Shares of New Fortress Energy (NFE -5.90%) are falling on Monday, down 5.8% as of 3:48 p.m. ET. The drop comes as the S&P 500 and Nasdaq Composite both had modest gains.
The embattled energy company is in a standoff with the government of Puerto Rico, a major buyer of the company's natural gas.
New Fortress withholds critical shipments
Puerto Rico has temporarily shut down 10 of the 14 power plants it used to meet peak demand at the height of summer after New Fortress Energy withheld its latest shipment of liquified natural gas (LNG) to the island. The remaining four power plants are running on diesel, a more expensive and emission-heavy fuel source.
New Fortress Energy told the Puerto Rican government that it was canceling the shipment, claiming that it was owed millions of dollars from projects dating back to 2020. The Puerto Rican energy czar, Josue Colon, has said that his office has no records of those debts and that New Fortress' sudden cancellation of a critical energy shipment was "not acceptable to the government of Puerto Rico."
Image source: Getty Images.
New Fortress and the government of Puerto Rico have been locked in tense negotiations to extend a deal worth an estimated $20 billion to supply the island with LNG for 15 years. While an agreement was reached recently, it was blocked last week by Puerto Rico's finance regulator, saying the deal would essentially give New Fortress a monopoly on Puerto Rico's gas supply.
New Fortress is in hot water
New Fortress is facing mounting debt and shrinking revenue after it was forced to sell a key asset in Jamaica recently to pay its creditors. I would stay away from this stock.