Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE
American: CQP) today announced its financial results for second
quarter 2023.
HIGHLIGHTS
- During the three and six months ended June 30, 2023, Cheniere
Partners generated revenues of $1.9 billion and $4.9 billion, net
income of $622 million and $2.6 billion, and Adjusted EBITDA1 of
$757 million and $1.8 billion, respectively.
- With respect to the second quarter of 2023, Cheniere Partners
declared a cash distribution of $1.03 per common unit to
unitholders of record as of August 7, 2023, comprised of a base
amount equal to $0.775 and a variable amount equal to $0.255. The
common unit distribution and the related general partner
distribution will be paid on August 14, 2023.
- Reconfirming full year 2023 distribution guidance of $4.00 -
$4.25 per common unit.
- In May 2023, certain subsidiaries of Cheniere Partners entered
the pre-filing review process with the Federal Energy Regulatory
Commission (“FERC”) under the National Environmental Policy Act
(“NEPA”) for the SPL Expansion Project (defined below). In April
2023, certain of our subsidiaries executed a contract with Bechtel
Energy Inc. (“Bechtel”) to provide the Front End Engineering and
Design (“FEED”) for the SPL Expansion Project.
2023 FULL YEAR DISTRIBUTION GUIDANCE
2023
Distribution per Unit
$ 4.00
-
$ 4.25
SUMMARY AND REVIEW OF FINANCIAL RESULTS
(in millions, except LNG data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
% Change
2023
2022
% Change
Revenues
$
1,933
$
4,181
(54
)%
$
4,850
$
7,509
(35
)%
Net income
$
622
$
342
82
%
$
2,557
$
501
410
%
Adjusted EBITDA1
$
757
$
977
(23
)%
$
1,783
$
2,008
(11
)%
LNG exported:
Number of cargoes
98
103
(5
)%
210
208
1
%
Volumes (TBtu)
355
374
(5
)%
758
758
—
%
LNG volumes loaded (TBtu)
353
375
(6
)%
756
760
(1
)%
Net income increased by approximately $280 million and $2.1
billion during the three and six months ended June 30, 2023,
respectively, as compared to the corresponding 2022 periods. The
increases were primarily due to non-cash favorable changes in fair
value of commodity derivatives (further described below).
Adjusted EBITDA1 decreased by approximately $220 million and
$225 million during the three and six months ended June 30, 2023,
respectively, as compared to the corresponding 2022 periods. The
decrease in Adjusted EBITDA was primarily due to decreased total
margins per MMBtu of LNG delivered and decreased regasification
revenues related to the previously announced early termination of
the Terminal Use Agreement between Sabine Pass LNG, L.P. and
Chevron.
Substantially all derivative gains (losses) are attributable to
the recognition at fair value of our long-term Integrated
Production Marketing (“IPM”) agreement with Tourmaline Oil
Marketing Corp. (“Tourmaline”), a natural gas supply contract with
pricing indexed to the Platts Japan Korea Marker (“JKM”). Our IPM
agreement is structured to provide stable margins on purchases of
natural gas and sales of LNG over the life of the agreement and has
a fixed fee component, similar to that of LNG sold under our
long-term, fixed fee LNG sale and purchase agreement (“SPA”).
However, the long-term duration and international price basis of
our IPM agreement makes it particularly susceptible to fluctuations
in fair market value from period to period. In addition, accounting
requirements prescribe recognition of this long-term gas supply
agreement at fair value, but does not currently permit fair value
recognition of the associated sale of LNG, resulting in a mismatch
of accounting recognition for the purchase of natural gas and sale
of LNG. As a result of continued moderation of international gas
price volatility and declines in international forward commodity
curves during the three and six months ended June 30, 2023, we
recognized approximately $187 million and $1.2 billion of non-cash
favorable changes in fair value attributable to the Tourmaline IPM
agreement.
During the three and six months ended June 30, 2023, we
recognized in income 353 TBtu and 756 TBtu of LNG, respectively,
loaded from the SPL Project, none of which was related to
commissioning activities.
Capital Resources
As of June 30, 2023, our total available liquidity was
approximately $3.7 billion. We had cash and cash equivalents of
approximately $1.8 billion. In addition, we had current restricted
cash and cash equivalents of $241 million, $1.0 billion of
available commitments under our CQP Revolving Credit Facility
(defined below), and $671 million of available commitments under
the SPL Revolving Credit Facility (defined below).
