outlook

To the benefit of LNG consumers, the second quarter of 2023 saw a continuation of the decreasing trend in natural gas prices. Dutch Title Transfer Facility (“TTF”) prices decreased to an average of $10.96/MMBtu in the second quarter of 2023 as compared to the first quarter of 2023’s average of $16.77/MMBtu and the fourth quarter of 2022’s average of $37.02/MMBtu. Lower LNG spot prices have allowed emerging buyers in Asia, such as India, Bangladesh, and Thailand to reenter the market. As of August 2023, Bangladesh LNG cargos awarded are already 42% higher than cargos purchased by the country on the spot market in all of 2022. In South America, the decline in prices allowed Argentina to award a 30-cargo buy tender for delivery during the Southern Hemisphere winter season.

European and Asian countries have now largely shifted their focus towards the 2023-2024 winter season. Mild weather in Europe has resulted in the continued build-up of European LNG storage and limited price increases during the second quarter. European Union (“EU”) natural gas storage levels ended the second quarter of 2023 at approximately 77% full, compared to 58% over the same period in 2022. As of early August 2023, EU natural gas storage is approximately 87% full. This is three months in advance of the EU’s mandated November 1, 2023 target of 90%. Market pricing of LNG through the end of the 2023-2024 winter season is expected to be largely dependent on the magnitude of colder weather in large LNG consumer regions. The International Energy Agency projects Chinese LNG imports could fluctuate by over 10 Bcm or 7.2 MT this upcoming winter, depending on seasonal temperatures. These dynamics and their resulting effect on LNG prices will determine how customers in the regions in which Excelerate operates will be able to participate in the spot market throughout the remainder of 2023.

LNG supply activity has continued to make significant moves forward during the first half of 2023. Approximately 200 MTPA of incremental LNG volumes have reached final investment decisions or are under construction, driven primarily by volumes from the United States and Qatar. These export projects are expected to begin coming online at the end of 2024. This increase in supply is expected to create new opportunities for Excelerate to connect LNG to downstream customers, including those in South and Southeast Asia.

Recent Business Updates:

•

In April and June of 2023, Excelerate delivered spot LNG cargos into Bangladesh. Year-to-date, Excelerate has secured four Bangladesh spot LNG cargo tenders, equating to approximately 250,000 tons of LNG. The third and fourth cargos are expected to be delivered in the third quarter of 2023.

•

In May 2023, the FSRU Excelsior commenced seasonal regasification services at the Bahia Blanca GasPort terminal (“Bahia Blanca”) in Argentina. The Excelsior, which is being chartered by the Government of the Federal Republic of Germany (“German government”), was placed on a suspension agreement beginning in April 2023 while it is temporarily deployed to Bahia Blanca during the Argentine winter. Immediately after the Argentine winter, the Excelsior will resume its original charter with the German government.

•

In April 2023, we completed the purchase of the FSRU Sequoia for a purchase price of $265 million from Anemoesa Marine Inc. (“Anemoesa”). Proceeds from our Term Loan Facility and cash on hand were used to purchase Sequoia. Prior to the purchase, we had leased Sequoia on a five-year bareboat charter from Anemoesa, which began in June 2020.

•

In March 2023, we closed on an amended and restated $600 million senior secured credit facility, consisting of a $350 million revolving credit facility and a $250 million term loan, which we drew down in April 2023. The new facilities refinanced our existing EE Revolver.

•

In February 2023, the Excelsior commenced its charter hire pursuant to a binding five-year charter contract signed with the German government in October 2022 to provide regasification services at one of Germany’s planned LNG import terminals that is being developed by Tree Energy Solutions, E.ON SE and ENGIE SA.

•

In February 2023, we extended our time charter party agreement with Dubai Supply Authority (DUSUP) for the Explorer. Under the terms of the new agreement, the time charter period has been extended by an additional five years, which will now reach completion in the first quarter of 2031.

•

In February 2023, we executed a 20-year LNG sales and purchase agreement with Venture Global LNG under which we will purchase 0.7 million MT per annum of LNG on an FOB basis from the Plaquemines Phase 2 LNG facility in Plaquemines Parish, Louisiana. The start of this commitment is dependent on the LNG facility becoming operational.

Components of Our Results of Operations

Revenue

We generate revenue through the provision of regasification services using our fleet of FSRUs and LNG terminal assets, as well as physical sales of LNG and natural gas, that are made primarily in connection with our regasification and terminal projects. We provide regasification services through time charters and operation service contracts primarily related to our long-term charter contracts. Most of our time charter revenues are from long-term contracts that function similarly to take-or-pay arrangements in that we are paid if our assets and teams are available and ready to provide services to our customers regardless of whether our customers utilize the services. A portion of our revenue attributable to our charters for the use of our vessels is accounted for as lease revenue, and the revenues attributable to the services provided under those charters are accounted for as non-lease revenue. We generally charge fixed fees for the use of and services provided with our vessels and terminal capacity plus additional amounts for certain variable costs.

Expenses

The principal expenses involved in conducting our business are operating costs, direct cost of gas sales, general and administrative expenses, and depreciation and amortization. A large portion of the fixed and variable costs we incur in our business are in the operation of our fleet of FSRUs and terminals that provide regasification and gas supply to our customers. We manage the level of our fixed costs based on several factors, including industry conditions and expected demand for our services and generally pass-through certain variable costs.

We incur significant equipment costs in connection with the operation of our business, including capital equipment recorded as property and equipment, net on our balance sheets and related depreciation and amortization on our income statement. In addition, we incur repair and maintenance and leasing costs related to our property and equipment utilized both in our FSRU and terminal services and gas sales. Property and equipment and other assets include costs incurred for our fleet of FSRUs and terminal assets, including capitalized costs related to drydocking activities. Generally, we are required to drydock each of our vessels every five years, but vessels older than 15 years of age require a shorter duration drydocking or in-situ bottom survey every two and a half years.

Cost of revenue and vessel operating expenses

Cost of revenue and vessel operating expenses include the following major cost categories: vessel operating costs; personnel costs; repair and maintenance; and leasing costs. These operating costs are incurred for both our FSRU and terminal services revenues and gas sales revenues.

Direct cost of gas sales

Direct cost of gas sales includes the cost of LNG and other fuel and direct costs incurred in selling natural gas and LNG, which are significant variable operating costs. These costs fluctuate in proportion to the amount of our natural gas and LNG sales as well as LNG prices.

