Venture Global (VG) risk factors, FY2024 10-K

Risks Relating to Our Business

1. 01Our ability to maintain profitability and positive operating cash flows is subject to significant uncertainty
2. 02We first generated proceeds from sales of commissioning cargos at the Calcasieu Project only in the first quarter of 2022, and prior to that we incurred significant losses from operations and negative cash flows from operations
3. 03remediating and which began producing LNG in a high-price environment, may not be indicative of the duration of the commissioning period or the amount of proceeds for any future period or for any of our other projects, including bolt-on expansions thereof
4. 04A key element of our business strategy is to generate proceeds from the sale of LNG at each of our projects during the construction and commissioning phases of our projects, prior to the relevant project achieving COD
5. 05Additionally, we may at times contract commissioning cargos on a forward basis and, as a result, these sales of commissioning cargos may be uncorrelated with movements in spot LNG prices
6. 06Our ability to optimize sales of post-COD LNG cargos is subject to significant uncertainty and volatility in proceeds generated from such sales
7. 07A key element of our business strategy is to generate revenue from the sale of LNG produced at each of our projects in excess of the nameplate capacity of the relevant project after such project achieves COD
8. 08Our customers or we may terminate our SPAs if certain conditions are not met or for other reasons
9. 09Our ability to generate cash under our post-COD SPAs is substantially dependent upon the performance by a limited number of our customers, and we could be materially and adversely affected if certain of these customers fail to perform their contractual obligations for any reason
10. 10Our operating margins may be adversely affected if the price of natural gas decreases, if we pay a premium for feed gas relative to the contractual spot price we charge our customers, or as a result of inflationary pressures
11. 11We may not be able to purchase or receive physical delivery of sufficient natural gas to satisfy our delivery obligations under the SPAs, which could have a material adverse effect on us
12. 12Total contracted revenue is based on certain assumptions and is presented for illustrative purposes only and actual sales under our SPAs may differ materially from such illustrative operating results
13. 13We may not be successful in pursuing bolt-on expansion opportunities at our current projects, which would adversely impact our growth prospects
14. 14Seasonal fluctuations will cause our business and results of operations to vary among quarters, which could adversely affect our business and results of operations
15. 15Our limited diversification could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, financing requirements, liquidity and prospects
16. 16In the ordinary course of our business, we explore acquisitions and other targeted investments in areas of the natural gas industry that relate to our natural gas liquefaction and export projects that could negatively affect our operating results, increase our debt or cause us to incur significant expense
17. 17Severe weather events, hurricanes, or other disasters could result in an interruption of our operations, a delay in the completion of our projects, higher construction costs and the deferral of the dates on which we would become entitled to receive payments under any SPAs, all of which could adversely affect us
18. 18We are unable to insure against all potential risks and may become subject to higher than expected insurance premiums. In addition, we retain certain risks as a result of insurance through our captive insurance
19. 19A major health and safety incident relating to our business could be costly in terms of potential liabilities and reputational damage
20. 20Failure to retain and attract executive officers and other skilled professional and technical employees or increased labor costs could have a material adverse effect on our operations
21. 21We are dependent on the strategic direction of Michael Sabel, our Chief Executive Officer, Executive Co-Chairman of the Board and Founder, and Robert Pender, our Executive Co-Chairman, Executive Co-Chairman of the Board and Founder
22. 22We and our contractors, including our EPC contractors, may experience increased labor costs, and the unavailability of skilled workers or our failure to attract and retain qualified personnel could adversely affect us
23. 23We use and are planning to utilize various tax incentive programs the State of Louisiana offers that may not continue to be available or may be available in diminished form
24. 24applicants for these benefits have been subjected to greater scrutiny by the state, and have been subjected to a greater burden in demonstrating that they meet the criteria (such as job creation requirements) for the award of such benefits. Furthermore, the grant of certain of these benefits may be challenged in court