Recent Key Financial Transactions and Updates
In June 2023, Cheniere Partners issued $1.4 billion aggregate
principal amount of 5.95% Senior Notes due 2033 (the “2033 CQP
Senior Notes”), and used the proceeds, along with cash on hand, to
redeem a portion of SPL’s 5.75% Senior Secured Notes due 2024 (the
“2024 SPL Senior Notes”) in July 2023.
In June 2023, Cheniere Partners entered into a $1.0 billion
Senior Unsecured Revolving Credit and Guaranty Agreement (the “CQP
Revolving Credit Facility”), and Sabine Pass Liquefaction, LLC
(“SPL”) entered into a $1.0 billion Senior Secured Revolving Credit
and Guaranty Agreement (the “SPL Revolving Credit Facility”). The
CQP Revolving Credit Facility and SPL Revolving Credit Facility
each refinance and replace the respective existing credit
facilities to, among other things, extend the maturity date
thereunder, reduce the rate of interest and commitment fees
applicable thereunder and make certain other changes to the terms
and conditions.
During the three months ended June 30, 2023, Cheniere Partners
repurchased approximately $200 million in aggregate principal
amount of the 2024 SPL Senior Notes in the open market with cash on
hand.
SABINE PASS OVERVIEW
We own natural gas liquefaction facilities consisting of 6
liquefaction Trains, with a total production capacity of
approximately 30 million tonnes per annum (“mtpa”) of LNG at the
Sabine Pass LNG terminal in Cameron Parish, Louisiana (the “SPL
Project”).
As of July 27, 2023, over 2,150 cumulative LNG cargoes totaling
approximately 150 million tonnes of LNG have been produced, loaded,
and exported from the SPL Project.
SPL Expansion Project
We are developing an expansion adjacent to the SPL Project
consisting of up to 3 natural gas liquefaction trains with an
expected total production capacity of approximately 20 mtpa of LNG
(the “SPL Expansion Project”). In May 2023, certain of our
subsidiaries entered the pre-filing review process with the FERC
under the NEPA, and in April 2023, executed a contract with Bechtel
to provide the FEED for the SPL Expansion Project.
DISTRIBUTIONS TO UNITHOLDERS
In July 2023, we declared a cash distribution of $1.03 per
common unit to unitholders of record as of August 7, 2023,
comprised of a base amount equal to $0.775 ($3.10 annualized) and a
variable amount equal to $0.255, which takes into consideration,
among other things, amounts reserved for annual debt repayment and
capital allocation goals, anticipated capital expenditures to be
funded with cash, and cash reserves to provide for the proper
conduct of the business. The common unit distribution and the
related general partner distribution will be paid on August 14,
2023.
INVESTOR CONFERENCE CALL AND WEBCAST
Cheniere Energy, Inc. will host a conference call to discuss its
financial and operating results for second quarter 2023 on
Thursday, August 3, 2023, at 11 a.m. Eastern time / 10 a.m. Central
time. A listen-only webcast of the call and an accompanying slide
presentation may be accessed through our website at
www.cheniere.com. Following the call, an archived recording will be
made available on our website. The call and accompanying slide
presentation may include financial and operating results or other
information regarding Cheniere Partners.
1 Non-GAAP financial measure. See
“Reconciliation of Non-GAAP Measures” for further details.
About Cheniere Partners
Cheniere Partners owns the Sabine Pass LNG terminal located in
Cameron Parish, Louisiana, which has natural gas liquefaction
facilities consisting of six liquefaction Trains with a total
production capacity of approximately 30 mtpa of LNG. The Sabine
Pass LNG terminal also has operational regasification facilities
that include five LNG storage tanks, vaporizers, and three marine
berths. Cheniere Partners also owns the Creole Trail Pipeline,
which interconnects the Sabine Pass LNG terminal with a number of
large interstate and intrastate pipelines.
For additional information, please refer to the Cheniere
Partners website at www.cheniere.com and Quarterly Report on Form
10-Q for the quarter ended June 30, 2023, filed with the Securities
and Exchange Commission.