Depreciation and amortization expenses

Depreciation expense is recognized on a straight-line basis over the estimated useful lives of our property and equipment assets, less an estimated residual value. Certain recurring repairs and maintenance expenditures required by regulators are amortized over the required maintenance period.

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) consist primarily of compensation and other employee-related costs for personnel engaged in executive management, sales, finance, legal, tax and human resources. SG&A also consists of expenses associated with office facilities, information technology, external professional services, business development, legal costs and other administrative expenses.

Restructuring, transition and transaction expenses

We incurred restructuring, transition and transaction expenses related to consulting, legal, and audit costs incurred as part of and in preparation for our initial public offering (the “IPO”).

Other income, net

Other income, net, primarily contains interest income, gains or losses from the effect of foreign exchange rates and gains and losses on asset sales.

Interest expense and Interest expense – related party

Our interest expense is primarily associated with our finance leases liabilities and loan agreements with external banks and related parties.

Earnings from equity-method investment

Earnings from equity-method investment relate to our 45% ownership interest in the Nakilat joint venture, which we acquired in 2018.

Provision for income taxes

for U.S. federal income tax for EELP. In addition, EELP has international operations that are subject to foreign income tax and U.S. corporate subsidiaries subject to U.S. federal tax. These taxes are also included in our provision for income taxes.

Net income (loss) attributable to non-controlling interest

Net income (loss) attributable to non-controlling interests includes earnings allocable to our shares of Class B Common Stock as well as earnings allocable to the third-party equity ownership interests in our subsidiary, Excelerate Energy Bangladesh, LLC.

Net income (loss) attributable to non-controlling interest – ENE Onshore

Net income (loss) attributable to non-controlling interest – ENE Onshore includes the earnings allocable to the equity ownership interests in Excelerate New England Onshore, LLC (“ENE Onshore”). On October 17, 2022, EE Holdings, the indirect sole member of ENE Onshore, and EELP, the sole member of Excelerate New England Lateral, LLC (“ENE Lateral”), entered into a merger agreement, pursuant to which ENE Onshore was merged with and into ENE Lateral (the “ENE Onshore Merger”), effective October 31, 2022. ENE Lateral was the surviving entity and ENE Onshore ceased to exist as a separate entity. Prior to the ENE Onshore Merger, Excelerate consolidated ENE Onshore as a variable interest entity as Excelerate was determined to be the primary beneficiary of ENE Onshore. As a result of the ENE Onshore Merger, Excelerate ceased to have a non-controlling interest related to ENE Onshore.

Factors Affecting the Comparability of Our Results of Operations

As a result of a number of factors, our historical results of operations may not be comparable from period to period or going forward. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.

Impact of the Reorganization

Following the completion of the IPO in April 2022, we are a corporation for U.S. federal and state income tax purposes. EELP is treated as a pass-through entity for U.S. federal income tax purposes and, as such, is generally not subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, our historical results of operations prior to the IPO do not include provision for U.S. federal income tax for EELP. The reorganization undertaken in connection with the IPO, as described under “Organizational Structure—The Reorganization” in the Prospectus (the “Reorganization”), was accounted for as a reorganization of entities under common control. As a result, our consolidated financial statements recognized the assets and liabilities received in the Reorganization at their historical carrying amounts, as reflected in the historical consolidated financial statements of EELP. In addition, in connection with the Reorganization and the IPO, we entered into the Tax Receivable Agreement (the “TRA”) with Excelerate Energy Holdings, LLC (“EE Holdings”) and the George Kaiser Family Foundation (the “Foundation”) (or their affiliates) (together, the “TRA Beneficiaries”) pursuant to which we will be required to pay the TRA Beneficiaries 85% of the net cash savings, if any, that we are deemed to realize as a result of our utilization of certain tax benefits described under “Certain Relationships and Related Person Transactions—Related Person Transactions—Transactions in Connection with our Reorganization and Initial Public Offering—Tax Receivable Agreement” in our Proxy Statement on DEF 14A filed on April 17, 2023 (the “Proxy Statement”).

Also included in the Reorganization is our acquisition of all of the issued and outstanding membership interests in Excelsior, LLC and FSRU Vessel (Excellence), LLC (f/k/a Excellence, LLC) (collectively, the “Foundation Vessels”). The acquisition of Excelsior, LLC was accounted for as an acquisition of property and equipment at the completion of the Reorganization. The Foundation Vessels had historically been accounted for as finance leases in our historical financial statements. In 2018, EELP entered into an agreement with a customer to lease the Excellence vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. Historically, EELP, as a lessor, has accounted for the Excellence vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with Accounting Standards Codification 842, Leases. The Excellence vessel continues to be accounted for as a sales-type lease and thus did not result in an adjustment to property and equipment.

Public Company Costs

We have incurred and expect to continue to incur incremental, non-recurring costs related to our transition to a publicly traded corporation, including the costs of the IPO and the costs associated with the initial implementation of our Sarbanes-Oxley Section 404 internal control reviews and testing. We also expect to incur additional significant and recurring expenses as a publicly traded corporation, including costs associated with compliance under the Exchange Act, annual and quarterly reports to common stockholders, registrar and transfer agent fees, national stock exchange fees, audit fees, incremental director and officer liability insurance costs and director and officer compensation.

How We Evaluate Our Operations

We operate in a single reportable segment. However, we use a variety of qualitative, operational and financial metrics to assess our performance and valuation. Among other measures, management considers each of the following in assessing our business:

Adjusted Gross Margin;

Adjusted EBITDA; and

Capital Expenditures.

Adjusted Gross Margin

We use Adjusted Gross Margin, a non-GAAP financial measure, which we define as revenues less direct cost of sales and operating expenses, excluding depreciation and amortization, to measure our operational financial performance. Management believes Adjusted Gross Margin is useful because it provides insight on profitability and true operating performance excluding the implications of the historical cost basis of our assets. Our computation of Adjusted Gross Margin may not be comparable to other similarly titled measures of other companies, and you are cautioned not to place undue reliance on this information.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. We define Adjusted EBITDA as net income before interest expense, income taxes, depreciation and amortization, accretion, non-cash long-term incentive compensation expense and items such as charges and non-recurring expenses that management does not consider as part of assessing ongoing operating performance. In the first quarter of 2023, we revised the definition of Adjusted EBITDA to adjust for the impact of non-cash accretion expense, which results in a metric that is consistent with how management will review performance going forward. Management believes accretion expense does not directly reflect our ongoing operating performance.

