CQP

Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE American: CQP) today announced its financial results for second quarter 2022.

HIGHLIGHTS

• Net income of $342 million and $501 million for the three and six months ended June 30, 2022, respectively.
• Adjusted EBITDA1 of $1.0 billion and $2.0 billion for the three and six months ended June 30, 2022, respectively.
• Declared a cash distribution of $1.060 per common unit to unitholders of record as of August 4, 2022, comprised of a base amount equal to $0.775 and a variable amount equal to $0.285. The common unit distribution and the related general partner distribution will be paid on August 12, 2022.
• Reconfirming full year 2022 distribution guidance of $4.00 - $4.25 per common unit.
• In June 2022, Sabine Pass Liquefaction, LLC (“SPL”) entered into a long-term LNG sale and purchase agreement (“SPA”) with Chevron U.S.A. Inc. (“Chevron”), a wholly-owned subsidiary of Chevron Corporation (NYSE: CVX). Under the SPA, Chevron has agreed to purchase approximately 1.0 million tonnes per annum (“mtpa”) of LNG from SPL on a free-on-board (“FOB”) basis. Deliveries under the SPA will begin in 2026, reach the full 1.0 mtpa during 2027 and continue until mid-2042. The purchase price for LNG under the SPA is indexed to the Henry Hub price, plus a fixed liquefaction fee.
• In June 2022, Sabine Pass LNG, L.P. (“SPLNG”) and Chevron agreed to terms for the early termination of its LNG Terminal Use Agreement (“TUA”) in return for a lump sum payment of $765 million to be made by Chevron to SPLNG during calendar year 2022.
• In June 2022, Cheniere Energy, Inc. (“Cheniere”) (NYSE American: LNG) and its subsidiaries, including SPL, commenced providing Cargo Emissions Tags (“CE Tags”) to its long-term LNG customers. The CE Tags provide those customers with estimated greenhouse gas (GHG) emissions data associated with each LNG cargo produced at Cheniere’s liquefaction facilities and are provided for both FOB and delivered ex-ship (DES) LNG cargoes. More information can be found in the Cheniere Corporate Responsibility Report for 2021.

2022 FULL YEAR DISTRIBUTION GUIDANCE

 

2022

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,

 

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

Revenues

$

4,181

 

$

1,889

 

121

%

 

$

7,509

 

$

3,852

 

95

%

Net income

$

342

 

$

395

 

(13

) %

 

$

501

 

$

742

 

(32

) %

Adjusted EBITDA1

$

977

 

$

690

 

42

%

 

$

2,008

 

$

1,469

 

37

%

LNG exported:

 

 

 

 

 

 

 

 

 

 

 

Number of cargoes

 

103

 

 

87

 

18

%

 

 

208

 

 

176

 

18

%

Volumes (TBtu)

 

374

 

 

311

 

20

%

 

 

758

 

 

632

 

20

%

LNG volumes loaded (TBtu)

 

375

 

 

313

 

20

%

 

 

760

 

 

630

 

21

%

Net income decreased $53 million and $241 million, respectively, while Adjusted EBITDA1 increased $287 million and $539 million, respectively, during the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021. The decrease in net income was primarily due to non-cash unfavorable changes in fair value of commodity derivatives, partially offset by increased margins per MMBtu of LNG and increased volumes of LNG delivered.

Substantially all derivative losses are attributable to the recognition at fair value of our long-term Integrated Production Marketing (“IPM”) agreement with Tourmaline, a natural gas supply contract with pricing indexed to the Platts Japan Korea Marker (“JKM”). While operationally we seek to eliminate commodity risk by utilizing derivatives to mitigate price volatility for commodities procured or sold over a period of time, as a result of the significant appreciation in forward international LNG commodity curves during the three and six months ended June 30, 2022, we recognized approximately $431 million and $862 million, respectively, of non-cash unfavorable changes in fair value attributable to such positions.

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 SPAs. 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 incompatibility of accounting recognition for the purchase of natural gas and sale of LNG.

During the three and six months ended June 30, 2022, we recognized in income 375 TBtu and 747 TBtu, respectively, of LNG loaded from the SPL Project (defined below). During the six month period ended June 30, 2022, approximately 13 TBtu of commissioning LNG was exported from the SPL Project.

