Dec. 24 at 3:37 AM
$VG my theory is they are able to successfully negotiate settlements via contract modifications that provide credits or a lower price over the 20 year agreements. They are operating the facilities above nameplate capacity and have excess capacity to make up the hit from a financing perspective.
From the settlement that was reached recently, Unipec, management noted there was no material impact to earnings and that the impact would be recognized as a reduction to revenue over the 20 years.
From a revenue recognition standpoint, I would think this is a contract modification to essentially credit the customer (as opposed to a lump sump cash settlement) in order for it to be deferred against revenue for 20 years.
My theory is they can successfully negotiate cashless settlements in 2026 following this same approach. The customers all just want the gas anyways and would be happy to get an even better deal.