We adjust net income for the items listed above to arrive at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. This measure has limitations as certain excluded items are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. For the foregoing reasons, Adjusted EBITDA has significant limitations that affect its use as an indicator of our profitability and valuation, and you are cautioned not to place undue reliance on this information.

Capital Expenditures

We incur capital expenditures as part of our regular business operations. Capital expenditures are costs incurred to expand our business operations, increase efficiency of business operations, extend the life of an existing asset, improve an asset’s capabilities, increase future service of an asset, repair existing assets in order to maintain their service capability, and provide upkeep required for regulatory compliance. Costs related to prospective projects are capitalized once it is determined to be probable that the related assets will be constructed.

The tables below reconcile the financial measures discussed above to the most directly comparable financial measure calculated and presented in accordance with GAAP:


	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
	(In thousands)
FSRU and terminal services revenues	$	125,462		$	110,072		$	244,039		$	207,664
Gas sales revenues		306,910			512,857			399,389			1,006,938
Cost of revenue and vessel operating expenses		(48,664	)		(58,673	)		(107,456	)		(108,736	)
Direct cost of gas sales		(277,693	)		(485,023	)		(332,878	)		(948,375	)
Depreciation and amortization expense		(30,772	)		(24,296	)		(55,965	)		(48,039	)
Gross Margin	$	75,243		$	54,937		$	147,129		$	109,452
Depreciation and amortization expense		30,772			24,296			55,965			48,039
Adjusted Gross Margin	$	106,015		$	79,233		$	203,094		$	157,491


	Three months ended June 30,					Six months ended June 30,
	2023		2022			2023		2022
	(In thousands)
Net income (loss)	$	29,556	$	(3,990	)	$	60,295	$	8,854
Interest expense		17,072		13,293			32,619		32,520
Provision for income taxes		9,712		7,800			17,315		11,519
Depreciation and amortization expense		30,772		24,296			55,965		48,039
Accretion expense		441		371			877		738
Restructuring, transition and transaction expenses		—		2,582			—		5,335
Long-term incentive compensation expense		1,074		270			1,431		270
Early extinguishment of lease liability on vessel acquisition		—		21,834			—		21,834
Adjusted EBITDA	$	88,627	$	66,456		$	168,502	$	129,109

Consolidated Results of Operations

Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022


	Three months ended June 30,									Six months ended June 30,
	2023			2022			Change			2023			2022			Change
	(In thousands)									(In thousands)
Revenues
FSRU and terminal services	$	125,462		$	110,072		$	15,390		$	244,039		$	207,664		$	36,375
Gas sales		306,910			512,857			(205,947	)		399,389			1,006,938			(607,549	)
Total revenues		432,372			622,929			(190,557	)		643,428			1,214,602			(571,174	)
Operating expenses
Cost of revenue and vessel operating expenses (exclusive of items below)		48,664			58,673			(10,009	)		107,456			108,736			(1,280	)
Direct cost of gas sales		277,693			485,023			(207,330	)		332,878			948,375			(615,497	)
Depreciation and amortization		30,772			24,296			6,476			55,965			48,039			7,926
Selling, general and administrative		21,563			13,064			8,499			43,880			25,698			18,182
Restructuring, transition and transaction		—			2,582			(2,582	)		—			5,335			(5,335	)
Total operating expenses		378,692			583,638			(204,946	)		540,179			1,136,183			(596,004	)
Operating income		53,680			39,291			14,389			103,249			78,419			24,830
Other income (expense)
Interest expense		(13,479	)		(7,800	)		(5,679	)		(25,434	)		(14,854	)		(10,580	)
Interest expense – related party		(3,593	)		(5,493	)		1,900			(7,185	)		(17,666	)		10,481
Earnings from equity-method investment		392			732			(340	)		808			1,510			(702	)
Early extinguishment of lease liability on vessel acquisition		—			(21,834	)		21,834			—			(21,834	)		21,834
Other income (loss), net		2,268			(1,086	)		3,354			6,172			(5,202	)		11,374
Income before income taxes		39,268			3,810			35,458			77,610			20,373			57,237
Provision for income taxes		(9,712	)		(7,800	)		(1,912	)		(17,315	)		(11,519	)		(5,796	)
Net income (loss)		29,556			(3,990	)		33,546			60,295			8,854			51,441
Less net income (loss) attributable to non-controlling interests		23,588			(831	)		24,419			47,483			(1,647	)		49,130
Less net loss attributable to non-controlling interests – ENE Onshore		—			(181	)		181			—			(418	)		418
Less pre-IPO net income (loss) attributable to EELP		—			(947	)		947			—			12,950			(12,950	)
Net income (loss) attributable to shareholders	$	5,968		$	(2,031	)	$	7,999		$	12,812		$	(2,031	)	$	14,843
Additional financial data:
Gross Margin	$	75,243		$	54,937		$	20,306		$	147,129		$	109,452		$	37,677
Adjusted Gross Margin		106,015			79,233			26,782			203,094			157,491			45,603
Adjusted EBITDA		88,627			66,456			22,171			168,502			129,109			39,393
Capital expenditures		277,859			31,001			246,858			292,788			42,030			250,758

Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Net income

Net income (loss) was $29.6 million for the three months ended June 30, 2023, an increase of $33.6 million, as compared to $(4.0) million for the three months ended June 30, 2022. Net income was higher primarily due to the early extinguishment of the Excellence vessel finance lease liability as part of the vessel acquisition in 2022 ($21.8 million), higher rates on charters in Finland and Argentina and a contract extension in the UAE ($11.8 million), lower operating lease expense due to the acquisition of Sequoia ($7.1 million), higher interest income received on cash balances invested in money market funds ($4.6 million), improved utilization resulting in lower idle vessel costs in 2023 ($3.4 million), lower restructuring, transition and transaction expenses after the completion of our IPO in April 2022 ($2.6 million), and higher direct margin earned on gas sales in Brazil and Bangladesh during the three months ended June 30, 2023 ($29.2 million), which exceeded direct margin earned on gas sales that occurred in Brazil during the three months ended June 30, 2022

($27.8 million), partially offset by an increase in general and administrative expenses ($8.5 million), as discussed below, an increase in depreciation and amortization expense ($6.5 million) primarily due to the acquisition of Sequoia, an increase in interest expense ($5.7 million), as discussed below, and an increase in the provision for income tax ($1.9 million), as discussed below.

