Why New Fortress Energy Stock Is Skyrocketing Today

New Fortress Energy (NASDAQ: NFE) stock is enjoying an explosive rally today following reports that a major new deal is in the works. The company's share price was up 24.4% as of 1 p.m. ET. The stock had been up as much as 40% earlier in the session.

Earlier today, El Nuevo Día published a report stating that New Fortress is on track to secure a 15-year contract to provide liquefied natural gas (LNG) to multiple power plants in Puerto Rico.

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Despite today's huge rally, the stock is still down roughly 78% across this year's trading.

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New Fortress soars on big contract win

New Fortress is reportedly poised to ink a 15-year contract to provide LNG to five power plants located in San Juan and Palo Seco. As part of the terms, New Fortress will also provide energy resources for eight peaking-power units that are being installed by one of its subsidiaries. The contract also leaves the door open for the partnership to be extended. The deal could be made official in the coming weeks and would supply the company with a substantial new revenue source.

What's next for New Fortress?

If the recent reports that New Fortress is set to land a major new contract are correct, the development could extend a major lifeline to the business. On the other hand, the company has been struggling lately -- and the challenges have been reflected in the poor performance for its stock.

New Fortress carries a high debt load, and it's been facing substantial liquidity issues. Landing a major new contract win could supply the company with a much-needed capital injection, but there are still significant risks that the energy specialist will move forward with major restructuring moves or share offerings that create unfavorable outcomes for shareholders. The business's outlook is undoubtedly stronger with a major new contract in the works, but the new deal may not be a silver bullet in and of itself.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.