Use of Non-GAAP Financial Measures
In addition to disclosing financial results in accordance with
U.S. GAAP, the accompanying news release contains a non-GAAP
financial measure. Adjusted EBITDA is a non-GAAP financial measure
that is used to facilitate comparisons of operating performance
across periods. This non-GAAP measure should be viewed as a
supplement to and not a substitute for our U.S. GAAP measures of
performance and the financial results calculated in accordance with
U.S. GAAP, and the reconciliation from these results should be
carefully evaluated.
Forward-Looking Statements
This press release contains certain statements that may include
“forward-looking statements.” All statements, other than statements
of historical or present facts or conditions, included herein are
“forward-looking statements.” Included among “forward-looking
statements” are, among other things, (i) statements regarding
Cheniere Partners’ financial and operational guidance, business
strategy, plans and objectives, including the development,
construction and operation of liquefaction facilities, (ii)
statements regarding Cheniere Partners’ anticipated quarterly
distributions and ability to make quarterly distributions at the
base amount or any amount, (iii) statements regarding regulatory
authorization and approval expectations, (iv) statements expressing
beliefs and expectations regarding the development of Cheniere
Partners’ LNG terminal and liquefaction business, (v) statements
regarding the business operations and prospects of third-parties,
(vi) statements regarding potential financing arrangements, and
(vii) statements regarding future discussions and entry into
contracts. Although Cheniere Partners believes that the
expectations reflected in these forward-looking statements are
reasonable, they do involve assumptions, risks and uncertainties,
and these expectations may prove to be incorrect. Cheniere
Partners’ actual results could differ materially from those
anticipated in these forward-looking statements as a result of a
variety of factors, including those discussed in Cheniere Partners’
periodic reports that are filed with and available from the
Securities and Exchange Commission. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release. Other than as required under the
securities laws, Cheniere Partners does not assume a duty to update
these forward-looking statements.
(Financial Tables Follow)
Cheniere Energy Partners,
L.P.
Consolidated Statements of
Income
(in millions, except per unit
data)(1)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Revenues
LNG revenues
$
1,415
$
2,959
$
3,521
$
5,447
LNG revenues—affiliate
469
1,135
1,230
1,892
LNG revenues—related party
—
4
—
4
Regasification revenues
33
68
67
136
Other revenues
16
15
32
30
Total revenues
1,933
4,181
4,850
7,509
Operating costs and expenses
(recoveries)
Cost of sales (excluding items shown
separately below)
603
3,144
916
5,706
Cost of sales—affiliate
1
57
18
62
Cost of sales—related party
—
1
—
1
Operating and maintenance expense
263
191
469
361
Operating and maintenance
expense—affiliate
38
41
82
79
Operating and maintenance expense—related
party
14
15
30
27
General and administrative expense
(recovery)
3
(3
)
6
—
General and administrative
expense—affiliate
24
24
46
47
Depreciation and amortization expense
167
156
334
309
Other
2
—
2
—
Total operating costs and expenses
1,115
3,626
1,903
6,592
Income from operations
818
555
2,947
917
Other income (expense)
Interest expense, net of capitalized
interest
(207
)
(216
)
(415
)
(419
)
Loss on modification or extinguishment of
debt
(2
)
—
(2
)
—
Other income, net
13
3
27
3
Total other expense
(196
)
(213
)
(390
)
(416
)
Net income
$
622
$
342
$
2,557
$
501
Basic and diluted net income per common
unit(1)
$
0.84
$
0.25
$
4.35
$
0.13
Weighted average basic and diluted number
of common units outstanding
484.0
484.0
484.0
484.0
(1)
Please refer to the Cheniere
Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter
ended June 30, 2023, filed with the Securities and Exchange
Commission.
Cheniere Energy Partners,
L.P.