Net income was $60.3 million for the six months ended June 30, 2023, an increase of $51.4 million, as compared to $8.9 million for the six months ended June 30, 2022. Net income was higher primarily due to the early extinguishment of the Excellence vessel finance lease liability as part of the vessel acquisition ($21.8 million), higher rates on charters in Finland, Germany, and Argentina and a contract extension in the UAE ($20.6 million), higher interest income received on cash balances invested in money market funds ($8.8 million), lower operating lease expense due to the acquisition of the Sequoia vessel ($8.2 million), higher direct margin earned on gas sales in Brazil and Bangladesh and new gas sales in Finland during the six months ended June 30, 2023 ($66.5 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the six months ended June 30, 2022 ($58.6 million), less interest expense – related party incurred in the six months ended June 30, 2023 due to the acquisition of the Foundation Vessels ($7.9 million), improved utilization resulting in lower idle vessel costs in 2023 ($7.7 million), one of our vessels coming off of suspension in the second quarter of 2022 ($5.6 million), lower restructuring, transition and transaction expenses after the completion of our IPO in April 2022 ($5.3 million), and a decrease in foreign currency exchange losses ($3.8 million), partially offset by an increase in general and administrative expenses ($18.2 million), as discussed below, an increase in interest expense ($10.6 million), as discussed below, an increase in depreciation and amortization expense ($7.9 million), primarily as a result of acquiring Sequoia and Excelsior in the second quarter of 2023 and 2022, respectively, and an increase in the provision for income tax ($5.8 million), as discussed below.

Gross Margin and Adjusted Gross Margin

Gross Margin was $75.2 million for the three months ended June 30, 2023, an increase of $20.3 million, as compared to $54.9 million for the three months ended June 30, 2022. Adjusted Gross Margin was $106.0 million for the three months ended June 30, 2023, an increase of $26.8 million, as compared to $79.2 million for the three months ended June 30, 2022. Gross Margin and Adjusted Gross Margin were higher primarily due to higher rates on charters in Finland and Argentina and a contract extension in the UAE ($11.8 million), lower operating lease expense due to the acquisition of Sequoia ($7.1 million), improved utilization resulting in lower idle vessel costs in 2023 ($3.4 million), and higher direct margin earned on gas sales in Brazil and Bangladesh during the three months ended June 30, 2023 ($29.2 million), which exceeded direct margin earned on gas sales that occurred in Brazil during the three months ended June 30, 2022 ($27.8 million). The increase in Gross Margin was also offset by an increase in depreciation and amortization expense ($6.5 million) primarily due to the acquisition of Sequoia.

Gross Margin was $147.1 million for the six months ended June 30, 2023, an increase of $37.6 million, as compared to $109.5 million for the six months ended June 30, 2022. For the six months ended June 30, 2023, Adjusted Gross Margin was $203.1 million, an increase of $45.6 million, as compared to $157.5 million for the six months ended June 30, 2022. Gross Margin and Adjusted Gross Margin were higher primarily due to higher rates on charters in Finland, Germany, and Argentina and a contract extension in the UAE ($20.6 million), lower operating lease expense due to the acquisition of Sequoia ($8.2 million), higher direct margin earned on gas sales in Brazil and Bangladesh and new gas sales in Finland during the six months ended June 30, 2023 ($66.5 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the six months ended June 30, 2022 ($58.6 million), improved utilization resulting in lower idle vessel costs in 2023 ($7.7 million), and one of our vessels coming off of suspension in the second quarter of 2022 ($5.6 million). The increase in Gross Margin was also offset by an increase in depreciation and amortization expense ($7.9 million), primarily as a result of acquiring Sequoia and Excelsior.

Adjusted EBITDA

Our Adjusted EBITDA was $88.6 million for the three months ended June 30, 2023, an increase of $22.1 million, as compared to $66.5 million for the three months ended June 30, 2022. Adjusted EBITDA was higher primarily due to higher rates on charters in Finland and Argentina and a contract extension in the UAE ($11.8 million), lower operating lease expense due to the acquisition of Sequoia ($7.1 million), higher interest income received on cash balances invested in money market funds ($4.6 million), improved utilization resulting in lower idle vessel costs in 2023 ($3.4 million), and higher direct margin earned on gas sales in Brazil and Bangladesh during the three months ended June 30, 2023 ($29.2 million), which exceeded direct margin earned on gas sales that occurred in Brazil during the three months ended June 30, 2022 ($27.8 million), partially offset by an increase in general and administrative expenses ($8.5 million), as discussed below.

Adjusted EBITDA was $168.5 million for the six months ended June 30, 2023, an increase of $39.4 million, as compared to $129.1 million for the six months ended June 30, 2022. Adjusted EBITDA was higher primarily due to higher rates on charters in Finland, Germany, and Argentina and a contract extension in the UAE ($20.6 million), higher interest income received on cash balances invested in money market funds ($8.8 million), lower operating lease expense due to the acquisition of Sequoia ($8.2 million), higher direct margin earned on gas sales in Brazil and Bangladesh and new gas sales in Finland during the six months ended June 30, 2023 ($66.5 million), which exceeded direct margin earned on gas sales that occurred in Brazil and New England during the six months ended June 30, 2022 ($58.6 million), improved utilization resulting in lower idle vessel costs in 2023 ($7.7 million), one of our vessels coming

off of suspension in the second quarter of 2022 ($5.6 million), and a decrease in foreign currency exchange losses ($3.8 million), partially offset by an increase in general and administrative expenses ($18.2 million), as discussed below.

For more information regarding our non-GAAP measures Adjusted Gross Margin and Adjusted EBITDA, and a reconciliation to their most comparable GAAP measures, see “—How We Evaluate Our Operations.”