Risks Relating to Our Projects and Other Assets

1. 25We will require significant additional capital to construct and complete certain of our projects, and we may not be able to secure such financing on time with acceptable terms, or at all, which could cause delays in our construction, lead to inadequate liquidity and increase overall costs
2. 26Furthermore, any adverse changes in natural gas demand that affect the competitiveness of LNG or any failure on our part to obtain or comply with necessary permits or approvals may also hinder our ability to obtain necessary additional capital or financing
3. 27We may not construct or operate all of our proposed LNG facilities or pipelines or any additional LNG facilities or pipelines beyond those currently planned, and we may not pursue some or any of the bolt-on expansion opportunities we have identified at our current projects, which could limit our growth prospects
4. 28When completed, our natural gas liquefaction and export projects, including the Calcasieu Project, the Plaquemines Project, the CP2 Project, the CP3 Project, the Delta Project, and any future projects or expansions thereof we develop, may face significant operational risks
5. 29Our strategy for each project involves us entering into and administering a number of procurement and construction contracts, which differs from certain other LNG projects of this scale developed in the United States
6. 30We are dependent on our contractors for the successful completion of our projects and any bolt-on expansion opportunities at our projects that we may pursue, and any failure by our contractors to perform their contractual obligations could have a material adverse impact on our projects
7. 31We have not entered into all of the definitive agreements for the CP2 Project, the CP3 Project or the Delta Project, and there can be no assurance that we will be able to do so on a timely basis or on terms that are acceptable to us
8. 32Certain of our contractual arrangements relating to the development and construction of one or more of our projects include termination rights or changes to the applicable pricing, or will automatically expire, if certain conditions are not met by specified deadlines
9. 33Our estimated costs for our projects have been, and continue to be, subject to change due to various factors
10. 34and export facilities, could exceed our available funds and result in our failure to complete such projects or assets and thereby negatively impact our business and limit our growth prospects
11. 35Delays in the construction of our projects beyond the estimated development periods could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, financing requirements, liquidity and prospects
12. 36deadline could also result in an event of default under the Calcasieu Pass Credit Facilities or the Plaquemines Credit Facilities, respectively, and/or certain investors exercising step-in rights to control, directly or indirectly, certain of our subsidiaries and the Calcasieu Project
13. 37We are dependent on third party vendors and service providers to provide certain services and equipment to our projects
14. 38Many of these factors are outside of our control
15. 39There is no assurance that our projects will receive the local government and community support required for construction
16. 40Our real property rights in the sites for our projects or any other natural gas liquefaction and export facilities that we may decide to develop in the future may be adversely affected by the rights of others that are superior to those of the grantors of our real property rights
17. 41The natural gas liquefaction system and mid-scale design we utilize at our projects are the first of such sized modules developed by us and Baker Hughes, and there can be no assurance that these modules, or our projects, will achieve the level of performance or other benefits that we anticipate over the long term
18. 42The phased commissioning start-up of our projects will subject us to additional risks
19. 43We are and will be relying on third-party engineers to estimate the future capacity ratings and performance capabilities of our projects, and these estimates may prove to be inaccurate
20. 44Delays in deliveries of newbuild or acquired LNG tankers, and increases in price or building costs, could harm our operating results
21. 45Management and operation of our LNG tanker fleet and the subcharter of third-party vessels will involve significant risks
22. 46The construction of our projects, and our operations, are subject to significant hazards and uninsured risks, one or more of which may create significant liabilities and losses for us

Risks Relating to the LNG Industry

1. 47Competition in the LNG industry is intense, and certain of our competitors may have greater financial, engineering, marketing and other resources than we have
2. 48We face competition based upon the international market price for LNG
3. 49Cyclical or other changes in the demand for and price of LNG and natural gas may adversely affect our business and the performance of our customers and could have a material adverse effect on our business, contracts, financial condition, operating results, cash flows, liquidity and prospects
4. 50There may be shortages of LNG tankers worldwide, which could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, financing requirements, liquidity and prospects
5. 51Technological innovation may render our anticipated competitive advantage or our processes obsolete

Risks Relating to Our Indebtedness and Financing

1. 52Our subsidiaries have incurred a significant amount of debt and issued a significant amount of preferred equity, which could adversely affect our financial condition
2. 53Servicing our indebtedness and preferred equity will require a significant amount of cash and we may not have sufficient cash, operating cash flows and capital resources to service our existing and future indebtedness and preferred equity
3. 54As a holding company, the Company depends on the ability of its subsidiaries to transfer funds to it to meet its obligations
4. 55from Calcasieu Funding will be permitted to VGLNG, its indirect parent, until Calcasieu Funding has redeemed in cash all of such preferred units
5. 56Certain of our debt agreements impose significant operating and financial restrictions on our subsidiaries, and the preferred equity of our subsidiaries also gives the holders certain consent rights, all of which may prevent us from capitalizing on business opportunities or paying dividends to the Company
6. 57In addition, other than Calcasieu Holdings contributing capital in exchange for issuance of common units in Calcasieu Funding, Calcasieu Funding may not issue additional units without a majority approval of holders of its preferred units
7. 58Our common equity interest in the Calcasieu Project will be diluted if we are unable to, or elect not to, pay certain distributions on the Holdings Preferred Units in cash
8. 59Increases in interest rates would increase the cost of servicing our debt and could reduce our profitability
9. 60Our use of hedging arrangements may adversely affect our future operating results or liquidity
10. 61The regulatory and other provisions of the Dodd-Frank Act and the rules adopted thereunder and other non-U.S. regulations, including EMIR and REMIT, could adversely affect our ability to hedge risks associated with our business and our operating results and cash flows
11. 62liquidity and prospects. Further, any violation of the foregoing laws and regulations could result in investigations, and possible fines and penalties, and in some scenarios, criminal offenses