Consolidated Balance
Sheets
(in millions, except unit
data) (1)
June 30,
December 31,
2023
2022
ASSETS
(unaudited)
Current assets
Cash and cash equivalents
$
1,834
$
904
Restricted cash and cash equivalents
241
92
Trade and other receivables, net of
current expected credit losses
189
627
Trade receivables—affiliate
134
551
Advances to affiliate
154
177
Inventory
130
160
Current derivative assets
32
24
Margin deposits
3
35
Other current assets
75
50
Other current assets—affiliate
1
—
Total current assets
2,793
2,620
Property, plant and equipment, net of
accumulated depreciation
16,463
16,725
Operating lease assets
85
89
Debt issuance costs, net of accumulated
amortization
18
8
Derivative assets
29
28
Other non-current assets, net
169
163
Total assets
$
19,557
$
19,633
LIABILITIES AND PARTNERS’
DEFICIT
Current liabilities
Accounts payable
$
60
$
32
Accrued liabilities
556
1,378
Accrued liabilities—related party
5
6
Current debt, net of discount and debt
issuance costs
1,796
—
Due to affiliates
38
74
Deferred revenue
97
144
Deferred revenue—affiliate
—
3
Current operating lease liabilities
10
10
Current derivative liabilities
366
769
Other current liabilities
4
5
Total current liabilities
2,932
2,421
Long-term debt, net of premium, discount
and debt issuance costs
15,595
16,198
Operating lease liabilities
75
80
Finance lease liabilities
16
18
Derivative liabilities
1,936
3,024
Other non-current liabilities
26
—
Other non-current
liabilities—affiliate
23
23
Partners’ deficit
Common unitholders’ interest (484.0
million units issued and outstanding at both June 30, 2023 and
December 31, 2022)
372
(1,118
)
General partner’s interest (2% interest
with 9.9 million units issued and outstanding at both June 30, 2023
and December 31, 2022)
(1,418
)
(1,013
)
Total partners’ deficit
(1,046
)
(2,131
)
Total liabilities and partners’
deficit
$
19,557
$
19,633
(1)
Please refer to the Cheniere
Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter
ended June 30, 2023, filed with the Securities and Exchange
Commission.
Reconciliation of Non-GAAP
Measures
Regulation G
Reconciliations
Adjusted EBITDA
The following table reconciles our
Adjusted EBITDA to U.S. GAAP results for the three months ended
June 30, 2023 and 2022 (in millions):
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income
$
622
$
342
$
2,557
$
501
Interest expense, net of capitalized
interest
207
216
415
419
Loss on modification or extinguishment of
debt
2
—
2
—
Other income, net
(13
)
(3
)
(27
)
(3
)
Income from operations
$
818
$
555
$
2,947
$
917
Adjustments to reconcile income from
operations to Adjusted EBITDA:
Depreciation and amortization expense
167
156
334
309
Loss (gain) from changes in fair value of
commodity derivatives, net (1)
(230
)
266
(1,500
)
782
Other
2
—
2
—
Adjusted EBITDA
$
757
$
977
$
1,783
$
2,008
(1)
Change in fair value of commodity
derivatives prior to contractual delivery or termination
Adjusted EBITDA is commonly used as a supplemental financial
measure by our management and external users of our Consolidated
Financial Statements to assess the financial performance of our
assets without regard to financing methods, capital structures, or
historical cost basis. Adjusted EBITDA is not intended to represent
cash flows from operations or net income as defined by U.S. GAAP
and is not necessarily comparable to similarly titled measures
reported by other companies.
We believe Adjusted EBITDA provides relevant and useful
information to management, investors and other users of our
financial information in evaluating the effectiveness of our
operating performance in a manner that is consistent with
management’s evaluation of financial and operating performance.
Adjusted EBITDA is calculated by taking net income before
interest expense, net of capitalized interest, depreciation and
amortization, and adjusting for the effects of certain non-cash
items, other non-operating income or expense items and other items
not otherwise predictive or indicative of ongoing operating
performance, including the effects of modification or
extinguishment of debt, impairment expense and loss on disposal of
assets, and changes in the fair value of our commodity derivatives
prior to contractual delivery or termination. The change in fair
value of commodity derivatives is considered in determining
Adjusted EBITDA given that the timing of recognizing gains and
losses on these derivative contracts differs from the recognition
of the related item economically hedged. We believe the exclusion
of these items enables investors and other users of our financial
information to assess our sequential and year-over-year performance
and operating trends on a more comparable basis and is consistent
with management’s own evaluation of performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802211616/en/
Cheniere Partners
Investors Randy Bhatia,
713-375-5479 Frances Smith, 713-375-5753
Media Relations Eben
Burnham-Snyder, 713-375-5764
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