FSRU and terminal services revenues

FSRU and terminal services revenues were $125.5 million for the three months ended June 30, 2023, an increase of $15.4 million, as compared to $110.1 million for the three months ended June 30, 2022. FSRU and terminal services revenues were higher primarily due to the Exemplar charter beginning in Finland in the fourth quarter of 2022 and Excelsior beginning seasonal service in Argentina, partially offset by the end of our contract with Israel in the fourth quarter of 2022.

FSRU and terminal services revenues were $244.0 million for the six months ended June 30, 2023, an increase of $36.3 million as compared to $207.7 million for the six months ended June 30, 2022. FSRU and terminal services revenues were higher primarily due to the Exemplar charter beginning in Finland in the fourth quarter of 2022, Excelsior beginning the German charter in March 2023 before transitioning to seasonal service in Argentina, Express coming off suspension in the second quarter of 2022, and additional capacity sales in New England in the first quarter of 2023, partially offset by the end of our contract with Israel in the fourth quarter of 2022.

Gas sales revenues

Gas sales revenues were $306.9 million for the three months ended June 30, 2023, a decrease of $206.0 million, as compared to $512.9 million for the three months ended June 30, 2022. The decrease was primarily due to a reduction of natural gas sales volumes related to our terminal operations in Brazil, partially offset by LNG sales in Bangladesh during the three months ended June 30, 2023.

Gas sales revenues were $399.4 million for the six months ended June 30, 2023, a decrease of $607.5 million, as compared to $1,006.9 million for the six months ended June 30, 2022. The decrease was primarily due to a reduction of natural gas sales volumes related to our terminal operations in Brazil and of LNG sales at our terminal in New England during the six months ended June 30, 2022, partially offset by LNG sales in Bangladesh during the three months ended June 30, 2023 and Finland gas sales activity which commenced in the fourth quarter of 2022.

Cost of revenue and vessel operating expenses

Cost of revenue and vessel operating expenses was $48.7 million for the three months ended June 30, 2023, a decrease of $10.0 million, as compared to $58.7 million for the three months ended June 30, 2022. The decrease in cost of revenue and vessel operating expenses was primarily due to lower operating lease expense due to the acquisition of Sequoia and improved utilization resulting in lower idle vessel costs in 2023, partially offset by increased operating expenses in Argentina, which are partially reimbursable.

Cost of revenue and vessel operating expenses was $107.5 million for the six months ended June 30, 2023, a decrease of $1.2 million, as compared to $108.7 million for the six months ended June 30, 2022. The decrease in cost of revenue and vessel operating expenses was primarily due to lower operating lease expense due to the acquisition of Sequoia, improved utilization resulting in lower idle vessel costs in 2023, and higher repair and maintenance and related personnel costs at one of our terminal locations, partially offset by increased operating expenses in Argentina, which are partially reimbursable.

Direct cost of gas sales

Direct cost of gas sales was $277.7 million for the three months ended June 30, 2023, a decrease of $207.3 million, as compared to $485.0 million for the three months ended June 30, 2022. The decrease was primarily due to a reduction of natural gas sales volumes related to our terminal operations in Brazil, partially offset by LNG sales in Bangladesh during the three months ended June 30, 2023.

Direct cost of gas sales was $332.9 million for the six months ended June 30, 2023, a decrease of $615.5 million, as compared to $948.4 million for the six months ended June 30, 2022. The decrease was primarily due to a reduction of natural gas sales volumes related to our terminal operations in Brazil and of LNG sales at our terminal in New England during the six months ended June 30, 2022, partially offset by LNG sales in Bangladesh during the three months ended June 30, 2023 and Finland gas sales activity which commenced in the fourth quarter of 2022.

Depreciation and amortization expenses

Depreciation and amortization expenses were $30.8 million for the three months ended June 30, 2023, an increase of $6.5 million, as compared to $24.3 million for the three months ended June 30, 2022. Depreciation and amortization increased primarily due to the acquisition of Sequoia in the second quarter of 2023 and accelerated depreciation recognized for assets removed from service on one of our vessels in the second quarter of 2023.

Depreciation and amortization expenses were $56.0 million for the six months ended June 30, 2023, an increase of $8.0 million, as compared to $48.0 million for the six months ended June 30, 2022. Depreciation and amortization increased primarily due to the acquisition of Sequoia in the second quarter of 2023, accelerated depreciation recognized for assets removed from service on one of our vessels in the second quarter of 2023, and the acquisition of Excelsior in the second quarter of 2022.

Selling, general and administrative expenses

Selling, general and administrative expenses were $21.6 million for the three months ended June 30, 2023, an increase of $8.5 million, as compared to $13.1 million for the three months ended June 30, 2022. The increase was primarily due to incremental costs incurred in conjunction with our transition to a publicly traded company, expenses related to new contracts in Europe, and additional business development activities.

Selling, general and administrative expenses were $43.9 million for the six months ended June 30, 2023, an increase of $18.2 million, as compared to $25.7 million for the six months ended June 30, 2022. The increase was primarily due to incremental costs incurred in conjunction with our transition to a publicly traded company, expenses related to new contracts in Europe, and additional business development activities.

Restructuring, transition and transaction expenses

We had no restructuring, transition and transaction expenses for three and six months ended June 30, 2023. Restructuring, transition and transaction expenses relating to the completion of our IPO in April 2022 were $2.6 million and $5.3 million for the three and six months ended June 30, 2022, respectively.

Interest expense

Interest expense was $13.5 million for the three months ended June 30, 2023, an increase of $5.7 million, as compared to $7.8 million for the three months ended June 30, 2022. Interest expense increased primarily due to the new Term Loan Facility.

Interest expense was $25.4 million for the six months ended June 30, 2023, an increase of $10.5 million, as compared to $14.9 million for the six months ended June 30, 2022. Interest expense increased primarily due to the new Term Loan Facility, accelerated amortization of deferred issuance costs related to the Amended Credit Agreement, and increases in LIBOR rates, partially offset by lower balances remaining on our finance leases and long-term debt.

Interest expense – related party

Interest expense – related party was $3.6 million for the three months ended June 30, 2023, a decrease of $1.9 million, as compared to $5.5 million for the three months ended June 30, 2022. Interest expense decreased primarily due to the acquisition of the Foundation Vessels in the second quarter of 2022.

Interest expense – related party was $7.2 million for the six months ended June 30, 2023, a decrease of $10.5 million, as compared to $17.7 million for the six months ended June 30, 2022. Interest expense decreased primarily due to the acquisition of the Foundation Vessels in the second quarter of 2022.