Risks Relating to Regulation and Litigation

1. 63We may fail to receive the required approvals and permits from governmental and regulatory agencies for our projects
2. 64In addition to the appeal, construction of the CP2 Project will be subject to ongoing oversight and needed additional authorizations by FERC in accordance with the terms and conditions of the CP2 Project FERC order
3. 65Our interstate natural gas pipelines and their FERC gas tariffs are subject to FERC regulation
4. 66Pipeline safety integrity programs and repairs may impose significant costs and liabilities on us
5. 67Existing and future environmental and similar laws and governmental regulations could result in increased compliance costs or additional operating and/or construction costs and restrictions
6. 68that could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, financing requirements, liquidity and prospects
7. 69emissions charge, and this measure currently awaits President Trump’s signature. The future prospects of the emissions charge are uncertain
8. 70We are involved and may in the future become involved in disputes and legal proceedings
9. 71commissioning process. The Calcasieu Project has responded to customer filings in the extension of time filing proceeding, which remains pending before FERC
10. 72If we are unsuccessful in any current or potential future arbitration proceedings with customers, the amounts that we are required to pay may be substantial or certain of our post-COD SPAs may be terminated, which may lead to an acceleration of all our debt for the relevant project
11. 73February 2025) or of approximately $400 million (in the case of two such customers), rather than the termination of the relevant post-COD SPAs

Risks Relating to Intellectual Property, Data Privacy and Cybersecurity

1. 74Hostile cyber intrusions, or other issues with our information technology, could severely impair our operations, lead to the disclosure of confidential information, damage our reputation and otherwise have a material adverse effect on our business
2. 75Changes in laws, rules or regulations relating to data privacy and security, or any actual or perceived failure by us to comply with such laws, rules and regulations, or contractual or other obligations relating to data privacy and security, could adversely impact our business
3. 76If we are unable to obtain, maintain, protect and enforce our intellectual property rights, our business may be adversely affected

Risks Relating to Ownership of Our Class A Common Stock

1. 77VG Partners has significant influence over us, including control over decisions that require their approval, which could limit your ability to influence the outcome of key transactions, including a change of control
2. 78There is the possibility of significant fluctuations in the price of our Class A common stock
3. 79Certain provisions of our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law have anti-takeover effects that could limit our ability to engage in certain strategic transactions our board of directors believes would be in the best interests of stockholders
4. 80We cannot guarantee that we will pay further dividends on our Class A common stock in the future and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock
5. 81If we, VG Partners or certain other stockholders sell shares of our Class A common stock or are perceived by the public markets as intending to sell them, the market price of our Class A common stock could decline
6. 82You may be diluted by the future issuance of additional Class A common stock, including in connection with our incentive plans, acquisitions, conversion of our Class B common stock, or otherwise
7. 83Any Class A common stock that we issue, including under our existing equity incentive plans or other equity incentive plans that we may adopt in the future and the conversion of Class B common stock into Class A common stock, would dilute holders of Class A common stock
8. 84We may issue preferred stock whose terms could materially adversely affect the voting power or value of our Class A common stock
9. 85If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or estimates that prove to be incorrect, our results of operations could be adversely affected, which could cause the price of our Class A common stock to decline
10. 86We are a “controlled company” within the meaning of the NYSE rules and, as a result, qualify for exemptions from certain corporate governance requirements. If we rely on such exemptions in the future, you will not have the same protections afforded to stockholders of companies that are subject to such requirements
11. 87Consistent with these exemptions, we do not have an independent compensation committee or an independent nominating and corporate governance committee. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements
12. 88Global economic conditions, including inflation and supply chain disruptions, could continue to adversely affect our operations
13. 89Developments related to the ongoing war between Russia and Ukraine and the ongoing conflicts in the Middle East could adversely affect our business, contracts, financial condition, operating results, cash flows, liquidity and prospects
14. 90Terrorist attacks, including cyberterrorism, or military campaigns may adversely impact our business
15. 91Changes in tax laws or tax rulings, or the examination of our tax positions, could materially affect our financial condition and results of operations
16. 92We face risks related to the uncertainty regarding the future of international trade agreements and the United States’ position on international trade
17. 93Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
18. 94The outbreak of any infectious diseases or other illness could adversely impact our business, contracts, financial condition, operating results, cash flow, financing requirements, liquidity and prospects