New Fortress Energy Inc (NASDAQ:NFE) stock is surging a considerable amount Wednesday after the company secured a seven-year liquefied natural gas (LNG) deal with Puerto Rico.

What Happened: New Fortress Energy announced that it reached an agreement with Puerto Rico’s Third-Party Procurement Office (3PPO) and Public-Private Partnerships Authority (P3A) for the long-term supply of LNG. The deal is now pending approval from the Puerto Rican Financial Oversight and Management Board (FOMB).

The aim of the gas supply agreement (GSA) is to replace costly, higher-emission liquid fuels with an alternative cleaner natural gas, which would offer substantial savings to Puerto Rican ratepayers, according to the company.

Overall, the GSA ensures a stable and secure supply of LNG to San Juan's power plants for the next seven years, ensuring the continuity of plants already running on natural gas.

The agreement also enables the progressive delivery of incremental LNG volumes, facilitating the conversion of diesel-burning, gas-ready plants. This upgrade is projected to create hundreds of millions of dollars in energy savings for Puerto Rican consumers.

The GSA contract secures an annual LNG supply of up to 75 TBtu with a minimum take-or-pay of 40 TBtu, increasing to 50 TBtu under certain conditions.

“Matching our LNG production with long term offtake … locks in sustainable long-term margins for NFE and provides a foundation of financial stability for our company,” said Chris Guinta, CFO of New Fortress Energy.

NFE Price Action: New Fortress Energy shares were up 17.5% at $2.35 at the time of publication on Wednesday, per Benzinga Pro.

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