Early extinguishment of lease liability on vessel acquisition

In the three months ended June 30, 2022, we incurred a $21.8 million expense as a result of the difference between the consideration given to acquire the Excellence vessel and the historical finance lease liability.

Other income (expense), net

Other income (expense), net was $2.3 million for the three months ended June 30, 2023, a variance of $3.4 million as compared to $(1.1) million for the three months ended June 30, 2022. The variance was primarily due to higher interest income received on cash balances invested in money market funds.

Other income (expense), net was $6.2 million for the six months ended June 30, 2023, a variance of $11.4 million as compared to $(5.2) million for the six months ended June 30, 2022. The variance was primarily due to higher interest income received on cash balances invested in money market funds and lower foreign currency exchange losses related to our operations in Brazil.

Provision for income taxes

The provision for income taxes for the three and six months ended June 30, 2023 and 2022 was $9.7 million and $7.8 million, respectively. For the six months ended June 30, 2023 and 2022, the provision for income taxes was $17.3 million and $11.5 million, respectively. The increase was primarily attributable to the year-over-year change in the amount and geographical distribution of income.

The effective tax rate for the three months ended June 30, 2023 and 2022 was 24.7% and 204.7%, respectively. For the six months ended June 30, 2023 and 2022, the effective tax rate was 22.3% and 56.5%, respectively. The decreases are a result of unusual, one-time items which existed in the prior periods. The prior period effective tax rates were increased by the reduction of income before tax due to the loss on early extinguishment of the lease liability on acquisition of the Excellence vessel without a corresponding tax benefit. Additionally, the decrease was driven by the geographical distribution of income and the varying tax regimes of jurisdictions.

Net income (loss) attributable to non-controlling interest

Net income (loss) attributable to non-controlling interest was $23.6 million for the three months ended June 30, 2023, an increase of $24.4 million, as compared to $(0.8) million for the three months ended June 30, 2022. The increase in net income attributable to non-controlling interest was primarily due to higher net income.

Net income (loss) attributable to non-controlling interest was $47.5 million for the six months ended June 30, 2023, an increase of $49.1 million, as compared to $(1.6) million for the six months ended June 30, 2022. The increase in net income attributable to non-controlling interest was primarily due to higher net income and the addition of non-controlling interest related to owners of our Class B Common Stock after our IPO, partially offset by higher maintenance costs at one of our terminal locations.

Net loss attributable to non-controlling interest – ENE Onshore

Net loss attributable to non-controlling interest – ENE Onshore was $(0.2) million and $(0.4) million for the three and six months ended June 30, 2022. In October 2022, ENE Onshore merged with and into ENE Lateral.

Liquidity and Capital Resources

Based on our cash positions, cash flows from operating activities and borrowing capacity on our debt facilities, we believe we will have sufficient liquidity for the next 12 months for ongoing operations, planned capital expenditures, other investments, debt service obligations, payment of tax distributions and our announced and expected quarterly dividends and distributions, as described in “Dividend and Distribution Policy” in the 2022 Annual Report. For more information regarding our planned dividend payments, see Note 12 – Equity. As of June 30, 2023, we had $462.0 million in unrestricted cash and cash equivalents.

Our proceeds from the IPO in April 2022 were approximately $416.2 million, after deducting underwriting discounts and commissions, but before deducting IPO-related expenses of $7.6 million. Approximately $50.0 million of the IPO net proceeds were used to fund, in part, EELP's purchase of the Foundation Vessels. The remaining proceeds are expected to be used to fund our growth strategy, working capital, and other general corporate purposes.

In December 2021, we started importing LNG and selling regasified natural gas to Petrobras through the Bahia Terminal under an agreement which expires in December 2023. We also have imported and sold natural gas and LNG into other countries in which we operate. Some of the inventory purchases which we make to fulfill these sales could potentially exceed cash on hand at certain times. We plan to fund any cash shortfalls with borrowings under the EE Revolver. For more information regarding the EE Revolver, see Note 10 – Long-term debt to the Consolidated Financial Statements. Management believes the EE Revolver will provide sufficient liquidity to execute our contractual purchase obligations. In the event sufficient funds were not available under the EE Revolver, we would seek alternative funding sources.

We have historically funded our business, including meeting our day-to-day operational requirements, repaying our indebtedness and funding capital expenditures, through debt financing, capital contributions and our operating cash flows as discussed below. We expect that our future principal uses of cash will also include additional capital expenditures to fund our growth strategy, pay income taxes and make distributions from EELP to fund income taxes, fund our obligations under the TRA, and pay cash dividends and distributions. Any determination to pay dividends to holders of our common stock and distributions to holders of EELP’s Class B interests will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, legal requirements, covenant compliance, restrictions in our existing and any future debt and other factors that our board of directors deems relevant. In the future we may enter into arrangements to grow our business or acquire

or invest in complementary businesses which could decrease our cash and cash equivalents and increase our cash requirements. As a result of these and other factors, we could use our available capital resources sooner than expected and may be required to seek additional equity or debt.

Cash Flow Statement Highlights

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022


	Six months ended June 30,
	2023			2022			Change
Net cash provided by (used in):	(In thousands)
Operating activities	$	24,479		$	(9,499	)	$	33,978
Investing activities		(288,687	)		(42,030	)		(246,657	)
Financing activities		210,463			366,266			(155,803	)
Effect of exchange rate on cash, cash equivalents, and restricted cash		(105	)		—			(105	)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(53,850	)	$	314,737		$	(368,587	)

Operating Activities

Cash flows provided by operating activities increased by $34.0 million for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to:

•

a $161.0 million decrease in cash flows used in settling accounts payable and accrued liabilities, primarily due to higher payments of outstanding LNG cargo purchase invoices in the six months ended June 30, 2022, related to Brazil natural gas sales activity;

•

a $104.5 million increase in inventory cash flows primarily due to Brazil inventory sales during the six months ended June 30, 2023;

•

a $51.4 million increase in net income;

•

partially offset by a $143.8 million decrease in cash flows from collecting accounts receivable, primarily due to higher collections of receivables in the six months ended June 30, 2022, related to Brazil natural gas sales activity;

•

a $121.2 million decrease in cash received related to deferred revenues, primarily related to prepayments of Brazil natural gas sales; and

•

a $21.8 million early extinguishment of lease liability on vessel acquisition in 2022.