BALANCE SHEET MANAGEMENT

Capital Resources

As of June 30, 2022, our total liquidity position was approximately $2.8 billion. We had cash and cash equivalents of $1.1 billion. In addition, we had current restricted cash and cash equivalents of $78 million, $750 million of available commitments under our CQP Credit Facilities, and $837 million of available commitments under the SPL Working Capital Facility.

SPL PROJECT OVERVIEW

We own natural gas liquefaction facilities consisting of six operational liquefaction Trains, with a total production capacity of approximately 30 mtpa of LNG at the Sabine Pass LNG terminal in Cameron Parish, Louisiana (the “SPL Project”).

As of July 30, 2022, approximately 1,750 cumulative LNG cargoes totaling approximately 120 million tonnes of LNG have been produced, loaded, and exported from the SPL Project.

DISTRIBUTIONS TO UNITHOLDERS

In February 2022, we announced the initiation of quarterly distributions to be comprised of a base amount plus a variable amount, which began with the distribution related to the first quarter of 2022.

We declared a cash distribution of $1.060 per common unit to unitholders of record as of August 4, 2022, comprised of a base amount equal to $0.775 ($3.10 annualized) and a variable amount equal to $0.285, 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 12, 2022.

INVESTOR CONFERENCE CALL AND WEBCAST

Cheniere will host a conference call to discuss its financial and operating results for second quarter 2022 on Thursday, August 4, 2022, 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 operational 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 two marine berths with a third marine berth under construction. Cheniere Partners also owns the Creole Trail Pipeline, which interconnects the Sabine Pass LNG terminal with a number of large interstate 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, 2022, 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, (vii) statements regarding future discussions and entry into contracts, and (viii) statements regarding the COVID-19 pandemic and its impact on our business and operating results. 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,

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

LNG revenues

$

2,959

 

 

$

1,597

 

 

$

5,447

 

 

$

3,266

 

LNG revenues—affiliate

 

1,135

 

 

 

211

 

 

 

1,892

 

 

 

425

 

LNG revenues—related party

 

4

 

 

 

—

 

 

 

4

 

 

 

—

 

Regasification revenues

 

68

 

 

 

67

 

 

 

136

 

 

 

134

 

Other revenues

 

15

 

 

 

14

 

 

 

30

 

 

 

27

 

Total revenues

 

4,181

 

 

 

1,889

 

 

 

7,509

 

 

 

3,852

 

 

 

 

 

 

 

 

 

Operating costs and expenses

 

 

 

 

 

 

 

Cost of sales (excluding items shown separately below)

 

3,144

 

 

 

888

 

 

 

5,706

 

 

 

1,836

 

Cost of sales—affiliate

 

57

 

 

 

12

 

 

 

62

 

 

 

54

 

Cost of sales—related party

 

1

 

 

 

1

 

 

 

1

 

 

 

1

 

Operating and maintenance expense

 

191

 

 

 

168

 

 

 

361

 

 

 

317

 

Operating and maintenance expense—affiliate

 

41

 

 

 

35

 

 

 

79

 

 

 

69

 

Operating and maintenance expense—related party

 

15

 

 

 

12

 

 

 

27

 

 

 

22

 

Development expense

 

—

 

 

 

1

 

 

 

—

 

 

 

1

 

General and administrative expense (recovery)

 

(3

)

 

 

3

 

 

 

—

 

 

 

5

 

General and administrative expense—affiliate

 

24

 

 

 

21

 

 

 

47

 

 

 

42

 

Depreciation and amortization expense

 

156

 

 

 

138

 

 

 

309

 

 

 

277

 

Other

 

—

 

 

 

6

 

 

 

—

 

 

 

6

 

Total operating costs and expenses

 

3,626

 

 

 

1,285

 

 

 

6,592

 

 

 

2,630

 

 

 

 

 

 

 

 

 

Income from operations

 

555

 

 

 

604

 

 

 

917

 

 

 

1,222

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

Interest expense, net of capitalized interest

 

(216

)

 

 

(209

)

 

 

(419

)

 

 

(426

)

Loss on modification or extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

(54

)

Other income, net

 

3

 

 

 

—

 

 

 

3

 

 

 

—

 

Total other expense

 

(213

)

 

 

(209

)

 

 

(416

)

 

 

(480

)

 

 

 

 

 

 

 

 

Net income

$

342

 

 

$

395

 

 

$

501

 

 