Investing Activities and Capital Expenditures

Cash flows used in investing activities were primarily comprised of capital expenditures made for the purchases of property and equipment, which increased by $250.8 million for the six months ended June 30, 2023, as compared to the same period in 2022. The increase was primarily due to the purchase of the Sequoia vessel and vessel upgrades made ahead of beginning service at the Inkoo Terminal in Finland.

Financing Activities

Cash flows provided by financing activities decreased by $155.8 million for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to proceeds of $412.2 million from the IPO sale of Class A Common Stock in 2022, $6.7 million less net borrowings on our long-term debt, and $6.6 million of repayments on the Kaiser Note Receivable during the six months ended June 30, 2022, partially offset by $250.0 million in proceeds from the Term Loan Facility in 2023 and $25.0 million in cash payments in 2022 made as part of the early extinguishment of a lease liability related to the IPO transaction.

Debt Facilities

Revolving Credit Facility and Term Loan Facility

On April 18, 2022, EELP entered into a senior secured revolving credit agreement, by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the lenders and issuing banks thereunder made available the EE Revolver, including a letter of credit sub-facility, to EELP. The EE Revolver enabled us to borrow up to $350 million over a three-year term originally set to expire in April 2025.

Also, on April 18, 2022, the Company borrowed under the EE Revolver, on the closing day of such facility, and used the proceeds to repay the KFMC Note in full. The KFMC Note was terminated in connection with such repayment.

On March 17, 2023, EELP entered into an amended and restated senior secured credit agreement (“Amended Credit Agreement”), by and among EELP, as borrower, Excelerate, as parent, the lenders party thereto, the issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent. The Amended Credit Agreement provides for, among other things (i) a new $250 million term loan facility (the “Term Loan Facility” and, together with the EE Revolver, the “EE Facilities”), (ii) an extension of the maturity date of the EE Revolver, (iii) an increase in the maximum consolidated total leverage by 0.50x to 3.50x, provided that, if the aggregate value of all unsecured debt is equal to or greater than $250 million, maximum consolidated total leverage increases to 4.25x, and (iv) collateral vessel maintenance coverage to be not less than the greater of (a) $750 million and (b) 130% of the sum of the total credit exposure under the Amended Credit Agreement. The EE Facilities mature in March 2027. Proceeds from the EE Revolver are intended to be used for letters of credit, working capital, and other general corporate purposes.

In April 2023, Excelerate purchased the FSRU Sequoia for $265 million using $250 million borrowed through our Term Loan Facility together with cash on hand. Concurrently with the purchase, the Company entered into interest rate swaps for the same notional amount as the Term Loan Facility. The purpose of the swaps is to hedge our exposure to fluctuations in SOFR related to borrowings on the Term Loan Facility. The interest rate swaps have maturity, payment and reset dates that align with those of the Term Loan Facility.

Borrowings under the EE Revolver bear interest at a per annum rate equal to the term SOFR reference rate for such period plus an applicable margin, which applicable margin is based on EELP's consolidated total leverage ratio as defined and calculated under the Amended Credit Agreement. The unused portion of the EE Facilities is subject to an unused commitment fee calculated at a rate per annum ranging from 0.375% to 0.50% based on EELP's consolidated total leverage ratio.

The Amended Credit Agreement contains customary representations, warranties, covenants (affirmative and negative, including maximum consolidated total leverage ratio, minimum consolidated interest coverage ratio, and collateral vessel maintenance coverage covenants), and events of default, the occurrence of which would permit the lenders to accelerate the maturity date of amounts borrowed under the EE Facilities. As of June 30, 2023, the Company had issued $80.9 million in letters of credit under the EE Revolver. As a result of the EE Revolver’s financial ratio covenants and after taking into account the outstanding letters of credit issued under the facility, all of the $269.1 million of undrawn capacity was available for additional borrowings as of June 30, 2023.

As of June 30, 2023, the Company was in compliance with the covenants under its debt facilities.

Other Contractual Obligations

Operating Leases

We lease a terminal and offices in various locations under noncancelable operating leases. As of December 31, 2022, we had future minimum lease payments of $88.6 million. As of June 30, 2023, we had future minimum lease payments totaling $12.0 million and are committed to $5.5 million in year one, $3.3 million for years two and three, $1.8 million for years four and five and $1.3 million thereafter.

Finance Leases

Certain enforceable vessel charters and pipeline capacity agreements are classified as finance leases, and the right-of-use assets are included in property and equipment. As of December 31, 2022, we had future minimum lease payments totaling $307.3 million. As of June 30, 2023, we had future minimum lease payments totaling $290.7 million and are committed to $16.6 million in payments in year one, $66.5 million for years two and three, $66.5 million for years four and five and $141.0 million thereafter.

Newbuild Agreement Commitments

In October 2022, Excelerate signed a binding Shipbuilding Contract (the “Newbuild Agreement”) with Hyundai Heavy Industries for a new FSRU to be delivered in 2026. As part of the Newbuild Agreement, we currently expect to pay approximately $330 million, subject to adjustment. Related payments are due in five installments with the final installment due concurrently with the delivery of the vessel, which is expected in 2026. During the year ended December 31, 2022, we made the first installment payment of approximately $30.0 million. Our future payment commitments related to the Newbuild Agreement are expected to be approximately $50.0 million in 2024 and $250.0 million in 2025-2026.

Venture Global SPA

In February 2023, we executed a 20-year LNG sales and purchase agreement with Venture Global LNG (the “Venture Global SPA”). Under the Venture Global SPA, Excelerate will purchase 0.7 MT per annum of LNG on a FOB basis from the Plaquemines LNG facility in Plaquemines Parish, Louisiana. Our purchase commitment will be based on the final settlement price of monthly Henry Hub natural gas futures contracts plus a contractual spread. Using Henry Hub natural gas futures pricing as of June 30, 2023, our average annual commitment is estimated to be approximately $250 million. The start of this commitment, however, is dependent on the LNG facility becoming operational, which is not expected in the next twelve months.

Critical Accounting Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires significant judgments from management in estimating matters for financial reporting that are inherently uncertain. For additional information about our accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies” in the 2022 Annual Report and the notes to the audited financial statements included therein.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2022 Annual Report.

Recent Accounting Pronouncements

Refer to Note 2 – Summary of significant accounting policies, to the notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for information regarding recently issued accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In our normal course of business, we are exposed to certain market risks, including changes in interest rates, natural gas and LNG commodity prices and foreign currency exchange rates. In order to manage these risks, we may utilize derivative instruments. Gains or losses on those derivative instruments would typically be offset by corresponding gains or losses on the hedged item.

Interest Rate Risk

We have entered into long-term interest rate swap agreements in order to hedge a portion of our exposure to changes in interest rates associated with our external bank loans. We are exposed to changes in interest rates on our other debt facilities as well as the portion of our external bank loans that remain unhedged. We may enter into additional derivative instruments to manage our exposure to interest rates.

As of June 30, 2023, the fair value of our interest rate swaps was $5.2 million, compared to $2.3 million as of December 31, 2022. Based on our hedged notional amount as of June 30, 2023, a hypothetical 100 basis point increase or decrease in the three-month and six-month LIBOR and SOFR forward curves would change the estimated fair value of our existing interest rate swaps by $9.4 million.

Commodity Price Risk

In the course of our operations, we are exposed to commodity price risk, primarily through our purchases of or commitments to purchase LNG. To reduce our exposure, we may enter into derivative instruments to offset some or all of the associated price risk. During the three and six months ended June 30, 2023, we utilized an immaterial amount of financial derivatives to hedge some of our commodity price risk. We did not hold any commodity derivative instruments as of June 30, 2023 or 2022.

Foreign Currency Exchange Risk

Our reporting currency is the U.S. dollar and the functional currency of each of our subsidiaries is the U.S. Dollar. Gains or losses due to transactions in foreign currencies are included in “Other income (expense), net” in our consolidated statements of income. Due to a portion of our expenses being incurred in currencies other than the U.S. dollar, our expenses may, from time to time, increase relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. Dollar and the Euro, Argentine Peso, Brazilian Real and the Bangladesh Taka. During the six months ended June 30, 2023, we utilized an immaterial amount of financial derivatives to hedge some of our currency exposure. For the six months ended June 30, 2023 and 2022, we recorded $(1.9) million and $(5.7) million, respectively, in foreign currency gains/(losses) in our consolidated statements of income. As of June 30, 2023, we held an immaterial amount of foreign currency swaps.

Item 4. Internal Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of June 30, 2023.

Remediation of Previously Identified Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In preparation of our 2020 and 2019 financial statements to meet the requirements applicable for our 2022 IPO, we identified the following material weaknesses in our internal control over financial reporting which were previously disclosed in our Registration Statement on Form S-1 filed on January 7, 2022, each of which has been remediated as of June 30, 2023.

We did not design and maintain an effective control environment commensurate with public company financial reporting requirements. Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of internal controls, accounting and tax knowledge, experience and training to appropriately analyze, record and disclose accounting matters commensurate with accounting and financial reporting requirements.

This material weakness contributed to the following additional material weaknesses:

•

We did not design and maintain effective controls over period end financial reporting processes and procedures, controls over significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures, including segregation of duties and controls related to the preparation and review of journal entries. Additionally, we did not design and maintain effective controls to identify and account for the elimination of certain intercompany revenue and expenses; and

•

We did not design and maintain effective controls to verify the completeness and accuracy of our income tax provision.

These material weaknesses resulted in adjustments to selling, general and administrative expenses, cost of revenue and vessel operating expenses, provision for income taxes and related account balances and disclosures as of and for the years ended December 31, 2020 and 2019.

To remediate the material weaknesses, we designed and implemented new or enhanced controls and took other actions to improve our internal control over financial reporting, including:

•

Expanded our accounting, tax and finance teams to add additional qualified resources, which included third-party consultants. We have hired new experienced accounting leadership team members in the following positions: Vice President, Controller and Chief Accounting Officer; Vice President of Tax; Assistant Corporate Controller; Director over International Accounting Operations; and Senior Manager over Income Tax Provision. In addition, we hired a Treasurer;

•

Established an Internal Audit function. We hired a Vice President of Internal Audit and team members experienced in audit and control design who worked with company personnel to establish and document policies and controls including providing additional training and guidance on requirements and control processes;

•

Designed and implemented controls related to the period-end financial reporting processes, including controls related to business performance reviews and manual journal entries;

•

Designed and implemented controls related to the completeness and accuracy of our income tax provision.

We determined that the remediated controls described above are designed effectively and have operated for a sufficient period of time to appropriately address the material weaknesses described above. Additionally, management has concluded, through testing, that these controls are operating effectively and the material weaknesses described above have been remediated as of June 30, 2023.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are a party to ongoing legal proceedings in the ordinary course of business. We do not believe the results of currently pending proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations or liquidity.

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in “Risk Factors” included in the 2022 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three months ended June 30, 2023, none of the Company’s directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

On August 9, 2023, the Company, EELP and EE Holdings, as parties to the Stockholder’s Agreement, dated April 18, 2022 (the “Stockholder’s Agreement”), entered into Amendment No. 1 to the Stockholder’s Agreement (the “Amendment”). The Amendment revises the Stockholder’s Agreement to remove EE Holdings’ consent right over hiring or terminating the Company’s chief executive officer and his or her successors, which was previously included in clause (i) of Section 2.2(b) of the Stockholder’s Agreement. Except as amended by the Amendment, all other terms and conditions of the Stockholder’s Agreement continue in full force and effect. This description is qualified in its entirety by the full text of the Amendment, which is filed as Exhibit 10.2 to this Form 10-Q.

Item 6. Exhibits.


Exhibit Number		Description
10.1		Amendment No. 1 to Sixth Amended and Restated Limited Partnership Agreement of Excelerate Energy Limited Partnership, dated as of May 10, 2023 (Incorporated by Reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed on May 11, 2023)
10.2*		Amendment No. 1, dated August 9, 2023, to Stockholder’s Agreement, dated as of April 18, 2022, by and among Excelerate Energy, Inc., Excelerate Energy Limited Partnership and Excelerate Energy Holdings, LLC
31.1**		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Excelerate Energy, Inc.

Date: August 10, 2023	By:	/s/ Dana Armstrong
		Dana Armstrong
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)