$

742

 

 

 

 

 

 

 

 

 

Basic and diluted net income per common unit

$

0.25

 

 

$

0.73

 

 

$

0.13

 

 

$

1.38

 

 

 

 

 

 

 

 

 

Weighted average number of common units outstanding used for basic and diluted net income per common unit calculation

 

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, 2022, 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,

 

2022

 

2021

ASSETS

(unaudited)

 

 

Current assets

 

 

 

Cash and cash equivalents

$

1,111

 

 

$

876

 

Restricted cash and cash equivalents

 

78

 

 

 

98

 

Trade and other receivables, net of current expected credit losses

 

723

 

 

 

580

 

Accounts receivable—affiliate

 

485

 

 

 

232

 

Accounts receivable—related party

 

—

 

 

 

1

 

Advances to affiliate

 

136

 

 

 

141

 

Inventory

 

170

 

 

 

176

 

Current derivative assets

 

153

 

 

 

21

 

Other current assets

 

104

 

 

 

87

 

Other current assets—affiliate

 

—

 

 

 

—

 

Total current assets

 

2,960

 

 

 

2,212

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation

 

16,861

 

 

 

16,830

 

Operating lease assets

 

94

 

 

 

98

 

Debt issuance costs, net of accumulated amortization

 

10

 

 

 

12

 

Derivative assets

 

36

 

 

 

33

 

Other non-current assets, net

 

169

 

 

 

173

 

Total assets

$

20,130

 

 

$

19,358

 

 

 

 

 

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

 

 

 

Current liabilities

 

 

 

Accounts payable

$

31

 

 

$

21

 

Accrued liabilities

 

1,576

 

 

 

1,073

 

Accrued liabilities—related party

 

6

 

 

 

4

 

Current debt, net of discount and debt issuance costs

 

1,497

 

 

 

—

 

Due to affiliates

 

58

 

 

 

67

 

Deferred revenue

 

124

 

 

 

155

 

Deferred revenue—affiliate

 

—

 

 

 

1

 

Current operating lease liabilities

 

9

 

 

 

8

 

Current derivative liabilities

 

478

 

 

 

16

 

Total current liabilities

 

3,779

 

 

 

1,345

 

 

 

 

 

Long-term debt, net of premium, discount and debt issuance costs

 

15,693

 

 

 

17,177

 

Operating lease liabilities

 

85

 

 

 

89

 

Derivative liabilities

 

3,178

 

 

 

11

 

Other non-current liabilities—affiliate

 

20

 

 

 

18

 

 

 

 

 

Partners' equity (deficit)

 

 

 

Common unitholders’ interest (484.0 million units issued and outstanding at both June 30, 2022 and December 31, 2021)

 

(2,043

)

 

 

1,024

 

General partner’s interest (2% interest with 9.9 million units issued and outstanding at June 30, 2022 and December 31, 2021)

 

(582

)

 

 

(306

)

Total partners' equity (deficit)

 

(2,625

)

 

 

718

 

Total liabilities and partners' equity (deficit)

$

20,130

 

 

$

19,358

 

_______________________

(1)

Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, 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 and six months ended June 30, 2022 and 2021 (in millions):

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

Net income

$

342

 

 

$

395

 

 

$

501

 

 

$

742

 

Interest expense, net of capitalized interest

 

216

 

 

 

209

 

 

 

419

 

 

 

426

 

Loss on modification or extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

54

 

Other income, net

 

(3

)

 

 

—

 

 

 

(3

)

 

 

—

 

Income from operations

$

555

 

 

$

604

 

 

$

917

 

 

$

1,222

 

Adjustments to reconcile income from operations to Adjusted EBITDA:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

156

 

 

 

138

 

 

 

309

 

 

 

277

 

Loss (gain) from changes in fair value of commodity derivatives, net (1)

 

266

 

 

 

(58

)

 

 

782

 

 

 

(36

)

Other

 

—

 

 

 

6

 

 

 

—

 

 

 

6

 

Adjusted EBITDA

$

977

 

 

$

690

 

 

$

2,008

 

 

$

1,469

 

___________________________

(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/20220803005801/en/

Cheniere Partners Investors Randy Bhatia, 713-375-5479 Frances Smith, 713-375-5753 Media Relations Eben Burnham-Snyder, 713-375-5764 Phil West, 713-375-5586